Trust registration is about recording a trust with HMRC for transparency and legal purposes to prevent financial crime like money laundering. This article covers everything you need to know about trust registration including steps, requirements and deadlines.

Key Points

• All UK express trusts must be registered with HMRC on the Trust Registration Service regardless of tax liabilities with specific exemptions.
• The lead trustee is responsible for keeping trust information up to date and communicating with HMRC to comply with registration requirements.
• Failure to register a trust on time can result in penalties including fines or legal action so make sure you meet the deadlines.

What is Trust Registration ?

Trust registration in the UK is an important tool for transparency and legal compliance. The purpose of a trust is to gift assets and manage them for the benefit of the beneficiaries which can include protecting family wealth, supporting charitable causes and controlling asset use after death.

The UK Trust Register was introduced in June 2017 as part of the EU’s 4th Anti-Money Laundering Directive to combat financial crime like money laundering and terrorist financing. Trustees must register details about the trust and the individuals associated with the trust with HMRC to comply with these regulations. This includes both taxable and non-taxable trusts so that the beneficial ownership of the assets held in trust is transparent.

The Trust Registration Service (TRS) is the hub of this system where trustees can manage their trust’s details. Despite Brexit the UK has kept the Trust Register so transparency and legal compliance is important. Using the TRS correctly is key to managing assets and complying with the regulations.

Who needs to register a trust?

Several factors determine if you need to register a trust with the Trust Registration Service (TRS). Generally all UK express trusts must be registered regardless of tax liabilities or not with specific exemptions. This includes both taxable and non-taxable trusts so all trust activity is covered.

Trusts with UK tax liability such as Capital Gains Tax, Income Tax and Inheritance Tax must register with HMRC. Non-UK express trusts that acquire UK property or have a UK resident trustee also need to register. All trusts created after 6 October 2020 must register regardless of tax status.

Some types of trusts such as those for bereaved minors or young adults have specific exemptions from registration. Will trusts that take effect on death also need to register. Knowing these requirements will help you stay compliant and avoid penalties.

The Lead Trustee

The lead trustee is key to the trust registration process and is the main point of contact with HMRC. All trustees have equal legal responsibilities for the trust but the lead trustee represents the group and communicates with HMRC.

One of the key responsibilities of the lead trustee is to keep their contact details up to date. This means any communications from HMRC will be received and responded to promptly. The lead trustee must also notify HMRC of any changes to the trust details to keep the records up to date.

For taxable trusts the lead trustee will receive the Unique Taxpayer Reference (UTR) from HMRC. Non-taxable trusts will also receive a unique reference number when registered which the lead trustee must manage. Choosing the right person for this role is important.

Information required for trust registration

When registering a trust trustees must provide all the required information to HMRC. This includes keeping written records of the beneficial owners and reporting any changes promptly. They must provide contact details including phone numbers and country of residence.

The registration requires information about the trust including the names and details of all trustees, settlors and beneficiaries. If the settlor is deceased their last known country of residence must be included. Trustees must also provide proof that living settlors have mental capacity.

Other information required includes the trust’s assets such as estimated values and descriptions of any controlling interests in foreign companies. Trustees must also declare if the trust is an express trust and provide details of any shares or partnerships involved. This will ensure the trust is registered correctly and compliant.

How to register a trust

Registering a trust in the UK involves several steps which are mainly done through the Trust Registration Service (TRS). Trustees must first create an organisation-type Government Gateway account as personal accounts are not allowed for trust registration. A Government Gateway user ID and password are required for this process.

The lead trustee will need to complete the registration online through the TRS. The good news is there is no fee to register a trust with HMRC through the TRS. If trustees cannot register online they must inform HMRC to get alternative instructions.

As it’s complicated we recommend you appoint a trust administrator to help with the registration process. This step by step approach will ensure all the required information is captured and the trust is compliant.

Trust registration deadlines

Registering on time is key to avoid penalties. Trusts created before 6th October 2020 and are non-taxable had a deadline of 1st September 2022. Non-taxable trusts must be registered within 90 days of creation if not exempt.

For trusts that become taxable for the first time the deadline is within 90 days of the tax liability arising. For trusts that have tax liabilities other than Income Tax or Capital Gains Tax the deadline is 31st January following the tax year. Trustees must also update trust information within 90 days of any changes.

