Non-taxable trusts can now register as required by new rules, and the deadline for registration has been set.

New rules have come into force requiring UK trustees, and some non-UK trustees, to register trust details on HMRC's Trust Registration Service (TRS). There is a deadline for registration of existing non-taxable trusts of 1 September 2022, with other deadlines applying for varying situations. Some trusts are excluded from the need to register (provided no taxable events happen). However there are many trusts including bare trusts (e.g. one person owning a property on behalf of several purchasers) that will need to register for the first time.

Our trust team can assist with any queries and registrations that are needed.

The background

Trustees have since 2017 been under obligations to register details of new trusts with tax to report on the TRS (the HMRC portal). For trusts with income or capital gains to report in a tax year they needed to be registered by 5th October following the end of the tax year. For trusts with Inheritance Tax or Stamp Duty Land Tax (and other Stamp Duty taxes) to report the deadline was 31 January following the end of the tax year. If both applied then the earlier deadline prevailed. Various details of the trust assets needed to be reported, together with details of the settlor, trustees and beneficiaries (and possibly others).

Trustees were also placed under an obligation to keep written records of fairly wide details of the potential beneficial owners of the trust and also, for example, of the advisors to the trust. This requirement continues for a period after the trust ends.

New provisions – non-taxable trusts need to register

Since 6 October 2020 new rules have applied such that express UK trusts, and some express non-UK trusts, now have to register even if there is no tax due nor return to submit. When there are subsequent taxable events or trust details change then the TRS needs to be updated and in some cases new information provided. These provisions are required so that the UK can comply with its international money-laundering obligations. 

Deadlines

The main issue recently has been that the TRS did not have the facility for this reporting to happen for non-taxable trusts. Since the beginning of September 2021 this has been resolved. The relevant deadlines are now that:

  • non-taxable trusts existing on or after 6 October 2020 must be registered by 1 September 2022
  • non-taxable trusts created after 1 September 2022 must be registered within 90 days
  • changes to trust details must be registered within 90 days; and
  • if the trust has tax liabilities then the same deadline as currently exist (as noted above) still apply

Which trusts?

The requirements are for express (i.e. written) trusts to register. Subject to exemptions (noted below) this is the case for all UK trusts. For non-UK trusts it is those with significant links to the UK after 6 October 2020 that need to register. Those links are that they either purchase UK land or have a business relationship with someone in the UK, for example their trust accounts are completed here. If there is a taxable event in an unregistered trust (express, exempted or otherwise) then they need to register regardless of whether they are required to do so under these rules.

Exemptions

The following is a list of the principal types of trusts that are exempted from the need to register: charities, pensions, some will trusts (generally if less than two years old or that do not have assets transferred to them), bank accounts held for a child, life insurance or personal injury trusts (however subject to certain limits), some jointly held property, and pilot trusts that hold less than £100 and were set up before 6 October 2020 (and do not have further assets added). It will be noted that there is no general exemption for bare trusts.

What to do?

A thorough review will be needed of any existing trusts that are not already registered. Unless the trust falls within the limited exemptions then there will be a need for registration before the deadline. Going forward regular reviews will be needed to make sure that any changes are reported accordingly.