Calling all Trustees – HMRC Trust Registration Service

by Robin Beadle

The HMRC Trust Registration Service (TRS) has now been in existence since 2017 but until now has largely been concerning itself with those trusts that have a tax liability. From the autumn of 2021, however, the TRS will be extended to all express trusts (with few exceptions) even if there is no tax liability or other reporting requirement. (This will also include non-UK resident trusts if they hold UK land or property).  If a non-tax paying trust has not already registered, it will have 12 months from the date that the online system goes live (September 2021) in which to do so.

Unless your trust, settlement or arrangement falls into one of the very few exclusions below, you will need to consider registration. The current list of exclusions from the new registration requirement only includes:

  • Co-ownership trusts where assets are held as “tenants-in-common”;
  • Trusts created from a person’s Will – provided that all assets are paid out within 2 years of death;
  • “Pilot” trusts of less than £100 in value which were created before 6 October 2020;
  • Trusts for bereaved children under age 18 or young adults under age 25 created by the parent’s Will or intestacy or by the Criminal Injuries Compensation Scheme.

Additionally, most pension scheme; retirement annuity; charitable trusts and most life policies held on trust are exempt from the new requirements, as are funds held as part of a “commercial” business transaction for brief periods (eg under Escrow).

Remember if the trust has had a tax liability (or is expecting one imminently), it should already be recorded on the TRS.

Most commonly, the new registration rules will affect Will Trusts whereby one spouse left assets in trust for the survivor’s use as part of standard Will planning made prior to Gordon Brown’s changes in 2006. Trusts created as part of divorce planning (for example to allow one party the use of an asset but ensuring that ultimate ownership passes to, say, children) are also caught. Indeed, the new rules will require registration of something as simple as a Bare Trust.

Registration must be done online either by the trustees or their agents and once completed, there is a legal responsibility to keep the TRS up to date.

 

Author

Robin Beadle

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