New Trustee obligations and updates to the UK Trust Registration Service
New obligations have been brought into law as part of Fifth Money Laundering Directive and the subsequent Money Laundering and Terrorist Financing (Amendment) Regulations 2022 (the Regulations), which came into effect in October 2020.
These anti-money laundering regulations mean all UK express trusts, and some non-UK express trusts, now need to be registered with HMRC by 1 September 2022, unless the trust falls into certain categories, notes Clare Newton from the Private Client Team at Tallents Solicitors.
These trusts need to be registered on the HMRC Trust Registration Service (TRS) even if the trust is not liable to pay tax.
So, if you are a Trustee of a trust, what does this mean to you and your TRS obligations?
Non-taxable trusts – was the trust set up before 2 June 2022?
- Trustees of non-taxable trusts do now need to be aware that trusts created before 6 October 2020, as well as trusts created between 6 October 2020 and 2 June 2022 must be registered by 1 September 2022. Any trusts that were in existence on or after 6 October 2020 are still liable for registration with HMRC even if the trust has ceased. Any trust created from 3 June 2022 onwards must be registered within 90 days.
Taxable trusts – was the trust set up prior to 6 April 2021?
- Trustees of taxable trusts set up prior to 6 April 2021 must be registered by 31 January after the tax year in which the tax liability arose.
- However, if a trust is liable for income or capital gains tax (CGT) for the first time, then the trust must be registered by 5 October after the end of the tax year in which the Trustees are liable to pay the tax liability.
Taxable trusts – was the trust set up after 6 April 2021?
- For taxable trusts set up after 6 April 2021, if the UK tax liability is due before 3 June 2022, then the trust must be registered by 1 September 2022. Where the tax liability is due after 3 June 2022, then the trust must be registered within 90 days of when the tax liability arises.
Updating the UK Trust Register
- Trustees are also under an obligation to keep the Trust Registration Service up to date in respect of the trust. This means changes such as retirement and appointment of Trustees or cessation of the trust needs to be updated on the Register and within 90 days of the change being recorded (rather than the 30 days required previously).
Changes to the categories of excluded trusts
If the trust qualifies as an excluded trust, then it will fall outside the TRS regime (although it is worth noting that there is an exception for trusts that are liable to pay UK tax which will still need to register).
Most of the categories of excluded trusts remain the same as before the Regulations were made. However, under the Regulations some low-risk categories have been added to the list of excluded trusts including: trusts created to set up a bank account for children or vulnerable persons, trusts holding insurance policies covering temporary disablement cover and trusts holding healthcare policies.
What should Trustees do now?
Are you a Trustee and are now feeling confused regarding your legal reporting obligations under the Trust Registration Service?
We are here to help you find your way through these new Trustee obligations. Tallents Solicitors offers a complete service to ensure your trust is registered in accordance with the regulations. Please feel free to call solicitor Clare Newton in our Private Client Department on 01636 671881 or book an appointment to discuss your trust in confidence.