Trust in the system

Are you a Trustee? If so, you may be required to register the Trust with HMRC’s Trust Registration Service (TRS).

The requirement to register a Trust has been extended to apply not only to taxable Trusts but to include, with some specific exclusions, non-taxable express Trusts (i.e. intentionally created Trusts).  Examples might include Discretionary Trusts, Will Trusts after two years from the date of death, Interest In Possession Trusts or Life Interest Trusts, Taxable Disabled Persons Trusts and Pilot Trusts holding more than £100.

Some Trusts that are not express Trusts may not be required to register with the TRS as registerable express trusts, but may instead be caught by the requirement to register for taxable purposes if they have a UK tax liability.

The change to the rules has been implemented as part of ongoing compliance with money laundering directives.

So as a Trustee, when do I need to take action? 

This rather depends on the type of Trust, when the Trust was created, whether the Trust is taxable and if so, what tax applies and when the liability arose. 

For registerable taxable Trusts the rules are well established and unchanged. Registration must be completed by 31 January following the end of the tax year in which the Trust had a liability to UK taxation. Trusts that are liable for Income Tax or Capital Gains Tax for the first time should register by a different deadline, namely 5th October in the tax year after the one in which the Trust starts to receive any income or has chargeable gains. If more than one tax deadline applies then it is the earlier of the two deadlines that must be met.

Under the new rules, the registration deadline is 01 September 2022 for registerable non-taxable trusts that existed on or after 06 October 2020. Registration of non-taxable trusts created after 06 October 2020 must take place within 90 days of the date they were created or became registrable, or by 01 September 2022 (whichever date is later).

For new registrable non-taxable trusts created after 01 September 2022, there will be a 90-day window from the date the Trust was registered in which to register.

Any changes to taxable and non-taxable trusts, whether this be to the Trust details or beneficial ownership, must now be reported to HMRC within 90 days of the change using the TRS system. A Trustee is also required to declare the Trust is up to date on an annual basis by 31 January each year.

As is to be expected, the rules are detailed and quite nuanced and so it is important to be clear about how they apply to you. The good news is that there is time in which to get up to speed with what’s required, and to take necessary action. But don’t leave it too late, as penalties will apply.

If you are a trustee and want to find out more about how the changes impact your Trust, or if you want assistance in registering the Trust, talk to our Private Client team on 01264 353411 or at probate@bsandi.co.uk. We will be able to help you understand your obligations under the new rules, and support you in carrying out your role.