Important Changes to the HMRC Trust Registration Service
From 1st September 2022, most trusts will need to be registered with HM Revenue and Customs (HMRC), even if they are not liable for UK taxes. Previously, only those trusts liable for things like Capital Gains Tax or Inheritance Tax needed to be registered. The changes have been brought in to reduce the risk of money laundering and the funding of terrorist and other criminal activity.
Don’t delay, as a failure by Trustees to register a trust on time could incur a penalty.
Which trusts have no tax liability?
According to the HMRC website, trusts that have no tax liability include:
- all UK express trusts — unless they are specifically excluded
- non-UK express trusts, such as trusts that:
- acquire land or property in the UK
- have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK
What are the specific exclusions?
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 be registered
- 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
When do I need to register my trust with HMRC?
Non-taxable trusts that were created on or before 6th October 2020 need to be registered with HMRC on or before 1st September 2022. Those that were created after 6th October 2020 need to be registered within 90 days of them being created, or on or before 1st September 2022 (whichever is later).
The registration deadline for taxable trusts depends on:
- When the trust was created
- The tax the trust is liable for
- If it has been liable for Income Tax or Capital Gains Tax before
More guidance on the registration details for taxable trusts can be found online from HMRC.
You can either register the trust yourself online for free. You’ll need:
- the name of the trust
- the date the trust was created
- to say if the trust is an express trust or not
- details about whether a non-UK trust has a business relationship in the UK
- details about any UK land or property the trust has purchased
These details should be in the trust deed and any correspondence that the trust has had with HMRC.
Otherwise, you may ask a financial adviser, accountant or tax specialist to deal with the registration for you. We can supply a list of recommendations for companies who can help with this, if required.
Please note that if you do not register the trust on time, you may receive a notification letter reminding you of your obligation to keep the register up to date. If you do not keep the register up to date, you may be charged a penalty.