Tax

Do you need to register a Trust?

The new rules on which Trusts need to register with HMRC are explained

Many people are unaware that Trusts now need to register with HMRC.

The extension of the Trust Registration Service in September 2021 means that, subject to limited exceptions, all UK Trusts that were in existence on 6 October 2020 and some non-UK Trusts, irrespective of whether the Trust has a UK tax liability, will be required to register with HMRC by 1 September 2022.

Note importantly bare trusts, employment-related trusts, loan trusts and discounted gift trusts are required to be registered. All such new Trustees are required to be registered within 90 days of creation. Failure to register may result in a penalty.  

Certain Trusts are excluded and are not required to register unless they are liable to pay UK tax. These include:

Trusts required to open a bank account for a child

Charitable trusts

Trusts for bereaved minors or adults aged 18-25

Will trusts (but only for the first two years after date of death)

Trusts imposed by courts or created by legislation

Co-ownership trusts

Note co-ownership Trusts will arise where two or more persons hold property. HMRC Trusts Manual states that trusts of jointly held property (‘co-ownership trusts’), where the Trustees and Beneficiaries are the same persons, are excluded from registration. The implication is that where the Trustees and Beneficiaries are not the same people such Trusts are not excluded from registration. However, there are 2 cases where registration is not applicable – on the basis that any Trusts that automatically arise by law are excluded:

1. Where property is held on Trust by two or more persons and the Beneficiaries include a minor.

2. Where property is beneficially owned by more than 4 persons. The law states that a maximum of 4 persons can hold the legal title to land. 

As part of the registration, Trustees provide certain details relating to the Trust, including the identity of the Trustees, beneficial owners, and Trust assets. Trustees are also required to keep the information up-to-date or confirm annually that there have been no changes.

If you are uncertain if a Trust will need to be registered by 1 September 2022 please do get in contact. Liz Hooley our Solicitor and Mandy Bunce UK personal tax specialist  will be able to advise.