The requirement for certain trusts with a UK tax liability to register on the TRS and provide specific information to HMRC was originally introduced in June 2017 on the UK’s adoption of the Fourth EU Anti-Money Laundering Directive. However, the extension of the TRS in September 2021 now means that, subject to limited exceptions, all existing UK trusts and some non-UK trusts, irrespective of whether the trust has a UK tax liability, will also be required to register with HMRC by 1 September 2022.
Background
The UK Government introduced the Trust Register to provide greater transparency around the ownership of Trust assets and individuals connected with trusts. Since 2017, most UK and non-UK tax resident trusts with a relevant UK tax liability (i.e. Income Tax, Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax or an equivalent devolved tax, and Stamp Duty Reserve Tax, have been required to register with the TRS (referred to as ‘taxable trusts’). There are some limited exemptions from registration. As part of the registration, trustees provide certain details relating to the trust, including the identity of the trustees, beneficial owners and trust assets. Trustees are also required to keep the information up-to-date or confirm annually there have been no changes.
Where are we now?
As part of the UK’s implementation of the Fifth Anti-Money Laundering Directive, the scope of the TRS was further extended in October 2020 requiring the following trusts to also register:
- All UK resident ‘express’ trusts, irrespective of whether they have a tax liability. An ‘express’ trust is one which is created deliberately by a settlor (e.g. a family discretionary trust) rather than a trust created through the operation of the law or a court decision. A UK resident trust is a trust where all of the trustees are UK resident, or there is a mix of UK resident and non-resident trustees and the settlor of the trust was either UK resident or domiciled when the trust was created or further funds added, or there is a UK resident corporate trustee.
- Non-UK resident express trusts which:
a) receive income from a source in the UK; or
b) have assets in the UK, on which it is liable to pay one or more of the relevant taxes above; or
c) directly acquire an interest in UK land on or after 6 October 2020; or
d) have at least one UK resident trustee and enter into a business relationship with an ‘obliged entity’. An obliged entity could include a financial institution, an accountant, tax adviser, legal professional or estate agent etc.
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- Trusts required to open a bank account for a child
- Charitable trusts;
- Trusts for bereaved minors or adults aged 18-25;
- Will trusts (but only for the first two years after date of death);
- Trusts imposed by courts or created by legislation;
- Co-ownership trusts.
It is worth noting that bare trust arrangements and employment related trusts (e.g. Employee Benefit Trusts) are not excluded and may also need to be registered.
Registration deadlines
The deadline for registering a taxable trust (i.e. one with a relevant UK tax liability) depends on when the trust was established and when the first relevant tax liability arises:
Trust established |
When the first relevant tax liability arises |
Registration deadline |
Before 6 April 2021 |
At any time |
5 October following the end of the tax year in which the first relevant tax liability arises if it is income tax or CGT 31 January following the end of the tax year in which the first relevant tax liability arises in other cases |
After 5 April 2021 |
Before 4 June 2022 |
1 September 2022 |
After 5 April 2021 |
After 3 June 2022 |
Within 90 days of the first relevant tax liability arising |
Non-taxable trusts (i.e. those with no relevant UK tax liability) in existence on or before 6 October 2020 that meet the conditions for registration must register on or before 1 September 2022. Relevant non-taxable trusts created after 6 October 2020 must register within 90 days of being created (or otherwise becoming registerable) and 1 September 2022, whichever is the later.
In addition, the Trust Register must also be updated within 90 days of any changes to the trust details or beneficial ownership. Where the trust is taxable, the trustees must also declare on their annual Self-Assessment tax return that the Trust Register is up to date.
Given the significant changes and recent extension to the scope of the TRS, it is imperative that trustees review their position to assess their registration obligations in relation to both registering and updating the Trust Register, to avoid penalties. KPMG can assist Trustees with reviewing their reporting obligations in this area.
By way of practical steps, anyone who thinks they may need to register their trust with HMRC should confirm their position as soon as possible – our experts would be happy to have an initial call with trustees, beneficiaries or other advisors.
If you need any support, please contact Graeme Whitfield.
