Trust Registration Service Extended to Non-Taxable Trusts

HMRC has recently extended the Trust Registration Service (TRS) to non-taxable trusts.

The TRS was initially launched in 2017, however at that time only taxable trusts (those with a liability to income tax, capital gains tax, inheritance tax, stamp duty land tax, stamp duty reserve tax or land & buildings transaction tax) were required to register.

Failure to register in time may result in HMRC applying financial penalties therefore all trustees should review whether a registration is required.

Key Deadlines

 The deadline to register will depend on whether the trust is taxable or non-taxable and the date the trust was created.

1. Non-Taxable Trusts

   • Non-Taxable Trusts in existence on 6 October 2020 must register by 1 September 2022

   • Non-Taxable Trusts created after 6 October 2020 must register by the later of (i) 1 September 2022, or (ii) 90 days of being created

2.  Taxable Trusts

   For Taxable Trusts in existence on 5 April 2021 the registration deadline will depend on the type of tax liability:

   • Liable to income tax or capital gains tax for first time – register by 5 October after end of tax year in which first receive income/gains

   • Other taxable trusts – register by 31 January after end of tax year in which tax liability arises

   Taxable Trusts created on/after 6 April 2021 must register by the later of (i) 1 September 2022, or (ii) 90 days of being created

3. Updates

   The register should be updated with changes (including notification of the trust being closed) within 90 days of the change.

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Which Non-Taxable Trusts Should Register

Non-taxable trusts will need to register if they fall into the following categories:

1. UK Express Trust

   A trust is a UK trust if either (i) all the trustees are UK resident, or (ii) there is a mixture of UK and non-UK resident trustees, and the settlor was UK resident and domiciled when the trust was created/ funds added to the trust

   An express trust means that the trust was deliberately set up by the settlor – for example a will trust, or a trust set up though a trust deed such as a bare trust or a discretionary trust. 

   Trusts established through the operation of law such as trusts arising on intestacy (i.e. on the death of a person without a will) are not express trusts.

2. Non-UK Express Trusts that have a link to the UK – unless an exclusion applies

   A trust is a non-UK trust if either (i) all the trustees are non-UK resident, or (ii) there is a mixture of UK and non-UK resident trustees, and the settlor was non-UK resident or domiciled when the trust was created/funds added to the trust.

   Links to the UK include; (i) acquiring land/property in the UK on/after 6 April 2020, and (ii) for non-UK trusts with at least 1 UK resident trustee, entering into a business relationship with a UK business

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 Non-Taxable Trusts Excluded from Registering

There are a number of exclusions from registration as a non-taxable trusts.

Some of the more common/notable exceptions include:

•  Will trusts that only hold property from the deceased estate are excluded for a period of 2 years from the date of death

• Trusts for some life insurance policies

• Trusts arising from personal injury payment where the trust is disregarded from capital

• Some trusts for employee share schemes

• Trusts set up before 6 October 2020 with assets of under £100 (historic pilot trusts). If assets are added at a later date then the exclusion will cease to apply.

• Trusts for the benefit of a disabled person

• Trusts for bereaved minors or 18-25 trusts

The full list of exclusions and details of the conditions for each exclusion are available in HMRC’s Trust Registration Service Manual TRSM23000

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How to Register

Trustees can register the trust with HMRC by taking the following steps:

1. Collate information regarding the trust and the people associated with it (settlor, trustees, beneficiaries etc)

2. Create an organisation government gateway

3. Prepare and submit the trust registration

For detailed instructions see HMRC’s website

Or please get in touch if you’d like Elliott Tax to prepare and submit the registration as the trust’s agent