Trust Registration Service
Who does it affect?
Rules were introduced on 6 October 2020 extending the scope of trust registration with TRS to all UK express trusts and some non-UK trusts regardless of whether the trust pays tax.
Trusts that may be required to register on the TRS are:
a) All UK express trusts, whenever established with no backstop date, provided that they are/were in existence on or after 6 October 2020.
b) Non-UK express trusts that acquire an interest in land in the UK (including leases of more than seven years) on or after 6 October 2020.
c) Non-UK express trusts that have at least one trustee resident in the UK and which have entered / enter into a business relationship on or after 6 October 2020 with a relevant person in the UK.
There are some limited exceptions in the legislation.
What trusts need to be registered?
Though this is not an exhaustive list, examples of trusts that need to be registered are:
- An express trust written in a deed or will or declaration of trust.
- A trust to hold assets for a child when they attain 18.
- A co-ownership trust. If the legal and beneficial owners of a property differ, then the trust must be registered. For example: a property is owned by Mr Jones, but he and Mrs Jones have signed a declaration of trust stating that they hold the beneficial interest in the property (and therefore the income generated by the property) on trust for themselves jointly. Mrs Jones’s name is not on the legal title, but she has a beneficial interest.
- A discretionary trust where the trustees have discretion to make decisions about how to use the capital and income of the trust.
- Interest in possession trust. For example, if a person has a right to live in a property for their lifetime.
- Pilot trusts. A trust set up with a nominal amount but with the intention that further assets will be transferred to it at a later date or following death.
- Executors of an estate might need to register the estate if the administration is ongoing two years after the date of death
Deadlines for registration
Where it is necessary for trustees to register under the TRS, the following deadlines apply:
- Non-taxable trusts created before 4th June 2022 – on or before 1 September 2022.
- Trusts created on or after 4 June 2022 – within 90 days of creation.
- The TRS must be updated within 90 days of any changes to details or circumstances of the trust.
HMRC’s guidance indicates that the lead trustee may have to pay a penalty if they fail to register the trust before the registration deadline or fail to notify HMRC of changes to the trust.
Written by Sioned Thomas, RDP Director and Head of Private Client.