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Attention trustees – do you need to register your trust?

On 1 September 2021 the Trust Registration Service (TRS) opened for the registration of UK non-taxable express trusts.

Previously only those trusts which incurred a UK tax liability in any given year were required to register so this represents a significant extension to the TRS regime. It follows the UK’s adoption of the EU’s 5th Anti-Money Laundering Directive which was introduced as part of the European Commission’s plan to tackle the use of the financial system for criminal activities and obfuscation of funds.

The responsibility for registration with the TRS lies with the Trustees who must ensure compliance with the relevant deadlines.

  • Any non-taxable express trusts created on or before 6 October 2020 must be registered by 1 September 2022.
  • Any non-taxable express trusts created after 6 October 2020 must be registered within 90 days of creation or by 1 September 2022, whichever is the later.

The deadlines for registration of taxable trusts have been updated to bring them in line with non-taxable trusts and are as follows.

  • Any taxable trusts created before 6 April 2021 which incur income tax or capital gains tax for the first time must be registered by 5 October after the end of that tax year.
  • Any taxable trusts created before 6 April 2021 which incur any other taxes for the first time (i.e. inheritance tax or stamp duty land tax) must be registered by 31 January after the end of that tax year.
  • Any taxable trust created on or after 6 April 2021 must be registered within 90 days of the trust becoming liable for tax or by 1 September 2022, whichever is the later.

HMRC has warned that penalties will be imposed if the deadlines are not met.

The following trusts are excluded from the TRS regime, unless taxable:

  • UK Pension Scheme trusts
  • Charitable trusts
  • A Will trust which comes into effect on death, providing it is wound up within 2 years of the date of death
  • A Pilot trust set up before 6 April 2020 which holds less than £100
  • A co-ownership of land trust providing the trustees and the beneficiaries are the same people
  • A trust of a life insurance policy providing the policy pays out only on the death, terminal or critical illness of the person assured; or to meet the cost of their healthcare
  • A trust for bereaved children under 18 or adults aged 18-25 where the trust was set up by the Will (or intestacy) of their deceased parent or the Criminal Injuries Compensation Scheme

However caution must be applied when considering this list as various exclusions and ‘traps’ apply so we recommend that Trustees seek advice to ensure compliance.