All trusts, even those without tax liabilities must now be registered by 1 September 2022.
What’s the Background?
Historically, it has only been a requirement to register a trust with the Trust Registration Service (TRS), in the main, where you have a trust with a tax liability to declare. Therefore, many trusts, such as bare trusts, interest in possession trusts with all income mandated, trusts holding non-income creating investments, and many others did not require any formal registration or have reporting requirements with a governing body.
So what’s changed and why?
The introduction of the 5th Money Laundering Directive (5MLD) has now widened the scope to bring in many other trusts for which registration was previously not mandatory. A TRS registration is required by trusts now captured by the 5MLD.
These new rules have been introduced by the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations to ensure that the UK has an anti-money laundering and counter terrorist financing regime that is up to date, effective and proportionate, giving improved transparency about the ownership of assets held in trusts.
What does it mean for you?
If you have a trust set up for any purpose, which does not already complete an annual Tax Return, then you will likely need to speak with your accountant to get this registered before the deadline.
The main category to be aware of, for Signature Tax products, would be Education Trusts, where as part of this work, a Bare Trust will have been set up to hold shares for Grandchildren. In this case, the Bare Trust will now need to be registered with the TRS.
Broadly the other trusts that need to be registered are:
- all UK express trusts unless they are specifically excluded (see ‘Trusts that do not have to be registered’)
- non-UK express trusts which:
- 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
If the trust needs a Unique Taxpayer Reference (UTR) for Self-Assessment purposes, it must still register to get this, even if it’s highlighted in the exclusion list.
When is the deadline?
Trusts created before 1 September 2022 will generally have to register by that date, they will be given extra time if created within 90 days of the deadline.
These trusts will have 90 days from creation to register. This addresses the problem that a trust created in, for example, August 2022 would have very little time to register if it had to meet the 1 September 2022 deadline.
TRS details must also be kept up to date. Changes to the trust details or beneficial ownership must be registered within 90 days of the date that the trustees become aware of these changes.
Please make sure this deadline is met in order to avoid a fine being levied. If you need clarification as to whether this applies to you, please do not hesitate to contact us on 0333 009 0801.