‘Put not your trust in money, put your money in trust’, Oliver Wendell Holmes, Sr. once said, but is this still the case with the introduction of the HMRC Trust Registration Service?
Trusts can be complicated and time-consuming at the best of times, so if you have money or assets placed in a trust, or you’re a trustee, you’ll need to know about the Trust Registration Service and some of the recent changes.
What is the Trust Registration Service?
In the past, to register a trust, HMRC requested the completion of a paper 41G (Trust) Form. However, catching up with the digital age, trusts should now register with HMRC through the online Trust Registration Service.
In June 2017, the HMRC Trust Register came into effect following the 4th Anti-Money Laundering Directive (4MLD). The Trust Register is an online service established to improve transparency around the ownership of assets held in trusts. From this point, trustees had to provide details of their trust, including information about the settlor(s), the trustee(s), and potential beneficiaries for any taxable trusts.
But, from 6th October 2020, as part of the UK’s implementation of the 5th Money Laundering Directive (5MLD), the registration requirement was extended to express trusts, even if they didn’t have a tax liability.
Since 1st September 2021, the Trust Registration Service is now available online for all types of trusts, so let’s look at who needs to register and how you go about doing it.
Who needs to register, and by when?
Following the introduction of 5MLD, there are two types of trust that an agent or trustee must register online:
- Taxable trusts (any trust subject to UK tax, such as income tax, capital gains tax, inheritance tax, stamp duty land tax, stamp duty reserve tax, land and buildings transaction tax (Scotland), land transaction tax (Wales))
- Express trusts (those created by a written deed, such as a gift, loan or discounted gift trust) even if there isn’t a tax liability.
Express trusts that do not need to register (unless they are liable to pay UK tax) include:
- Charitable trusts
- Registered pension schemes
- Protection policies
- Historic ‘pilot’ trusts set up before 6 October 2020, which hold less than £100
- Bereaved minor trusts or 18-25 trusts
- Personal injury trusts
- Disabled trusts
- Statutory trusts (intestacy)
- Bare trusts
The Trust Registration Service has been around for a while, and taxable trusts have always needed to be registered, but with the introduction of 5MLD, express trusts, even if there wasn’t a tax liability, also need to be added. So, if you hold assets or money in a trust, and you’re not part of the exclusions list outlined above, you will need to register your trust by the following dates:
- All existing non-taxable trusts in existence on 6th October 2020 by the 1st September 2022
- All new non-taxable trusts created after 6th October 2020 within 90 days of creation or by 1st September 2022 (whichever is later)
- The registration deadline depends on the creation date, when a tax liability arises, and if it’s been liable to tax before. More details on this can be found here.
And the Trust Registration Service must also be used to:
- Update the details held about the trust
- Declare the details held within the trust are up to date – this is an annual requirement
- Close a trust
- Get proof of registration
Changes to an existing registered trust must be made within 90 days of becoming aware of the change.
Unfortunately, if you fail to register or update the trust information by the above deadlines, then there are penalties of:
- £100 if three months late
- £200 if three to six months after the deadline
- £300 or 5% of the total tax liability in the relevant year (whichever is higher) if over six months late
Penalties aren’t automatic, and each case will be considered, and there is the chance to appeal any charges.
How to register a trust as a trustee
So to ensure you don’t get stung with a penalty, here are the next steps you need to take to register your trust:
- Set up an Organisation Government Gateway account
Follow the link here to manage your trusts registration service and click ‘start now’ at the bottom of the page. If the trustees don’t have a Government Gateway account, they will need to set one up or enter the details to log in.
You’ll need an email address and your full name to register.
- What details you need to register
You will need to register trust details, including name, type, establishment date, the settlor, trustees and other parties exercising control. The beneficiaries or potential beneficiaries, and the trust assets, including market valuation, the date of any settlements and the address of any property held.
- After you’ve registered
The lead trustee will receive a Unique Tax Reference (UTR) within 15 days from HMRC for taxable trusts or a URN for non-taxable trusts.
- Authorising an agent
You can also authorise an agent to act on the trust’s behalf and maintain the trust online for you. There’s a handy step-by-step guide here if this is something you would be interested in doing.
Trusts can be very complicated to understand and administer, not to mention costly should you get it wrong, so, if you have any questions or would like to discuss the trust registration service changes, please don’t hesitate to get in touch and speak to one of our independent financial planners.