Trust Registration Deadline Looms for Trustees
Registering a Trust
On 1st September 2022 many will be caught unaware that the law is changing regarding registering trusts. Taxable trusts in the UK have been required to be registered for a few years now, however what most people won’t be aware of is that a new deadline now looms. From 1 September it will be compulsory to register most other types of trusts in the UK and those that don’t could face penalties.
Now all existing trusts within the scope of the new legislation will need to be registered by the 1st September, or within 90 days of the trust being set up – whichever is the latter.
Which trusts does this apply to?
This applies to all express trusts existing on or after the 6th October 2020 unless they are exempt. This means that all UK trusts (and some non-UK Trusts), will now require registration on the Trust Registration Service even if they are now closed. An express trust is any trust created intentionally, with or without deed. For example, a Will which holds money on trust for someone until they reach a certain age. The Trust Registration Service (TRS) is an online register of trusts operated by HMRC. Registration is completely free if you do this process by yourself.
Exemptions from registering a Trust
Trusts that are exempt do not need to register, unless liable for UK tax, include:
- Trusts created in a commercial transaction;
- Co-ownership trusts where the legal and beneficial owners are the same persons;
- UK Charitable Trusts;
- Trusts holding assets for registered pension schemes, and those holding death benefit payments made within two years of the date of death;
- Trusts made under a court order, or imposed by intestacy rules;
- Trusts created by Wills and wound up within two years of the date of death;
- Trusts set up before 6th October 2020 and holding less than £100.
What does a trustee need to do?
It is the responsibility of the trustees to ensure the trust is registered online by the deadline, and where there is more than one trustee only one ‘lead’, i.e. someone who the trustees collectively agree to be HMRC’s point of contact, can then register the trust.
There is also an obligation placed on the trustee to keep records of information that must be recorded on the register. If you aren’t sure whether you are a trustee, or if you are unsure whether a trust needs registering, it is recommended that you seek professional guidance.
Trustees will need information such as names, dates of birth, national insurance numbers and addresses etc. of the trustees, settlors if appropriate. Trustees should also be aware that this is an ongoing duty so if the information changes, they have 90 days from becoming aware of the change to update the register.
What will the penalties be if I don’t register in time?
HMRC latest update confirmed that they will not issue penalties for a first failure or late registration unless the failure is shown to be due to deliberate behaviour. They would issue warning letters due to this being a new obligation on many trustees. Reports indicate that if a penalty is issued it will likely be a £100 penalty but can be up to £5,000 for failure to register or update the TRS details within the relevant time period therefore it is important that you review all trusts and ensure that you are following the procedure set out for registration.