Trust Registration Service – recent changes

Recent changes to the Trust Registration Service (TRS) mean that many more trusts will need to be registered by 1 September 2022.

Under these new rules, most ‘express trusts’ (trusts created deliberately by a settlor) now need to be registered with the TRS. Express trusts include discounted gift trusts, loan trusts, gift trusts and trusts holding an investment bond (whether a discretionary or bare trust).

Read on to find out more about what the Trust Registration Service is, which trusts are exempt from registration, and your obligations as a trustee.

What is the Trust Registration Service?

The TRS is an online system by which trustees (administrators of the trust) can register in respect of the beneficial ownership of trusts. It was introduced to satisfy the requirements of The Fourth and The Fifth Money Laundering Directives (4MLD and 5MLD).

The 4MLD and 5MLD were introduced by the EU to prevent trusts being used for money laundering and/or terrorist financing. For further information, see the Trust Registration Service Manual.

What are the deadlines for trust registration and updating the TRS?

The deadline and timescales for the registration of existing or new trusts are as follows:

• Non-taxable trusts in existence on or after 6 October 2020 must be registered by 1 September 2022 (even if they are now closed).
• Non-taxable trusts created after September 2022 must be registered within 90 days of their creation.
• Changes to the trust details or circumstances must be registered within 90 days of the change.

Why do I need to register my trust?

There is a legal obligation for trustees to register the trust, but some trusts are exempted. 

HMRC may enforce penalties on trustees who are required to register their trust but do not or who do not keep the details on the register up to date.

Which trusts are exempt from registration on TRS?

Trusts with a perceived low risk of money laundering are excluded from the requirement to be registered. These include trusts of registered pension schemes, charities and trusts that are established by statute – for example, on intestacy. 

The list of exempt trusts can be found on the HMRC TRS Manual here.

What are your obligations as a trustee?

The trustees are the persons who hold the property in the trust for the benefit of the beneficiaries and are responsible for the administration of the trust.

The rules state that the trustees have general duties to keep and maintain an up-to-date written record of the beneficial owners involved in the trust (including settlors, trustees and beneficiaries) as well as people with control over the trust (for example, trust protectors).

When a trust has multiple trustees, the trustees must nominate one of the trustees to act as the lead trustee. That trustee is then responsible for the administrative duties in relation to the tax affairs of the trust and is the main contact point that HMRC will use.

Each trust needs to be registered with details of a lead trustee. If the trust only has one trustee, then that trustee must be registered as the lead trustee.

What happens if you do not register your trust?

You may have to pay a penalty if you do not register the trust before the registration deadline.

What if the trustees do not have access to the internet?

If all trustees are unable to access the internet, you can call HMRC’s helpline on 0300 123 1072 for
assistance or to appoint an agent if you are unable to do so digitally.

What information do you need to register the trust?

Trustees are required to enter details about the lead trustee, co-trustees, settlor, and beneficiaries.

A complete list of what information is needed is available here.

What trust changes must be recorded on TRS?

You must update the register if the trust becomes liable to income tax or capital gains tax, or if there are any changes to trustees’, beneficiaries’, or settlor’s details. Changes must be recorded on TRS within 90 days of the change to avoid fines and penalties.

Do non-UK trusts have to be registered with TRS?

Trusts that are already registered in another EEA member state will be automatically exempt from UK TRS registration unless they have at least one UK resident trustee, acquire land or property in the UK or have a UK tax liability.

Who can ask to view the information on the register?

Details of the register will only be released in certain circumstances to those with a ‘legitimate interest’ such as law enforcement agencies where there is evidence of money laundering or terrorist financing activity. 

Beneficiary information will not be disclosed if the beneficial owner is a minor, lacks mental capacity or where access to the information could lead to a disproportionate risk of harm to them such as a risk of fraud, kidnapping, blackmail, extortion, harassment, violence, or intimidation.

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. 

Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.