Trust Registration- what you need to know
Posted on 30th June 2022 at 09:43
Most trusts now need to be registered with the HMRC via their Trust Registration Service which is an online portal service as opposed to paper form registration.
The purpose of registering a trust with HMRC is to make sure the trust complies with anti-money laundering regulations and so the trustees can obtain a Unique Taxpayer Reference (UTR), if required, for example, to complete a Self Assessment tax return.
Trusts should be registered if they become liable for any of the following taxes: -
-Capital Gains Tax
-Stamp Duty Reserve Tax or Scottish/Welsh equivalent.
A trust must also be registered if relief from tax is to be claimed.
Trusts do not need to be registered where they were imposed through a court or created via legislation unless they become liable to tax.
A non-resident trust must be registered if it becomes liable for tax on UK income or assets.
Non-UK express trusts
A non-UK express trust must be registered with HMRC if it acquires land or property in the UK or has at least one trustee resident in the UK and enters a ‘business relationship’ within the UK.
Non-taxable trusts must also now be registered unless they fall into one of the following categories: -
- If the trust holds money or assets or a UK registered pension scheme
- Holds life or retirements policies if the policy only pays out funds on death, terminal or critical illness or permanent disablement/to provide healthcare costs of the individual assured.
- Holds insurance policy benefits received after the assured has died if these benefits are paid out within 2 years of death.
- Is a charitable trust
- Is a pilot trust set up before 6th October 2020 and holds no more than £100. Pilot trusts created after this date are required to register with the TRS.
- Is a co-ownership trust holding property or assets which are jointly owned by two or more people for themselves as tenants in common.
- Will trusts created by Will and coming into effect on death if the trust only holds assets up to 2 years after the person’s death.
- Is for bereaved children under 18 or adults ages 18-25 set up under the Will or intestacy or a deceased parent or Criminal Injuries Compensation scheme.
- Is a financial or commercial trust created in the course of professional services or business transactions for holding client monies/assets.
When to register
Trusts that are not taxable
1. For non-taxable trusts that were created on or before 6 October 2020 the deadline for registrations is on or before 1 September 2022.
2. For non-taxable trusts created after 6 October 2020 the trust should be registered within 90 days of it being created or becoming liable for tax, or on or before 1 September 2022 (whichever is later).
Trusts that are taxable
The registration deadline depends on:
- when the trust was created
- the tax the trust is liable for
- if it has been liable for Income Tax or Capital Gains Tax before
Taxable trusts that are created on or after 6 April 2021
Register your trust within 90 days of the trust becoming liable for tax or on or before 1 September 2022 (whichever is later).
Taxable trusts that were created before 6 April 2021
1. Trusts that are liable for Income Tax or Capital Gains Tax for the first time
Register the trust on or before 5 October in the tax year after the one in which the trust starts to receive any income, or has capital gains, and becomes liable for Income Tax or Capital Gains Tax.
2. Trusts that have been liable for Income Tax or Capital Gains Tax before
Register the trust by 31 January in the tax year after the one in which the trust receives any income, or has capital gains, and is liable for tax.
3. Trusts that are liable for other taxes
Register the trust on or before 31 January in the tax year after the one in which the trust has any other tax liability, like Inheritance Tax.
If the trust is liable for more than one tax and both deadlines could apply, you must register it before the earlier of the 2 deadlines.
If you do not register the trust on time, the trustee may receive a notification letter reminding them of the obligation to keep the register up to date. If you do not keep the register up to date the trustee may be charged a penalty.
Once registered, is that the end of it?
No, once registered, the HMRC requires that an annual declaration be made by the Trustees confirming that the details previously provided are still accurate. This must be done by 31 January after the end of each tax year.
The Trustees must also declare on the portal if the trust has come to an end.
Powell Eddison can assist with assessing any trust in place to determine whether this requires registration with the HMRC Trust Registration Service.
We can help you compile the information required for registration and assist by putting you in touch with reputable contacts who can register the trust on your behalf and update this for you on an annual ongoing basis.
Contact us on 01423 564551 or email us at firstname.lastname@example.org to arrange your free initial, no-obligation consultation with a specialist.
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