Not registering a trust on time will result in warning letters and fines if intentional. Registering on time is key to compliance and avoiding penalties.

Penalties for non-compliance

Non-compliance with trust registration will result in penalties. Trustees will first get a warning letter from HMRC before any fines are imposed. If the failure to register is not intentional no penalty will be charged for the first offence.

But trustees who deliberately ignore the registration requirements will face more severe penalties including fines and legal action. HMRC’s guidance details these penalties and why registering on time and accurately is important.

Exemptions from registration

Some trusts are exempt from registration. Charitable trusts for example do not need to register if they are registered as charities. Trusts with amounts below £100 and created before 6th October 2020 are also exempt.

Will trusts created within 2 years of the individual’s death do not need to register. Express trusts with no tax liabilities generally do not need to register so non-taxable express trusts are not unnecessarily registered.

Professional advisors

The trust registration has implications for professional advisors. Advisors must ensure the trusts they manage or service are registered with HMRC to comply with anti-money laundering regulations. This includes checking the trust’s registration before forming a business relationship.

Not complying with these requirements will result in sanctions from HMRC and compliance risk for advisors and their firms. Advisors must review their records and inform their clients about the new trust registration requirements. Being proactive will help with compliance and avoiding penalties.

If you’re unsure about your registration requirements get professional advice. A solicitor, accountant or financial advisor will be able to clarify and ensure all legal requirements are met. This collaboration between trustees and advisors will ensure effective management and compliance.

Updating trust information

Trustees must keep all trust information up to date and accurate. Any changes to the trust must be reported to HMRC within 90 days. This includes changes to the beneficial owners, assets and other relevant information.

The lead trustee must update the trust information using the TRS whenever changes occur. Certain changes such as the trust start date and trust name will require direct contact with HMRC rather than using the online service. Accurate records are key to ongoing compliance.

Access to registered trust information

Access to the Trust Registration Service (TRS) is limited to specified individuals and entities so the information is protected. Relevant individuals such as law enforcement and those with a legitimate interest can access the information on the TRS. In some cases the public can access some information on the trust register depending on the circumstances.

HMRC will share trust registration information with third parties in limited circumstances where there is a risk of harm. Information about the trust’s beneficial owners is protected from disclosure to prevent harm, fraud or violence. Trustees can apply for a risk of harm exemption which requires annual reviews and renewal.

Offshore and non-UK trusts

Non-UK trusts including offshore trusts must register with the Trust Registration Service if they have UK tax liabilities or a UK resident trustee. This will ensure all trusts with UK connections are compliant with anti-money laundering and tax regulations.

Offshore trusts with a UK resident trustee must register with the TRS regardless of their tax status. This includes trusts with UK assets or involved in UK land transactions. Knowing this will help with compliance and avoid penalties.

Practical tips for trustees

Trustees should prioritise understanding their legal obligations to avoid personal liability. Get professional advice to clarify and ensure all legal requirements are met. Regular reviews and updates of trust information are key to accurate records and penalty avoidance.

To manage the registration process effectively trustees should appoint a trust administrator and use the resources available on the TRS. Being proactive will ensure all the information is captured and the trust is compliant with HMRC requirements.

Conclusion

Trust registration in the UK is a key process for transparency, compliance and asset management. Knowing the requirements, deadlines and responsibilities will help trustees avoid penalties and keep accurate records. Follow this guide and you’ll be able to register your trusts with confidence and be compliant with all legal requirements.

Frequently Asked Questions

Who needs to register a trust in the UK?

All UK express trusts, as well as non-UK trusts with UK tax liabilities or a UK resident trustee, are required to register, unless they fall under specific exemptions.

What is the role of the lead trustee?

The lead trustee serves as the primary point of contact with HMRC, ensuring effective communication and the timely updating of trust details. This role is crucial for maintaining compliance and transparency.

What information is required for trust registration?

Trust registration requires detailed information about the trust’s beneficial owners, assets, trustees, settlors, and beneficiaries. This comprehensive data ensures proper legal recognition and transparency of the trust.

What are the penalties for failing to register a trust?

Failing to register a trust can result in fines and potential legal action, particularly if the omission is intentional. Trustees may initially receive a warning letter from HMRC before facing further consequences.

Are there any exemptions from trust registration?

Certain trusts, including charitable trusts and will trusts established within two years of an individual’s death, are exempt from registration. It is important to be aware of these exemptions when managing trusts.