The UK Trust Registration Service (TRS) came into being in 2017 as part of the UK implementing an EU anti-money laundering directive. Each EU member state has a similar register. The UK agreed to maintain the TRS as part of the Brexit Withdrawal Agreement entered into with the EU.
The TRS was designed to provide a single point of access for trustees and their agents to register trusts and once registered, update any changes in their details online.
Originally, only trusts deliberately created and which incurred certain UK tax liabilities were required to register. On 2 September 2021, the UK Government announced that certain other trusts would be required to register and set out the deadlines by which they would have to do so.
In most cases, it will be clear if a trust will have to register on the TRS, but this is not always the case.
Trustees should always take specific advice based upon the circumstances of their trust, the TRS regulations and HMRC’s published guidance (including the TRS Manual) but the following outlines the main features of the TRS including the recently announced changes. Revised TRS regulations laid before Parliament on 6 January 2022 are due to come into effect on 9 March 2022. HMRC has announced that updates to its TRS Manual will be published early in 2022.
Deciding if a trust is subject to the TRS rules
The TRS rules only apply to “express trusts”. So, the first question you need to ask is whether the trust is an express trust or not. The term “express” is not legally defined, but in practice this means any trust which has deliberately been created, rather than by operation of law. The TRS also applies to bare trusts unless the trustees and beneficiaries are identical or if they are over a bank account.
If the trust is an express trust, you then need to check if it is exempt from registering. For example, some express trusts are exempt from registering, even if they do incur a UK tax liability (such as certain life policies, including those for temporary disablement cover and healthcare policies), pension trusts and UK-registered charitable trusts).
Taxpaying Vs non-taxpaying express trusts
If your trust is “express”, you need to decide if it is a “taxpaying trust” or “non-taxpaying trust”.
A trust will be a taxpaying trust if it incurs one of the following UK tax liabilities;
- Income tax
- Inheritance tax
- Capital gains tax
- Stamp duty and stamp duty reserve tax
- Stamp duty land tax (SDLT)
- Land and buildings transaction tax (Scottish equivalent of SDLT)
If none of the above apply, the trust will be a non-taxpaying trust.
Registration for “taxpaying trusts”
The general rules on registration deadlines dates (which should be checked as they can change) are:
- Trusts that are liable for Income Tax or CGT for the first time: 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 CGT.
- Trusts that have been liable for Income Tax or CGT previously: By 31 January in the tax year after the tax year in which the trust receives any income or has capital gains and is liable for tax.
- Trusts that are liable for other taxes: By 31 January in the tax year after the one in which that other tax liability was incurred.
Non-taxpaying express trusts
Most of the Government’s recently announced changes to the TRS have been in relation to these, so the rest of this article focusses on these.
Different rules apply to UK or non-UK non-taxpaying express trusts, so you need to know which type you have. A UK trust is one which is UK tax resident, and a non-UK trust is one which is not.
Certain UK non-taxpaying express trusts in existence on or after 6 October 2020 must now be registered unless they fall within one of the categories of registration-exempt trusts mentioned above.
Non-UK non-taxpaying express trusts
You only have to register these if on or after 6 October 2020 they:
- Acquire directly land or property in the UK; or
- Have at least one trustee resident in the UK and enter into a new ongoing ‘business relationship’ with an entity in the UK (such as a professional adviser).
TRS registration deadlines for non-taxpaying trusts
The original deadline for any such trusts meeting either of the above two conditions to be registered was 10 March 2022. However, these deadlines are now:
- 1 September 2022 for all such trusts in existence on or after 6 October 2020 (even if they are wound-up before 1 September 2022).
- Within 90 days for new such trusts created in the 90 days before 1 September 2022 or created from 1 September 2022 onwards.
If any trust information which was already on the register on 1 September 2022 needs updating, the update must also be done within 90 days of the change of information occurring.