New HMRC rules for trusts
Are you a trustee of a trust? It is now a requirement for trustees to register all UK express trusts and some non-UK express trusts, with HMRC by 1st September 2022, or within 90 days of creation, unless the trust is specifically excluded.
The Trust Registration Service (TRS) is now open. It is a register that was introduced in order to give greater transparency to the beneficial ownership of trust assets, to comply with the new anti-money laundering regulations and to digitalise the registration of trusts.
Previously trusts only needed to be registered if they were liable to pay tax but these new rules were introduced to extend the scope of the trust register whether or not the trust has to pay any tax.
An express trust is any trust that is created deliberately, for example by way of a Deed or Declaration of trust. An example of a non-taxable trust is a trust set up on a person’s death under their Will, where their property or a share of it is held in trust for the benefit of their spouse to continue to live in the property.
To avoid being caught out by the new rules, trustees of express trusts should be aware of the following deadlines which they need to comply with, in relation to any non-taxable trusts:
Trusts created before 6 October 2020 or between 6 October 2020 and 2 June 2022 must be registered by 1 September 2022.Trusts created on or after 3 June 2022 must be registered within 90 days of creation.
Trustees should also be aware that any trusts that were in existence on or after 6 October 2020 and have since ceased will still need to be registered with the Trust Registration Service and then immediately de-registered.
Taxable trusts must also continue to be registered and the deadlines for registration depend on whether the trust was set up prior to 6 April 2021. The deadlines for taxable trusts are as follows:-
Set up prior to 6 April 2021
Must be registered by 31 January after the tax year in which the tax liability arose (unless the trustees are liable to income tax /capital gains tax for the first time – see below).Trusts liable for income tax / capital gains tax for the first time – must be registered by 5 October after the end of the tax year in which the trustees are liable to pay income tax / capital gains tax (this will apply when a registered non-taxable trust becomes taxable going forward).
Set up after 6 April 2021
Where the trustees become liable to pay UK tax before 3 June 2022 – must be registered by 1 September 2022.Where the trustees become liable to pay UK tax after 3 June 2022 – must be registered within 90 days of the tax liability arising.
Trustees must also make sure that the TRS record is kept up to date. It is a requirement that the information on TRS is updated within 90 days of the date that the trustees become aware of changes to the trust details or beneficial ownership.
If you would like any further guidance on whether your trust needs registering or you would like help with registration, then please do not hesitate to contact Amy Murphy on 01482 398374, email [email protected] or visit www.wilkinchapman.co.uk/personal/wills-estates-tax-and-trusts