New rules for registering trusts came into force in October 2020. Non-taxable trusts in existence on or after 6 October 2020 must be registered by 1 September 2022 (even if they are now closed). Non-taxable trusts created anytime from 90 days before 1 September 2022 must be registered within 90 days of creation. 

There is a legal obligation for trustees to register trusts and HMRC will enforce penalties if trusts are not registered, or details on the register are not kept up to date.

What is the Trust Registration Service?

The Trust Registration Service is a register of the beneficial ownership of trusts. The TRS was set up in 2017 as part of an EU anti-money laundering directive aimed at combatting money laundering. All UK express trusts liable to pay UK tax were required to register.

These require registration of all UK trusts (and some non-UK trusts) in existence on or after 6 October 2020, including those not liable to tax, unless specifically excluded, even where they have since closed. Exclusions include pension schemes; charitable trusts; will trusts wound up within two years of death; policy trusts paying out on death or critical illness, and existing trusts with a value of less than £100 created prior to 6 October 2020. There are further exclusions, and a full list has been published by HMRC. 

Death estates where the administration has continued for more than two years, and complex estates also need to register on the TRS. In estates where there are underlying trusts, the dates for registration vary so it is important to seek advice. 

Who is responsible for registering a trust?

Trustees are responsible for ensuring trusts are registered. Trustees can appoint a lead trustee to do this or an agent, such as a solicitor.

What kind of trusts are affected, and what trusts are excluded?

The following trusts are Registrable Trusts:

Most trusts now need to be registered. Examples of trusts which need to be registered include but are not limited to:

• Express trusts - unless included on the exclusion list provided by HMRC (see below)
• Bare trusts - for example, assets held on behalf of another individual 
• Land/Property where legal owners and beneficial owners are not the same - examples include Declarations of Trust where a married couple completed a Declaration of Trust to split the ownership and income between them. Another example includes parents who have contributed a deposit towards a property purchase for a child which they are to receive back upon any sale.

There are exclusions. According to HMRC’s guidance, you do not need to register your trust if it:

• holds money or assets of a UK registered pension scheme - like an occupational pension scheme
• holds life or retirement policies (as long as the policy only pays out on death, terminal or critical illness or permanent disablement, or to meet the healthcare costs of the person assured)
• holds insurance policy benefits received after the person assured has died (as long as the benefits are paid out from the trust within 2 years of their death)
• is a charitable trust that is registered as a charity in the UK or which is not required to register as a charity
• is a ‘pilot’ trust set up before 6 October 2020 and holds no more than £100 - pilot trusts set up on or after 6 October 2020 need to register
• is a co-ownership trust set up to hold shares of property or other assets which are jointly owned by 2 or more people for themselves as ‘tenants in common’
• is a will trust created by a person’s will and comes into effect when they die (as long as they only hold the estate assets for up to 2 years after the person’s death)
• is for bereaved children under 18, or adults aged 18 to 25, set up under the will (or intestacy) of a deceased parent or the Criminal Injuries Compensation Scheme
• is a ‘financial’ or ‘commercial’ trust created in the course of professional services or business transactions for holding client money or other assets

How to register a trust with the TRS

Registration includes having to provide details about the trust funds, trustees, settlor, and beneficiaries. The trustees are required to maintain accurate and up-to-date trust records and are obliged to keep the register updated each year or on certain specific events occurring. Changes to the trust details or circumstances must be registered within 90 days of the change.

Farmland and farming partnerships

Farming partnerships are likely to be particularly affected by the new rules and a review of how land is held should be undertaken to determine whether there are registrable trusts. If you are in a farming partnership or want to know more about farming business trusts, read more in our article about farmland and farming partnerships.

Get help to register your trust

If you have not yet registered your trust, or are unsure whether your trust needs to be registered, please contact us as soon as possible. The reporting requirements for this new legislation in most cases need to be met by 1 September to avoid late filing penalties. 

Should you require more information or would like to appoint Birkett Long to help register a trust or relevant estate, please contact Chloe Walker on 01206 217350.