In June 2017, the HMRC Trust Register came into effect following the adoption of the 4th Anti-Money Laundering Directive. The Trust Register was introduced to improve transparency around the beneficial ownership of assets held in trusts with trustees required to provide details of the trust itself (including its tax residence status and the assets it holds), as well as information in respect of the settlor(s), trustee(s), and potential beneficiaries. Information was then required to be kept up to date by way of an annual declaration by the trustees.
This resulted in ‘express’ trusts with UK tax liabilities being required to register on the Trust Registration Service (TRS) if they incurred certain UK tax liabilities, namely capital gains tax, income tax, inheritance tax, stamp duty land tax, and stamp duty reserve tax.
Where a trust becomes liable for Income Tax or Capital Gains Tax for the first time, they must register by 5 October in the tax year following the one in which the liability arises to obtain a UTR. Trusts that already have a UTR or are liable for other taxes (such as Inheritance Tax) must register by 31 January following the end of the tax year in which the trust had a liability to UK tax.
Changes to the TRS
From 6 October 2020, as part of the UK’s implementation of the Fifth Money Laundering Directive (“5MLD”), the registration requirement was extended to include the following trusts (again with limited exceptions):-
- All UK express trusts, i.e. deliberately created by a settlor (which are not specifically excluded) regardless of whether the trustees incur a liability to UK tax. A UK resident trust is one where either all trustees are UK resident; there is a mix of UK and non-UK resident trustees and the settlor of the trust was resident and domiciled in the UK at the time when the trust was set up or when the settlor added funds to the trust; or there is a corporate trustee that is incorporated in the UK.
- Non-UK express trusts where the trust acquires land or property in the UK on or after 6 October 2020.
- Non-UK express trusts which have at least one trustee resident in the UK when the trustees enter into a business relationship with an ‘obliged entity’ in the UK. An obliged entity includes but is not limited to a financial or credit institution, accountant, tax adviser, legal professional, estate agent, art dealer and other person dealing in certain goods or providing particular services.
- Non-express trusts and specifically excluded express trusts which have a UK tax liability.
Trust that are specifically excluded from the requirement to register include but are not limited to:-
- Trusts imposed by legislation or court order.
- Estates (apart from registrable complex estates) and trusts created on death that are only in existence for a period of two years from the date of death.
- Charitable trusts.
- Trusts where a disabled person is the beneficiary.
HMRC’s online registration facility for registering new trusts required to do so under the 5MLD opened on 1 September 2021. Trustees can register trusts via GOV.UK.
Whilst the money laundering regulations require express trusts to register on the Trust Register by 10 March 2022, HMRC announced the deadline is extended with trustees required to register a non-taxable trust under their control that was in existence on or after 6 October 2020 by 1 September 2022. However, where newly created UK trusts or non-UK trusts trigger an obligation to enrol on the Trust Register on or after 3 June 2022, the deadline for doing so is 90 days from the event that triggered the obligation, even if this is later than 1 September 2022. Additionally, trustees will also have 90 days from the date a change of certain circumstances occurs to update any relevant information on the Trust Register.
Access to TRS information
Access to TRS is currently restricted to government authorities but this will extended to anyone with a 'legitimate interest' under the new regulations. The government have confirmed that guidance will be provided as to how requests will be reviewed and access will only be given where there is evidence of counter money laundering or terrorist financing activity. The government have also confirmed that necessary safeguards will be in place to reduce the risk of information being released where it could lead to disproportionate harm.
We can help Trustees to understand their likely obligations under these rules and assist with the UK Trust registration process if required. Get in touch with our dedicated team if you have any queries about the changes and the registration process.