Do you need to register your trust?

The Trust Register was introduced in 2017 as part of anti-money laundering regulations. Previously, only trusts with a UK tax liability had to be registered with HMRC; however new rules came into force in October 2020 which expanded the number of trusts which must now be registered.

The new provisions capture an enormous number of trusts and mean that all UK trusts, unless they are specifically exempt, must be registered with HMRC regardless of whether there is a UK tax liability.

These regulations came into force on 6 October 2020 and mean any non-taxable trusts that were in existence on 6 October 2020 must be registered by a specified date, even if they have since been wound up. The registration date has been deferred several times as the registration service was not fully working, but the date has now been fixed for 1 September 2022.

There are a number of different types of trust caught by these provisions. They include trusts set up in Wills, such as life interest trusts and discretionary trusts. Wills can also create trusts that perhaps aren’t obvious; for example, a cash gift to somebody conditional upon reaching a certain age.

It is not only trusts created on death that are subject to these regulations; trusts created during a person’s lifetime and even trusts where the legal owners of a property are different to the beneficial owners, are also caught by these rules.

There are a number of non-taxable excluded trusts and there are specific rules in place for non-UK trusts.

The legal responsibility for registration falls on the trustees, and HMRC may impose penalties for non-compliance with the registration requirements. It is, therefore, very important that trustees understand and fulfil their obligations as trustees in connection with the Trust Registration requirements.

Deadlines

All non-taxable trusts created on or before 6 October 2020 must be registered by 1^st September 2022.

All non-taxable trusts created after 6 October 2020 must register within 90 days of creation or become liable for tax or by 1^st September 2022 (whichever is later).

The deadline for taxable trusts depends on when the trust was created and the tax for which the trust is liable.

If you would like any advice on whether a trust needs to be registered with HMRC and/or if you would like us to deal with the registration for you, don’t hesitate to get in touch with Samantha Tayler in the Private Client team.