Major Changes to the Trust Registration Service (“TRS”)
Who needs to be aware of these changes?
All Trustees of any Trust, regardless of whether or not the Trust pays UK tax.
Background – what exactly is the TRS?
Historically, HM Revenue & Customs (“HMRC”) required completion of paper Form 41G (Trust) to register a new Trust. This registration form recorded details of the Trust such as the Settlor, Trustees, and the type of Trust.
However, in 2017, the UK government was required under EU law to comply with the 4th Money Laundering Directive and in response to this, on 13 July 2017, the HMRC’s online Trust Register came into effect. The purpose of the TRS is to record the details of Trusts to help alleviate their misuse and maintain a central register to establish who has beneficial ownership. Only existing or new Trusts which were liable to UK tax (income, capital gains, inheritance tax or stamp duty) needed to consider registering at that time.
However, with effect from January 2020 the 5th Money Laundering Directive was implemented and from 6th October its framework was applied to the TRS.
What is the 5th Money Laundering Directive and what does it mean?
As outlined above, initially only Trusts with a UK tax liability were required to register under the TRS. The 5th Money Laundering Directive removes the tax liability requirement, broadening the definition of those Trusts now required to register.
Trusts HMRC expect to be registered are….
- All UK express Trusts, unless they are specifically excluded.
- Non-UK express Trusts with a UK connection.
HMRC defines an Express Trust as….
“An express Trust is a Trust created deliberately by a Settlor, usually (but not always) in the form of a document such as a written deed or declaration of Trust. Most Trusts are express Trusts, including most of the other types of Trusts.”
Are there some Trusts excluded from registering with the TRS?
HMRC have issued an excluded trust list which can be found here:
https://www.gov.uk/guidance/trust-registration-extension-an-overview
Are there any deadlines for the registration of previously unregistered trusts?
- Non-taxable Trusts in existence on or after 6 October 2020 must be registered by 1 September 2022.
- Non-taxable Trusts created after September 2022 must be registered within 90 days of commencement.
What if there are changes to any registered Trust?
Once a Trust has been registered, if any changes occur to the Trust details or circumstances these must be registered within 90 days of the change.
Real life scenario caught by the new TRS registration regime
Mike’s now elderly mother Elsie arranged a life insurance policy in 1975 to help her family when she died. The policy would pay out a sum of money on her death. The life policy was put into trust to ensure it was outside of her Estate when she died. As the Trust was not liable to tax, she had not been required to register the trust previously.
Elsie is still very much alive and received a note from her life insurance provider advising her that her Express non-taxable trust now needed to be registered with HMRC under the new 5th Money Laundering Directive.
What should happen?
In this situation one of the named Trustees should ensure that the Trust is registered with HMRC before 30 September 2022 using the online registration service.
To register the Trust the Trustees will need to provide details of themselves, the Settlor, the Beneficiaries, and anybody who holds certain powers in relation to the Trust. The details include names, addresses, dates of birth and National Insurance numbers. Details of the Trust property, perpetuity and purpose will be amongst the other details that may be required.
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At Stewart & Co we are very experienced with both setting up and maintaining Trusts on the TRS. If you would like help meeting your obligations to register a Trust on the TRS and/or with ongoing maintenance of the TRS, please feel free to get in touch with a member of our Personal Tax Team who will be happy to assist you.
Andrew McIntyre
Personal Tax Assistant Manager
01276 61203
