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Insight

Update on the Trust Registration Service

Insight 29 July 2022

Update on the Trust Registration Service

Background

The introduction of the 5th Money Laundering Directive (the “5MLD”) in October 2020 introduced the requirement for all trusts to register with the HMRC’s Trust Registration Service (“TRS”).

Up until then, most UK and non-UK tax resident trusts with a UK tax liability (e.g. capital gains tax, income tax or stamp duty reserve tax) already were under the obligations to register with the TRS. As a result, the above changes involve the majority of non-taxable trusts.

  • UK resident express trusts
  • Non-UK express trusts with at least one trustee resident in the UK where the trustees:
    • acquire UK land (on or after 6 October 2020), or
    • enter into a business relationship with a UK relevant person[1]
  • Non-UK resident express trusts with no trustees resident in the UK where the trustees:
    • acquire UK land (on or after 6 October 2020)
  • Non-express trusts and specifically excluded express trusts which have a UK tax liability

Express trusts are trusts created deliberately by a settlor, irrespective of whether its trustees incur a UK tax liability.

Exclusions

HMRC provided a long list of exclusions for trusts which would not require registration with the TRS. Below is a non-exhaustive list[2]:

  • Charitable trusts
  • Employee share scheme trusts[3]
  • UK registered pension trusts[4]
  • Trusts used by government and other UK public authorities
  • Unit trusts (both authorised and unauthorised)
  • Co-ownership trusts where the trustees and beneficiaries are the same persons
  • Trusts registered on a European Economic Area (EEA) register[5]

[1] e.g. credit or financial institutions, auditors, estate agents or legal professionals.

[2] Full list available on https://www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm23000

[3] Such trust would either need to be:

  • The plan trust of a Share Incentive Plan that meets the requirements of Part 9 of Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003.

  • A trust created under a share option scheme that meets the requirements of Parts 2 to 7 of Schedule 3 to the Income Tax (Earnings and Pensions Act 2003.

  • Thre is no specific exclusion from registration of an employee benefit trust (“EBT”) and so in general these should be registered, however, depending on the circumstances of the EBT, one or more exclusions from registration may apply.

[4] Unregistered pension arrangements setup under a trust are within the scope of the Fifth Money Laundry Directive.

[5] This exclusion does not apply if the trust is a non-UK trust with no UK trustees where the trustees acquire UK land.

Scope

Deadline

Non-taxable trusts in existence on or after 6 October 2020

1 September 2022

Registrable taxable trusts

31 January (or 5 October in some cases) following the end of the tax year in which the trust had a UK tax liability

Non-taxable trusts created after 1 September 2022

Within 90 days of creation

Changes to the trust details or circumstances

Within 90 days of the change

HMRC has confirmed that non-taxable trusts set up on or after 6 October 2020 but ceased before 1 September 2021 will need to register on the TRS, before immediately closing the record. HMRC added it will take a proportionate approach with trusts that do not meet the 1 September 2022 registration deadline.

Trusts

The following information is needed for both taxable and non-taxable trusts.

  • name of the trust
  • date the trust was created
  • state if the trust is an express trust or not
  • details about whether a non-UK trust has a business relationship in the UK[6]
  • details about any UK land or property the trust has purchased
  • Whether all or some of the trustees based in the UK
  • Whether any of the settlors are based in the UK
Lead trustees

All trustees are equally legally responsible for the trust, but you must nominate one ‘lead’ trustee to be the main point of contact for HMRC. The lead trustee will receive the trust’s UTR if registering a taxable trust and a Unique Reference Number (URN) if registering a non-taxable trust.

Individuals:Organisations:
  • Full name
  • Date of birth
  • National insurance number and address (if a UK citizen, passport details and address if not a UK citizen)
  • Address, email address and telephone number
  • Country of residence
  • Country of nationality
  • Mental capacity
  • organisation name
  • organisation UTR (if the business is registered in the UK)
  • Address, email address and telephone number
  • country of residence

Settlors

Individuals:

Organisations:
  • Full name
  • Date of birth
  • Date of death
  • Country of nationality
  • Country of residence
  • Mental capacity
  • Business name
  • Country of residence

Beneficiaries
Individuals:

Class of beneficiaries:

Charities or trusts:

Companies or employment related:

Other beneficiaries:

 

  • Full name
  • Date of birth
  • Country of nationality
  • Country of residence
  • Mental capacity
  • Description of the class of beneficiaries
  • Name of charity or trust
  • Country of residence
  • Name of the company or business
  • Country of residence
  • Description of beneficiaries
  • Description of the beneficiary
  • Country of residence

[6] only relevant if the trust is a non-UK trust with at least one UK-resident trustee. This question is only asked if the trust has non-UK trustees, or a mix of UK and non-UK trustees and a non-UK settlor.

  • Reporting a controlling interest in a non-EEA entity: Trustees of registrable UK express trusts and of registerable non-UK express trusts with at least one UK resident trustee are required to tell HMRC when they hold a controlling interest in a third country (i.e., outside the UK and EEA) entity.
  • Individuals or businesses who have control over the trust: HMRC will also require details on any person who has a control over the trust. Control here is defined by having the power to:
    • Dispose of, advance, lend, invest, pay or apply trust property
    • Vary or terminate the trust
    • Add or remove a person as a beneficiary, or to or from a class of beneficiaries
    • Appoint or remove trustees or give another individual control over the trust
    • Direct, withhold consent to or veto the exercise of the powers of the settlors, trustees or beneficiaries.
  • Trusts liable to income tax or capital gains tax: confirmation via the trust’s self-assessment return SA900 by 31 January each year that:
    • Details on the trust register have been updated, or
    • There have been no changes to the trust’s details.
  • Trusts not liable to tax: no annual declarations needed.

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Reach out to Paul, Sandra, Lisa, Joe and Mark directly to find out how Sanne can assist you or your business.

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