From 1st September 2022, it was mandatory for all eligible trusts in the UK to be registered with HMRC's Trust Registration Service.
What is a trust?
A trust is an arrangement in which a person (known as a Trustee) holds or ‘looks after’ assets (often property or money) for others (known as Beneficiaries).
What is the Trust Registration Service?
The Trust Registration Service (TRS) is an online register managed by HMRC and which records trusts and their beneficial owners in the UK.
Why do I need to register my trust with HMRC?
The Trust Registration Service was set up in 2017 as part of an anti-money laundering directive. Many UK Trusts must be registered to satisfy the requirements of The Money Laundering and Terrorist Financing (Amendment) Regulations 2019.
In October 2020, new rules came into force that stipulated non-taxable trusts in existence on/after 6 October 2020 must be registered with HMRC by 1st September 2022, unless exempt from registration. Those trusts exempt from registration are very limited.
What is an express trust?
An express trust is a trust that is usually written in the form of a deed or writing (though does not have to be) and there has been a clear intention to set the trust up.
There must be three certainties:
An express trust may be created, for example, by:
What is a bare trust?
Bare trusts are usually where assets are held in the name of the trustee for a beneficiary. In general, bare trusts are often used for children (those under 18). For example, a parent may hold a sum of money or an investment for the child until they reach the age of 18. Bare trusts may also be express trusts.
Do I need to register my trust with HMRC?
All relevant trusts need to be registered, unless exempt. This includes UK express trusts. This includes all taxable and many non-taxable trusts.
Any non-express UK trusts that include the acquisition of property or land or have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK must be registered.
If the trust is not resident in the UK, you must register it if it becomes liable for tax from UK assets.
If the trust has a tax liability and is covered by a relief, the trust needs to be registered. Then, any relief can be claimed through Self Assessment returns.
If you are unsure whether your trust needs to be registered, you should seek advice from a specialist solicitor or financial adviser. Please get in touch with us if you require advice about registering your trust.
What is the Trust Registration Service deadline in the UK?
The deadlines for the Trust Registration service in the UK are:
What is the cost of trust registration?
There is no cost to register a Trust in the UK. HMRC do not charge for the Trust Registration Service. This is a free online process.
If you require assistance with registration from a lawyer or professional advisor, it is likely they will charge a fee for this service.
At stevensdrake, we charge a modest fee for assisting clients with the Trust Registration service. Please get in touch to find out more about our fees for this service.
What are the penalties if I have not registered a trust by the deadline?
If you have deliberately not registered your trust by the deadline, then you may face penalty fines.
HMRC released the following guidance on 17 May 2021, and which was updated on 2 August:
In recognition of the fact that the registration requirement is a new and unfamiliar obligation for many trustees, there will be no penalty for a first offence of failure to register or late registration of a trust unless that failure is shown to be due to deliberate behaviour on the part of the trustees.
Where failures to register are due to deliberate behaviour on the part of the trustees, a £5000 penalty may be charged per offence.
How can a Lawyer help me register a trust with HMRC?
Lawyers and other professional advisors can register a trust with HMRC on your behalf. This may be useful if you are unsure about the circumstances and eligibility of your trust. It may also be useful if you do not have the time or resources to register your trust yourself.
We would be pleased to assist you with registering your trust with HMRC. Please contact us by telephone on 01293 596900 or by email firstname.lastname@example.org if you require advice and guidance on the Trust Registration Service. We look forward to hearing from you.