HMRC Trusts Register – new rules

You may have heard about the Trusts Register (TRS), which was introduced in 2017 and requires trustees who pay Income Tax, Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax and Stamp Duty Reserve Tax to register their trust online. For those trustees without tax liabilities, no registration has previously been required. However, under the new rules, more trusts will need to register.

New rules

New rules were introduced on 6 October 2020 as part of the UK’s implementation of the EU Fifth Anti-Money Laundering Directive, to make sure that the UK’s anti-money laundering and counter-terrorism regime is current, proportionate and transparent. This extended the scope of the register to all UK and some non-UK trusts, whether or not the trust has to pay any tax, but with some exclusions.

The deadline for registration was originally stated as 10 March 2022, with financial and criminal penalties for failing to register on time. However, HM Revenue & Customs have stated that they won’t meet the March 2021 target for upgrading the TRS, in order to allow non-taxable trusts to register. As a result, it intends to defer the current 10 March 2022 registration deadline. No information has been given as to any new deadline.

Trusts that will need to be registered under the new rules

• All UK express trusts must be registered unless they’ve been specifically excluded.
• All non-UK express trusts which have at least one UK trustee when the trustees enter into a business relationship with an obliged entity, such as an accountant or tax adviser, or have no UK trustees but acquire UK land or property.
• An express trust is simply a trust that is created on purpose, and not imposed by a court.

Trusts which are specifically excluded include:

• Trusts used to hold money or assets of a UK registered pension scheme, such as an occupational pension scheme.
• Trusts used to hold a life insurance policy, income protection policy, or retirement benefits if the policy only pays out on death, terminal illness or permanent disablement, or to meet the healthcare costs of the person assured and does not have a surrender value.
• Trusts holding insurance policy benefits, providing the benefits are paid out within two years of the death of the person assured.
• Charitable trusts which are registered as a charity in the UK or which are not required to register as a charity (for example, schools, museums, galleries, churches and certain groups).
• ‘Pilot’ trusts which were set up before 6 October 2020 for a future use and which hold no more than £100.
• Co-ownership trusts set up to hold shares of property or other assets which are jointly owned by two or more people for themselves as ‘tenants in common.’
• Will trusts which are created by a person’s will and come into effect on their death, providing they only hold the estate assets for up to two years after the person’s death.
• Trusts for bereaved children under the age of 18 or adults aged 18-25 years, set up under the will (or intestacy) of a deceased parent or the Criminal Injuries Compensation Scheme.
• ‘Financial’ or ‘commercial’ trusts created in the course of professional services or business transactions for holding client money or other assets.

Need help?

Many trustees find they don’t have the confidence or the time to deal directly with HMRC. If this is true in your case, we can deal with the TRS registration for you, if you think you ought to have registered already or might need to in the future.

If you have any questions regarding the Trusts Register (TRS), please speak to your usual contact. You can find contact details on the Our People section of our website. Alternatively, call 0330 024 0888 or email enquiry@larking-gowen.co.uk

Cindy Chaplin