Take Action on Trusts!

Since 2017, all trusts with a tax liability have needed to be registered with HMRC through the Trust Registration Service (“TRS”). New regulations implementing the Fifth Money Laundering Directive came into force on 6 October 2020 which now requires most non-taxable UK trusts to register on the TRS.

s this extended the scope of registration to the large majority of existing UK trusts, the TRS functionality needed to be developed. Due to this it has only been since last month that HMRC confirmed that the TRS was open for non-taxable trusts to register. The deadline dates for registration are:

• Non-taxable trusts in existence on or after 6 October 2020 must be registered by 1st September 2022.
• Non-taxable trusts created after July 2022 must be registered within 90 days.
• Taxable trusts created on or after 6th April 20201 must be registered within 90 days of the trust becoming liable for tax or by 1st September 2022 (whichever is the later).
• Taxable trusts created before 6th April 2021 which require a UTR for Income Tax and/or Capital Gains Tax purposes must be registered by 5th October in the tax year following the liability.
• Taxable trusts created before 6th April 2021 which do not require a UTR must be registered by 31st January in the tax year following the liability.

Following the initial TRS registration, HMRC expect the trustees to maintain the trust’s details and ensure the details held on the TRS are up to date. The normal updates/amendments which may be required are:

• Any changes to the details for the trustees, beneficiaries, settlor, or any other individuals connected to the trust, need to be reported on the TRS by 1st September 2022 or within 90 days (whichever is the later).
• If a trust is liable to tax for any tax year, then taxable trusts will need to carry out an annual declaration by 31st January following the end of the tax year. The annual declaration either needs to update details held about the trust or declare the details within the trust are up to date.
• If the trust is wound up, then the trustees will need to close the trust on the TRS. It is not sufficient to only state on the trust’s tax return that the trust has come to an end. The trustees must use the TRS service to update the register, confirm the details on the TRS are up to date and input the date the trust ended.
• Where the trust was initially registered as non-taxable and has since become a taxable trust you must again notify this change on the TRS.

There are some exclusions to the registration rules and there is a summary of the most common exclusions below:

Taxable Trusts:

• Where income tax is payable but is less than £100 and the only income is savings interest
• It is a bare trust

Non-Taxable Trusts:

• The trust is for a UK registered pension scheme
• The trust is to hold life or retirement policies which only pay out on death, terminal or critical illness.
• The trust is a registered charitable trust.
• The trust is set up under a person’s will for their children under the age of 18 or for aged 18-25.

This is a general summary of the TRS provisions and how the new regulations have significantly widened the registration scope for trusts. This is not a complete guide to all the rules and exclusions as they are extensive. Therefore, if you are a trustee and are unsure whether the TRS registration applies to your trust and the information which needs to be registered, please do contact the Estate Planning Team on 03456 381381 or email us at estatemanagement@ibblaw.co.uk.