New HMRC guidance now requires all taxable and non-taxable trusts to be registered through their Online Trust Registration Service (TRS). The deadline for registering all qualifying existing trusts was the 1st of September 2022 (see more on exemptions below).
All new trusts will need to be registered.
Back in 2017 under the orginal rules, it was trusts who had trustees that met certain tax liabilities that originally needed to register. But since October 2020, under the new rules, almost all trusts set up during a lifetime will have to be registered – even if there’s no tax liability.
Why the Change?
The UK Government had to meet its obligations of complying with the fourth and fifth EU Money Laundering Directives but they also wanted greater transparency around the ownership of Trust assets and individuals connected with trusts.
What if I don’t do it?
Registering a trust is the responsibility of the trustee and failure to do so due to deliberate behaviour on the part of the trustee, could result in a £5,000 penalty per offence. Not only should you register the trust but keep the information up to date to avoid receiving a warning letter.
You will have the option to register the trust yourself or use a tax agent who can register the trust on your behalf. ‘Obliged entities’ such as ourselves (Less Tax 4 Landlords) must collect proof of registration before establishing a new business relationship with a registrable trust.
The HMRC website quotes, “You will not get a penalty for failure to register or late registration unless that failure is due to deliberate behaviour. If you deliberately fail to register your trust on time, or deliberately do not keep the register up to date, you may have to pay a penalty of £5,000.”
Who should register?
You must register your trust with HMRC:
- To get a unique taxpayer reference (UTR) for example if you’re filling a self-assessment tax return.
- To comply with anti-money laundering regulations
What trusts should be registered?
If your trust 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
Unless it has a liability to UK taxation, some of the trusts that do not need to be registered include:
- If it’s for bereaved children under 18, or adults aged 18 to 25
- If it holds money or assets of a UK registered pension scheme — like an occupational pension scheme
- If it 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
- If it’s a charitable trust that is registered as a charity in the UK or which is not required to register as a charity
There are many more exclusions, and you should check what is and what isn’t included by visiting the HMRC website here.
When to register
Non-taxable trusts that were created on or before 6 October 2020
The deadline for registration was 1st September 2022.
Non-taxable trusts created after 6 October 2020
Register your trust within 90 days of it being created or becoming liable for tax.
Taxable trusts that are created on or after 6 April 2021
Register your trust within 90 days of the trust becoming liable for tax.
Taxable trusts that were created before 6 April 2021.
- Trusts that are liable for Income Tax or Capital Gains Tax for the first time
- Trusts that have been liable for Income Tax or Capital Gains Tax before
- Trusts that are liable for other taxes
For more details on the above, please visit government guidelines here.
What you’ll need
The information you may need to provide includes:
- the name of the trust
- the date the trust was created
- to say if the trust is an express trust or not
- details about whether a non-UK trust has a business relationship in the UK
- details about any UK land or property the trust has purchased
You should be able to find these details in the trust deed and from any correspondence that the trust has had with HMRC.
All trustees are equally legally responsible for the trust, but you must nominate one ‘lead’ trustee to be the main point of contact for HMRC. The lead trustee will receive the trust’s unique taxpayer reference number (or UTR). This is a 10-digit code that uniquely identifies you or your business.
You’ll need to give their:
- date of birth
- National Insurance number and address (if they’re a UK citizen)
- passport details and address (if they’re not a UK citizen)
- telephone number
- country of residence
- country of nationality
If the lead trustee is an organisation, you’ll need to give their:
- organisation name
- organisation UTR
- telephone number
- email address
- country of residence
Trustees need to be aware of their responsibility to register the trust with the TRS (if applicable) and keep the information up to date.
Registration will almost certianly be required for trusts that are subject to a UK tax liability and non taxable ‘express trusts’.
Who can help me register my trust?
Accountancy services can help you register your trust and providers must be:
- auditors who carry out statutory audit work;
- accountants who provide accountancy services to clients;
- tax advisers and consultants who provide advice to clients about their tax affairs;
- payroll agents that provide accountancy services or tax advice;
- customs practitioners, freight forwarders and similar businesses if they provide accountancy or tax services.
Less Tax 4 Landlords is a specialist multi-disciplinary consultancy that helps property investors and portfolio landlords maximise the commercial benefits of building, running, and growing a recognised professional property business.
If you have an existing portfolio of properties, then please take our assessment to see if we can help you benefit from running a recognised property business.
We provide landlords with unbiased, impartial, and holistic advice based upon:
- Where you are now
- What you want to achieve
- The available Financial and Legal Instruments
Specialising in the PRS (Private Rented Sector), typically we help:
- Growing businesses whose owners are looking to support further growth
- Full Time Landlords looking to plan for their retirement
- Portfolio Landlords at capacity needing to make changes so their business can grow
- Landlords needing to restructure their business due to the ‘Section 24’ tax changes
- Family businesses looking to ensure that the business portfolio can remain intact on succession
This requires an all-round service – which includes (but is not limited to) business consultancy, legal advice, financial advice and tax advice.
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