Our Trust experts explain what the Trust Registration Service is, which trusts need to register, the registration deadlines and the ongoing obligations of trustees in this detailed guide.
Since 2017, many trusts in the UK have been required to register with the Trust Registration Service. Here, we explain what the service is and which trusts may need to register.
What is the Trust Registration Service?
The Trust Registration Service, or TRS, is essentially a database of trusts maintained by HMRC. It records information about trusts and their beneficial ownership. First introduced in 2017, it has expanded significantly in scope since then.
The TRS is not limited to taxable trusts. Both taxable and non-taxable trusts which operate within the UK or have specified connections to the UK must be registered.
What types of trusts need to register?
The three main types of trust that must register with the trust registration service are:
Any trust that becomes liable to a UK tax, which includes a broad range of taxes such as Capital Gains Tax, Income Tax, Inheritance Tax and Stamp Duty Land Tax.
UK resident express trusts, unless the trust is one of the number of exceptions.
Certain non-UK resident trusts
Are there any exemptions?
There are a number of trusts currently excluded from TRS registration.
According to government guidance, some non-taxable trusts which are exempt from TRS registration currently include the following, but not exclusively:
a trust that is used to hold money/assets of a UK registered pension scheme, for example an occupational pension scheme;
a trust that is used to hold life or retirement policies providing that the policy only pays out on death, terminal or critical illness or permanent disablement, or to meet the healthcare costs of the person assured;
a trust that is holding insurance policy benefits received after the death of the person assured provided that the benefits are paid out from the trust within two years of the death;
a charitable trust that is registered as a charity in the UK or falls within an exemption and does not need to register as a charity; or
a ‘pilot trust’ that was created before 6 October 2020 and holds no more than a nominal amount i.e. £100 or less. Please note that all pilot trusts set up on or after 6 October 2020 will need to register;
a co-ownership trust set up to hold shares of property or other assets which are jointly owned by two or more people for themselves as ‘tenants in common’;
a will trust created by a person’s will and comes into effect on their death providing they only hold the estate assets for up to two years after the person’s death;
a trust for bereaved children under 18, or adults aged 18 to 25, set up under a will, or on an intestacy, of a deceased parent or the Criminal Injuries Compensation Scheme;
a ‘financial’ or ‘commercial’ trust created in the course of professional services or business transactions for holding client money or other assets; and
a trust which has been created via legislation or imposed by a court such as under the intestacy laws or by court order to hold compensation payments, as these are not deemed express trusts. TRS registration will be required however if a unique taxpayer reference (UTR) is needed to file a tax return.
Registration deadlines
A trust must typically register with the TRS within 90 days of creation or becoming eligible to register. Similarly, any relevant changes to the trust’s structure or beneficiaries must be reported within 90 days of the change.
What details are needed to register?
Generally, you will need details of the trustees, settlor, each named beneficiary and a description of any class of beneficiaries as well as the details of the trust fund at the date of registration for taxable trusts only.
What happens post-registration?
If a trust has been registered as a taxable trust, then the lead trustee can expect to receive a UTR for the trust by post within 15 working days from HMRC. Following this, reminders for annual tax returns will be sent.
If a trust has been registered as a non-taxable trust, then the lead trustee can expect to receive a unique reference number (URN) for the trust by post within 15 working days from HMRC.
Are there any future requirements?
Once a trust has been registered on TRS, there is a continuing obligation to keep the TRS register up to date. This can be actioned by a Trustee claiming the Trust on the TRS and can be regularly maintained such as to record a change in Trustees or to change the status of the trust from non-taxable to taxable.
Are there any penalties for failing to register?
A fine of up to £5,000 can be issued of an eligible trust is not registered. Therefore, it is important to ensure that you keep up to date with your reporting obligations.
Unsure if a trust needs to be registered?
In this area, government guidance is a comprehensive resource for an overview of the TRS scheme, however it is complex.
If you are a Trustee of a trust or a Settlor of a trust and are unsure if your trust falls within the scope of TRS, professional advice is recommended. There are a variety of professionals offering assistance with TRS including solicitors, accountants and chartered financial planners. Contact our Trust solicitors for advice.
