The Trust Registration Service

As the deadline for the requirement of non-taxable trusts to be registered by 1 September 2022 approaches, I thought it appropriate to provide a fuller explanation of the recent changes to this service and what obligations this will place on trustees.

What is the Trust Registration Service?

The Trust Registration Service (TRS) is a register of the beneficial ownership of trusts. The fourth Money Laundering Directive placed a requirement on the UK to create a register for all express trusts that incur a UK tax consequence. As a result, HMRC set up the Trust Registration Service, which went live in 2017.

From the time of its launch, trustees were required to register on TRS if a trust was liable to pay any of the following taxes: income tax, capital gains tax, inheritance tax, Stamp Duty Land Tax (Land and Buildings Transaction Tax in Scotland) or Stamp Duty Reserve Tax.

The fifth Money Laundering Directive expanded the scope of this register by requiring trustees or agents of ALL UK and some non-EU resident express trusts to register those trusts with the TRS, whether or not the trust has incurred a UK tax consequence.

New rules introduced on 6 October 2020 extended the scope of the trust register to UK and some non-UK trusts, with some specific exclusions, regardless of whether the trust is liable to pay any tax.

What trusts do not need to be registered?

The following list shows the potentially excluded trusts which are typically encountered. Exclusion may be dependent on additional criteria.

• Registered pension schemes

• Trusts holding only a life/health insurance protection policy with no, or an incidental investment content (NB if the claim is paid the trust would need to register if the proceeds are not paid out in two years)

• Will trusts for two years after death, unless tax is due

• Statutory trusts, for example a trust established through intestacy

• Personal injury trusts

• Disabled trusts

• Historic pilot trusts created before 6 October 2020 holding £100, or less

• Bereaved minor trusts and 18-25 trusts (subject to s71A and s 71D of IHTA 1984)

• Charitable trusts

What trusts need to be registered and when do they need to be registered by?

All UK express trusts (usually created with a written deed), including bare, absolute, interest in possession, flexible and discretionary trusts and some non-UK express trusts, should be registered with HMRC, including non-taxable trusts, unless the trust is specifically excluded due to its characteristics.

Therefore, this includes bare trusts, designations and nominee accounts, unless exempt, although there will be no tax reporting as any potential taxation liability would generally be assessed on the beneficiary.

Trusts that need registering are -

• non-taxable trusts in existence on or after 6 October 2020 by the 1 September 2022 or 90 days from creation

• non-taxable trusts created after 1 September 2022 within 90 days

• changes to the trust details and/or circumstances, within 90 days of the change

It should be noted that trusts which are required to register because they have UK tax liabilities under the fourth Money Laundering Directive should comply with the existing timescales, e.g., a trust that became liable to tax in 2020/21 for the first time should have registered by 5 October 2021.

What information is required?

For all trusts required to register, the trustees need to provide information on the persons involved in the trust (settlor, trustees and beneficiaries) as well as details of the trust itself.

These details include names, dates of birth, contact details and NI number of lead trustee, nationality, and country of residence. For trusts with no named beneficiary, such as discretionary trusts, a description of the 'class of beneficiaries' must be given.

Where a trust also has a UK tax liability, further information must also be provided on the assets held by the trust and additional information on all the settlors, trustees and beneficiaries.

You can find out more and register your trust here.

Register a trust as a trustee - GOV.UK (www.gov.uk)

We’ll be regularly updating this article. Last updated 16 August 2022