This list is to be administered via an online portal operated by ‘Her Majesty’s Revenue Customs’ (HMRC) and has been introduced in the continued global fight against both money laundering, and the financing of terrorism.
Whilst the UK is classified as ‘low risk’ in relation to these areas, it has still been agreed for these rules to be implemented.
UK Trusts that need to use the TRS
An ‘express trust’ where the trustees have incurred a liability, in a given tax year, to pay any of these UK taxes:
- Income Tax
- Capital Gains Tax
- Inheritance Tax
- Stamp Duty Land Tax
- Stamp Duty Reserve Tax and (in Scotland) Land and Buildings Transaction Tax
UK Trusts that do not need to use the TRS
Trusts which do not need to register, include those falling under these circumstances:
- The trustees do not need to file a tax return and have not incurred a UK tax liability.
- The settlor, or a beneficiary of the trust has incurred the UK tax liability, but the trustees are not liable.
- The trustees of a bare trust, as no UK tax liability arises at trust level.
- Where all income is received directly by the UK resident beneficiary, and not reported on the trustees’ tax return (unless they have another UK tax liability, such as capital gains tax).
- The trustees of a charitable trust will not have to register until they incur a UK tax liability.
- A statutory trust
- The trust has no other UK tax liability other than a tax liability of less than £100 on bank or building society interest income.
The registration requirements will mean that certain information will be required, as part of this process, which includes:
- Details of the settlors
- Details of the trustees
- Details of the beneficiaries (or class if not individually specified)
The information required for each, is as follows:
- Date of birth
- NI number (NINO) if UK resident, unless under 16 years old, or a Unique Tax Reference (UTR), if any
- An address and passport, or ID number for non-UK residents, if no NINO.
The government has made it clear that the responsibility for the registration of a Trust lies with the trustees themselves. Failure to register, and to subsequently update the register where changes are made to a Trust, will likely incur penalties in the form of fines.
Financial Advisers (and other financial service providers) are required to obtain proof that a Trust has been registered on the Trust Registration Service, before conducting any new business with the Trust.
Without this confirmation, financial advisers will be unable to provide services to the Trust.
The government have stated that:
- Trusts in existence at 10 March 2020 (in line with the directive) must register by 10 March 2022.
- Trusts that are set up after 10 March 2020 must register within 30 days, or by 10 March 2022, whichever is later.
- Trusts that are set up on or after 10 March 2022, will have 30 days to register.
- Once registered on the updated system, trustees will have 30 days from when they are aware of any changes to update the details.
Until 10 March 2022, all trusts that incur a tax liability for the first time should register on TRS, under the current process in place for tax registration purposes.
Lovewell Blake Financial Planning Limited want you to be aware of this new requirement so that you are prepared to act, when required to do so.
As the government provides further guidance, it may be that we are able to provide some assistance to you and facilitate the registration process. Lovewell Blake LLP offer additional services that can help in this area too.