Are you a trustee or beneficiary of a trust? Act now to avoid a potential fine!

An important part of the service we provide to clients is to inform them about any legislative changes that affect the products they may hold. From recent conversations, it is clear the majority are unaware of changes to the requirements with trust registration.

Essentially, any trust which is liable to UK tax already has a requirement to be registered with the HMRC but, to comply with the latest regulations on money laundering, this has now been extended to include certain types of trust which have no UK tax liability.

The clock is ticking - do you need to register your trust with the TRS?

If you have an investment which is held within a trust, recent changes to anti-money laundering regulations mean it is likely that this trust needs to be registered with HMRC using their online Trust Registration Service (TRS).


The registration of the trust is the responsibility of your trustees (the lead trustee specifically), however, to help you understand the requirements and the process, we have included some guidance below.

The new rules require that your trust is registered with HMRC by 1st September 2022 and, if you make any changes to the details of your trust, HMRC must be notified of these within 90 days of the change.


It is important that your trustees know the rules, their reporting obligations, and act ahead of the deadline to register with the TRS.


HM Revenue & Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes, which cannot be foreseen. Please contact an accountant or tax specialist for specific tax advice.


 

A quick guide to the HMRC trust registration service


HMRC created the Trust Registration Service (TRS) to facilitate compliance with the obligations of the 4th and 5th EU Money Laundering Directives (4MLD and 5MLD). The TRS also enables trustees to notify HMRC of the existence of trusts that are likely to have tax to pay.


Which types of trust need to register with the TRS?


Essentially, any trust which is liable to UK tax already has a requirement to be registered with the HMRC but, to comply with the latest regulations on money laundering, this has now been extended to include certain types of trust which have no UK tax liability.


Taxable trusts (trusts with a UK tax liability) and any non-taxable trusts (trusts created with a written deed, will or other declaration – known as express trusts) which are required to register with the TRS have separate requirements. Please note it is possible for a trust to fall into both these categories.


Both types of trust need to identify the individuals involved with the trust (i.e. settlor, trustees and beneficiaries). But taxable trusts also need to provide additional information on the assets held within the trust at the time of the registration.


To use the TRS, the trust will first need an Organisation Government Gateway ID. This can be obtained via the TRS as part of the registration process. If you are registering a trust that is liable to tax, HMRC will send the lead trustee a Unique Taxpayer Reference (UTR) shortly after registration so that the trust can start filing Self-Assessment tax returns. This applies to both new trusts and any existing trusts which have a tax liability for the first time. Non-taxable Express trusts

  • Express trusts with no UK tax liability are now also required to register with the TRS unless exempt. Exemptions are limited and do not extend to trusts holding life insurance-based investment bonds.

  • Non-taxable express trusts can now register on the TRS and must do so by 1st September 2022.

  • Non-taxable express trusts created after 1st September 2022 must be registered within 90 days.


Further guidance:

https://www.gov.uk/guidance/register-a-trust-as-a-trustee

https://www.gov.uk/guidance/register-your-clients-trust

https://www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual