Are you a Trustee of a trust? Important Information, please read.
The deadline for registration of non-taxable trusts with HMRC’s Trust Registration Service is fast approaching, immediate action may be required.
When to register
Trusts that are not taxable
Non-taxable trusts that were created on or before 6th October 2020
The deadline for registrations is on or before 1st September 2022. The trust must be registered even if it has come to end since 6th October 2022 and the record must then be immediately closed.
Non-taxable trusts created after 6 October 2020
The deadline for registration of your trust is 90 days of it being created or becoming liable for tax, or on or before 1 September 2022 (whichever is later).
Trusts that are taxable
The registration deadline depends on:
- when the trust was created
- the tax the trust is liable for
- if it has been liable for Income Tax or Capital Gains Tax before
Taxable trusts that are created on or after 6 April 2021
The deadline for registration of your trust is 90 days of the trust becoming liable for tax or on or before 1 September 2022 (whichever is later).
Taxable trusts that were created before 6 April 2021
Trusts that are liable for Income Tax or Capital Gains Tax for the first time
Register your trust on or before 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 Capital Gains Tax.
Trusts that have been liable for Income Tax or Capital Gains Tax before
Register your trust on or before 31 January in the tax year after the one in which the trust receives any income or has capital gains, and is liable for tax.
Trusts that are liable for other taxes
Register your trust on or before 31 January in the tax year after the one in which your trust has any other tax liability, like Inheritance Tax.
If your trust is liable for more than one tax and both deadlines could apply, you must register it before the earlier of the 2 deadlines.
If you do not register the trust on time, you may receive a notification letter reminding you of your obligation to keep the register up to date. If you do not keep the register up to date you may be charged a penalty.
Who should register
You must register your trust with HMRC:
- to make sure you and the trust comply with anti-money laundering regulations
- if you need to get a Unique Taxpayer Reference (UTR) — for example, for filling in a Self Assessment tax return for the trust, even if the trust is on the exemption list
You must register if the trust becomes, or is liable for any of the following taxes:
- Capital Gains Tax
- Income Tax
- Inheritance Tax
- Stamp Duty Land Tax
- Stamp Duty Reserve Tax
- Land and Buildings Transaction Tax (in Scotland)
- Land Transaction Tax (in Wales)
The following types of trusts must register even if they have no tax liability:
- all UK express trusts — unless they are specifically excluded
- non-UK express trusts, like trusts that:
- acquire land or property in the UK
- have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK
If the trust is not resident in the UK (‘non resident trusts’), you must register the trust if it becomes liable for tax on income coming from the UK or on UK assets.
If the trust has a tax liability but this is covered by a relief, you’ll need to register the trust to claim the relief through Self Assessment.
Trusts that do not need to be registered unless they are liable to pay UK tax
You do not need to register your trust if any of the following apply, unless it has a liability to UK taxation:
- the trust is used to hold money or assets of a UK registered pension scheme — like an occupational pension scheme
- the trust is used to hold life or retirement policies providing that the policy only pays out on death, terminal or critical illness or permanent disablement, or to meet the healthcare costs of the person assured
- the trust is holding insurance policy benefits received after the death of the person assured — as long as the benefits are paid out from the trust within 2 years of the death
- it’s a charitable trust that is registered as a charity in the UK or which is not required to register as a charity
- it’s a ‘pilot’ trust set up before 6 October 2020 and holds no more than £100 — pilot trusts set up on or after 6 October 2020 will need to register
- it’s a co-ownership trust set up to hold shares of property or other assets which are jointly owned by 2 or more people for themselves as ‘tenants in common’
- it’s a will trust created by a person’s will and comes into effect on their death providing they only hold the estate assets for up to 2 years after the person’s death
- it’s a trust for bereaved children under 18, or adults aged 18 to 25, set up under the will (or intestacy) of a deceased parent or the Criminal Injuries Compensation Scheme
- it’s a ‘financial’ or ‘commercial’ trust created in the course of professional services or business transactions for holding client money or other assets
Other less common types of express trusts which are set up for particular purposes are also excluded from registration unless they have to be registered because they are liable to pay tax.
Trusts which are not set up deliberately by a settlor but are imposed by courts or created by legislation, are not ‘express trusts’ and do not have to register unless they need to obtain a UTR to complete a tax return. Examples of these trusts include ones set up under:
- the intestacy laws when a person dies without a valid will and the assets in the estate are held by a trust before passing to relatives
- a court order to hold compensation payments
Some financial products and arrangements with ‘Trust’ in their description, like the Child Trust Fund or Venture Capital Trusts, are not really trusts, so do not need to be registered.
For further information about the Trust Registration Service or if you are unsure whether you are a trustee of a trust that requires registering or you require any assistance in registering your trust, please do get in touch and a member of our Private Client Team will be pleased to advise and assist as necessary.
