Trusts are a fantastic tool in anyone’s Estate Planning arsenal. They allow a trustee to hold and control assets for a beneficiary and they can even reduce the Inheritance Tax liability of your estate.
If you already have a trust, then we have some important news you should be aware of. There have been changes to rules surrounding trusts and you may need to register yours with the Trust Registration Service.
The rules around the Trust Registration Service (TRS) were changed in 2020 and the deadline for meeting the new rules is approaching.
In this article we will explain what the Trust Registration Service is, what the new rules are and what you need to know.
What is the Trust Registration service?
The Trust Registration Service (TRS) is a government register of the beneficial ownership of trusts. It was introduced in 2017, when the UK was required to have anti-money laundering and counter terrorist financing regimes in place. The regimes should be up to date, effective and proportionate. They should also improve the transparency about the assets held in trusts.
The regulations required trustees of trusts subject to tax to register information about the trusts and people related to the trust to HMRC. These specific trusts were ones which became liable to pay any of the following taxes:
- Income tax
- Capital gains tax
- Inheritance tax
- Stamp duty land tax (Land and building transaction in Scotland. Land transaction tax in Wales)
- Stamp duty reserve tax.
The list of registered trust owners was only accessible to HMRC and other law enforcement agencies, but not third parties, before the rules changed
What are the new Trust Registration rules?
In October 2020 the rules changed so that all UK express trusts* (with a few exceptions), and some non-UK trusts are required to register with the TRS, whether they are liable to pay the above taxes or not. It’s essentially to make sure that you and the trust comply with anti-money laundering regulations.
*An express trust is one which has been created deliberately. It will have a written Deed of settlement, or Declaration of Trust.
The non-UK trusts that need to be registered include trusts that:
- acquire land or property in the UK
- have at least one trustee resident in the UK and enter into a ‘business relationship in the UK’. This could be with an accountant or solicitor, for example.
When is the deadline?
The deadline for registering a trust without a UK tax liability is 1st September 2022.
After this time the trust will need to be registered in line with the current rules, within 90 days of being set up or within two years of death if a will trust.
All express trusts in existence on 6th October 2020 or created after this date are required to be registered. Trusts created after 3rd June 2022 will have 90 days to register it.
Registering a trust
All trustees are equally legally responsible for the trust, but one ‘lead’ trustee must be nominated to be the main point of contact for HMRC, this is the person registering the trust. The lead trustee’s contact information MUST be kept up to date.
A full list of the details required for registration can be found on the Government website.
If you’re unsure whether you need to register your trust, get in touch with the organisation which put your trust in place.