With the aim of improving transparency surrounding trusts and in particular the beneficial ownership of those assets held within a trust, the Trust Registration Service (TRS) was born in June 2017.
The TRS is an online website created by HMRC which requires trustees to provide details of the trusts settlor, trustees and beneficiaries along with the tax residence of the trust and the assets it holds.
As a recap, initially not all trusts were required to participate and register, only trusts with UK tax liabilities namely Capital Gains Tax, Income Tax, Inheritance Tax, Stamp Duty Land Tax, and Stamp Duty Reserve Tax were required to register with the TRS, commit to keeping the details up to date and annually make a declaration.
The deadline for registering a taxable trust in existence before 6 April 2021 is by 5 October in the tax year after the one in which the trust starts to receive any income or has capital gains, and becomes liable for Income Tax or Capital Gains Tax. For example, if your trust received bank interest for the first time in May 2019 (being the 2019/20 tax year) and became liable to Income Tax on it, the trustees would have needed to register by 5 October 2020.
Taxable trusts that are created on or after 6 April 2021 must be registered within 90 days of the trust becoming liable for tax or by 1 September 2022 (whichever is later).
New trusts
As expected, the TRS has evolved and is being rolled out to include the majority of non-tax paying trusts. The only trusts that are specifically excluded from the requirement to register include but are not limited to:-
- Trusts imposed by legislation or court order.
- Estates (apart from registrable complex estates) and trusts created on death that are only in existence for a period of two years from the date of death.
- Charitable trusts.
- Trusts where a disabled person is the beneficiary.
For non-taxable trusts in existence on 6 October 2020, the deadline by which the trust needs to be registered is 1 September 2022. Trusts created after this date are required to register by the later of 90 days from creation or 1 September 2022.
Maintaining and updating the trust records on the TRS
Even if the trust details remain the same, the trustees will still be required to submit an annual declaration to confirm the details held on HMRC’s record are accurate and up to date. From 2022 onwards, updates will be necessary each time there are changes to the beneficial ownership information, such as trustees or beneficiaries. Trustees will have 90 days from the date a change to update any relevant information on the Trust Register.
The penalties on late registration/annual declaration
Where a trust is not registered prior to the deadline, HMRC has indicated they will send a letter to the trustees to remind them of the duty to register. If the trustees do not comply, a financial penalty will be issued to the trustees.
Next steps
We can help Trustees to understand their likely obligations under the new and existing rules. Get in touch with one of our tax team to discuss how we assist you with the registration process and ensure you are compliant going forward.
Kate Thorburn is Private Client Tax Manager and an expert in Trusts, and can help with your personal tax-related queries, please feel free to call 01242 776000 or email tax@randall-payne.co.uk.
