Following the implementation of the EU Fifth Anti-Money Laundering Directive (5AMLD), there is a requirement for many non-tax paying Trusts to be registered on a central government list (Trust Registration Service (TRS).
Previously only taxable Trusts were required to register but the TRS scope has now been expanded and requires almost all Trusts and ‘complex estates’ to be registered centrally, even where there is no taxable event such as, receipt of taxable income or capital gains arising on the sale of assets.
Whose responsibility is it to register?
The responsibility for the registration of a Trust lies solely with the trustees. If they do not comply with the regulations, they may be subject to a penalty fine.
The registration can be completed by a trustee through HMRC’s online services, or an agent can be appointed to complete the registration on your behalf, which we would be very happy to assist with.
Which Trusts are exempt?
HMRC have advised that despite the changes the following Trusts still remain exempt from registering:
- Trusts holding insurance policies while the life assured is still alive – if it only pays out in certain scenarios.
- Trusts holding proceeds from insurance policies received on death of the life assured – in certain circumstances, and with a time limit.
- Pilot Trusts – Trusts holding not more than £100 and already in existence before 6 October 2020 are
- Will Trusts - excluded from registration for two years from date of death. If it is still in existence after that date or if at any point property is added from outside the estate, it will need to register from that date.
- Trusts set up under intestacy rules and Personal Injury Trusts set up under a court order to receive compensation. Trusts which weren’t set up via specific instructions from a Settlor.
- Trusts for bereaved children under 18, and 18-25 Trusts where a parent has died.
- Co-ownership trusts 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’.
- Charitable Trusts
When do Trusts have to be registered?
Any Trusts not falling into an exemption category, have until 1 September 2022 to register.
From 1 September 2022 onwards, newly created Trusts will have 90 days from the date of creation to enter their details on the register.
Setting up a trust and dealing with the administration of the Trust within the UK tax system is a complex process and can be confusing. We will work with you to identify your objectives and advise you on how you can meet them through the use of Trusts. If you are looking to protect your estate and provide continuity for the future, family Trusts can be an effective solution and can bring Inheritance Tax (IHT) and Capital Gains Tax (CGT) advantages.
Our advisers regularly work with clients who wish to use Trusts as a way of protecting their financial future, but there are a range of Trusts available, so you should always seek professional and independent advice before setting up a Trust and to deal with the ongoing tax compliance.