Trust Registration Service – Non Taxable Trusts

HMRC’s Trust Registration Service (TRS) is now open for non-taxable trusts to register. The regulations which brought these trusts within TRS came into force in October last year but HMRC have had to upgrade TRS to take account of all the changes.

TRS was introduced in 2017 to comply with the EU’s Fourth Money Laundering Directive (4MLD) but previously only taxable trusts were required to register. However, the Fifth Money Laundering Directive (5MLD) has expanded the reach of TRS to many non-taxable trusts.

All UK express trusts and some UK non-express trusts should now register with HMRC, including non-taxable trusts, unless the trust is specifically excluded due to its characteristics.

You must register:

• non-taxable trusts in existence on or after 6 October 2020 by 1 September 2022.
• 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.

This gives more time than that set out in the current legislation, which is to be amended shortly to reflect the new deadlines.

Express trusts are usually created by a written deed and include several trusts typically used in financial planning such as loan trusts and discounted gift trusts. Generally, these trusts do not have annual tax liabilities and in many cases have not previously had to register under TRS. However, they will now be required to register unless they are excluded.

There are a number of express trusts which are specifically excluded from TRS. These include many life insurance policies, registered pension schemes, trusts arising on intestacy, personal injury trusts, charitable trusts and will trusts for the first two years after death. However, if any of these trusts have a tax liability they will still need to register.

Where trusts are required to register, trustees will need to provide information regarding the trust and the people involved with it including details of the settlor, trustees and beneficiaries. Where the trust has a UK tax liability details of the assets held by the trust are also required.

Trustees need to be aware of their obligations to register under TRS unless the trust is excluded, even if there is no tax liability. Once registered there is also the ongoing requirement to keep the register up to date with any changes to the trust. If Trustees do need to register they should gather the necessary information in good time to meet the deadlines.

As always, Dodd & Co is here to help.  If you have any queries on registering non-taxable trusts, please speak to Graham Arnott on 01228 530913 or Jonathan Ridley on 01768 864466.