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Don’t be caught out by HMRC trust registration changes

23 March 2022
James Thomson
Estate Planning / IHT

UK and non-UK trusts arrangements, including some that most may not understand to be trusts (such as bare trusts held for minors), now require trust registration with HMRC.

To avoid penalties many current and ceased trusts now need to be registered and all registered trusts will need to submit annual declarations to confirm all details are up to date. Changes to details of trustees and beneficiaries require updates to be made within 90 days.

The responsibility for registering a trust, making changes to details of trustees or beneficiaries and submitting the annual declarations lies with the trustees. They can however appoint a lead trustee to deal with it or appoint an agent such as their accountant.

Non-taxable trusts need to report details of their settlors, trustees and beneficiaries via the Trust Registration Service (TRS) before 1 September 2022 (or within 90 days of creation if later). Previously only express trusts that incurred a UK tax liability had to register with the TRS, however now all express trusts that are not specifically excluded need to register (unless the trust ceased before 6 October 2020).

Excluded trusts only need to register with the TRS if they have a tax liability (i.e. Income Tax, Capital Gains Tax, Inheritance Tax, or Land/Stamp Duty taxes) and those excluded are:

  • Will trusts created by will on death that hold estate assets up to 2 years after death. If assets are held for longer than two years the trust will need to be registered.
  • Bereaved Minor Trusts and 18-25 trusts.
  • Charitable trusts (including trusts not required to register as UK charities).
  • Trusts holding retirement, health, or life policies that only pay out on disablement, illness, or death (paid within 2 years of death).
  • UK registered pension trusts.
  • Pilot trusts holding up to £100 that were set up before 6 October 2020.
  • Trusts holding assets (e.g. property) jointly owned by tenants in common.
  • Commercial and financial trusts for holding funds or assets of clients of businesses.
  • Trusts needed to open a bank account for a child.
  • Non-express trusts created by legislations or imposed by courts, such as trusts set up under the intestacy laws or via a court order.
  • Trusts holding leasehold tenants’ service charge contributions.

Regardless of the above, if a trust is taxable it will need to be registered with both the TRS and for Self-Assessment before the 31 January Tax Return deadline for the first tax year with a tax liability (or by 5 October if not registered with Self-Assessment when the tax liability is for Income Tax or Capital Gains Tax).

If you are a client of Friend & Grant, believe you may be involved with a trust that needs to be registered with the TRS and would like our assistance with this or the annual declarations, then please contact Jan Friend or James Thomson who will tell you what is involved and provide you with a quote for the work.

The content in this blog is correct as at 22 March 2022 See terms and conditions.

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