As part of HMRC’s digital strategy, the trust registration service (TRS) was introduced in 2017 requiring the registration of most express trusts with a ‘UK tax consequence’. Trusts with a UK income tax, capital gains tax, inheritance tax or stamp duty land tax liability were all required to register under the TRS.
From 6 October 2020, the scope of trusts required to register was extended to include all UK express trusts (and certain non-EU resident trusts) regardless of whether they have a UK income tax liability or not. There are a limited number of exclusions specified under the revised legislation which does provide a ‘get out of jail free card’ to some trusts, but a huge number of additional trusts will now need to comply.
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The extension to all UK express trusts is quite far reaching as most UK trusts are express trusts. An express trust is defined as one which was ‘intentionally created’.
Broadly, trusts already in existence will have until 1 September 2022 to register under the TRS. All new express trusts created on or after 3 June 2022 will have 90 days to register. This is a welcome extension to the original 30-day timescale proposed.
The exclusions
As mentioned above, a trust does not need to be registered if it meets one of the specified exclusions which includes:
- Co-ownership trusts – for example jointly held property where the trustees and beneficiaries are the same persons as ‘tenants in common’.
- Trusts created by will – a trust created by will that holds only property from a deceased person's estate is excluded from registration for a period of two years from the date of death.
- Historic pilot trusts – includes pilot trusts in existence before 6 October 2020 with assets of less than £100. If the trust is set up after this date, or further funds are added to an existing pilot trust, they will need to be registered.
- Life policy trusts – life policies written in trust may be excluded from registration during the lifetime of the person assured.
If the trust is an express trust and has incurred a tax liability, it will be required to register regardless of whether it meets one of the above exclusions or not.
Bare trusts are not specifically excluded and they would typically meet the definition of an express trust, therefore, unless they fall under one of the specified exclusions, they would be required to register under the new rules.
How to register
In order to register, the trust will need to set up a government gateway account online. When doing so (if the trust does not already have an account) you will need to ensure that you set up an ‘organisation account’. You will then need to answer some questions about the trust and, following this, you should receive confirmation that you have successfully ‘claimed’ the trust. You will then be able to access the TRS using your government gateway details or can pass on details to your agent who can assist with the registration.
Given that the trust no longer must have incurred a UK tax liability to be registrable, your professional advisor may not be readily aware that you have a registration obligation. Please get in touch with us if you would like clarification on whether a trust may need to be registered and/or if you require any assistance with the registration process.