Registering a trust with the Trust Registration Service

The HMRC Trust Registration Service (TRS) is a register of the beneficial ownership of trusts. It was brought in by Money Laundering Regulations in 2017.

It is now a requirement that certain trusts are registered, so that HMRC have a record of the beneficial ownership. Although it has taken a number of years to bring about, the deadline for registering such trusts is 1^st September 2022.

 Which trusts need to be registered?

 Any trust that is considered to be an “express” trust that was in existence on or after 6^th October 2020. This also includes trusts which were in existence then but have already been brought to an end. There is no definition of what an “express” trust is, but HMRC guidance states that it is one that has been deliberately created by a settlor; either by Deed, Will or Declaration of Trust.

Trusts arising under a Will, where the testator (the person making the Will) has died and the trust created by the Will continues beyond two years of their death also need to be registered.

Trusts that fall into the following circumstances must register with the TRS:

• New trusts created after 6 October 2020 regardless of the value held, unless excluded elsewhere;
• All trusts that have a UK tax liability such as income tax, capital gains tax, inheritance tax or SDLT;
• Trusts of property held for a surviving spouse under a Will (once the initial two year period has expired);
• Bare Trusts – investments (for example stocks and shares) held on trust for the benefit of a minor child; (trusts created in the course of opening a bank account for a minor child or person lacking mental capacity are excluded from registration as express trusts) and
• Co-ownership trusts where there are different legal owners/trustees to beneficiaries – for example two people holding a house for themselves and another person.

Which trusts do not require registration?

There are exclusions from the requirement to register, which include (but not limited to) the following:

• Trusts for “bereaved minors” and “Personal Injury Trusts” and “vulnerable beneficiaries” including a bank account for someone lacking mental capacity;
• Will trusts created on death which end within two years of the death;
• Trusts holding life insurance or retirement policies that only pay out on death, terminal illness or on disability;
• Charitable Trusts;
• Co-ownership Trusts where the legal owner and beneficial owner are the same; typically where a house is owned by two people;
• UK registered pension schemes; and
• Trusts created before 6 October 2020 with less than £100 although if additional funds are added later then that will trigger the requirement for registration.

When must trusts be registered by? 

The deadline for registration of all trusts that fall into the registerable categories is 1 September 2022.

If a trust is created after that date then the trustees have 90 days in which to register with TRS.

What information is required in order to register a trust?

 The process is done online and certain information needs to be provided in order for the trust to be registered. This includes details on settlor, the trustees, the beneficiaries and any named beneficiary rather than a class of beneficiary such as grandchildren. It isn’t a matter of public record but in certain circumstances interested parties can access the information.

Who can register a trust with TRS?

The legal responsibility for registration and providing updates lies with the trustees. Trustees can register a trust themselves and whilst they are jointly responsible and liable for the penalties of non-registration, they will have to appoint a lead trustee who has to register with HMRC to obtain a Government Gateway user ID and complete the filings online. Accountants and solicitors can provide the service to trustees.

What are the consequences of not registering?

Failure to register can lead to financial penalties, although it is believed that for first and inadvertent failures, HMRC will be more lenient.

The obligation to register trusts is not going away. If and when advice (either legal or accountancy) is needed for a trust and the trust is not registered then the trustees are likely to be turned away until registration has occurred.

All trustees are obliged to register trusts where they are trustees, the lack of funds within the trust does not absolve them from that liability and the fines will start to mount up. Prompt action is required.

If you need help with registering an existing trust, or advice in general about setting up a trust, then please contact the Wills, Trusts and Probate Team on 01978 291000 and a member of our team will be happy to help you.

Angharad Hird, Senior Associate