If you are a trustee or you benefit from a trust, it is essential you are aware of the UK Trust Register Service (TSR), and if you need to register a trust. The Register was introduced in 2017 at a time when trusts were only needed to be registered if there was a tax liability. Three years later in 2020 new rules were implemented to capture all trusts, regardless if they had a tax liability.
Recent changes to the TRS now mean that a large number of more trusts will need to be registered by 1st September 2022. HMRC have introduced changes to combat criminals who are hiding assets in trusts overseas. Her Majesty Revenue and Customs have stated all non-taxpaying trusts need to be registered otherwise, they may incur a £5,000.
There remains confusion on who is required to register their trust. It is estimated less than a quarter of the one million trusts in the UK have been registered. Here we go some way to explaining what trusts need to be registered and how you go about it.
Who Should Register A Trust?
It is essential you register a trust if it becomes liable for any of the following taxes: –
- Capital Gains Tax
- Income Tax
- Inheritance Tax
- Stamp Duty Land Tax
- Stamp Duty Reserve Tax
- Additional Land Taxes if in Scotland or Wales
Additionally, some trusts need to be registered even if there is no tax liability. These are: –
- All UK Express Trusts – unless there is a specific exlcusion
- Non-UK Express Trusts – including trusts that acquire land or property; and those that have a trustee who is a UK resident with a UK business relationship
Furthemore, a trust needs to be registered if it is a non-resident trust with income from the UK or UK assets, with tax liability.
Which Trusts Don’t Need To Be Registered?
The following trusts don’t need to be registered, so long as there is no tax liability: –
- Trusts that have money or assets from a UK-registered pension scheme.
- Trusts with life or retirement policies that pay out on terminal or critical illness, permanent disablement, supporting healthcare costs or death.
- Charitable Trusts
- Trusts holding insurance policy benefits that are received after death
- Pilot trusts established before 6th October with less than £100
- Will trusts that come into effect on death
- Trusts for bereaved children younger than 18, and adults 18-25 in a will of deceased parents
- Co-ownership Trusts
Other examples of excluded trust are included here.
What Is Your Responsibility As A Trustee?
A trustee is a person who holds the assets in the trust for all trustee beneficiaries. They administer and manage the trust. Duties include keeping up-to-date records of the beneficial owners and people with control of the trust. The lead trustee is responsible for all tax affairs and is the main contact for HMRC.
How To Register A Trust
You will need to have an Organisation Government Gateway user ID and password to register your trust. Each individual trust needs a different Organisational Government user ID. Additional details required to register include full name, phone number and email address. You can only register online via the Trust Registration Service.
What Happens If You Don’t Register The Trust?
If you do not register your trust before the 1st of September 2022 you may be liable for a fine. HMRC have stated people who miss the September deadline may not be penalised immediately. A warning letter will be sent to request the trust is registered within 30 days. They go on to say if a trust is not registered within this time, the lead trustee will face a £5,000 fine.
If you would like advice on your tax affairs please contact us on 0800 471 4546.