The Trust Registration Service (TRS) is a register of beneficial ownership under trust arrangements. The requirement to register trusts started in 2017 and its scope widened considerably on 6 October 2020. These latest changes are likely to bring many more UK trust arrangements within the scope of TRS.

Types of UK trust arrangements that need to be registered

 All UK express trusts

All UK trusts that are created deliberately must be registered (unless covered by a specific exclusion). Trusts are usually established by a written deed or declaration of trust, but they may also be created verbally, particularly in the case of ‘bare trusts’.

A bare trust exists where the beneficial owner has the right to capital and income, but legal ownership is in another’s name, eg a share portfolio held in the name of a parent for the benefit of a child, or private company shares held by someone as a nominee.

Bare trusts are also commonly found in relation to property ownership as property cannot be registered in the joint names of more than four people.

Taxable UK trusts

Any trust which has a liability to UK tax must register, even if it is covered by an exclusion. Trusts required to register are those with a liability to:

• Income Tax
• Capital Gains Tax (CGT)
• Inheritance Tax
• Stamp Duty Land Tax
• Land and Buildings Transaction Tax (Scotland)
• Land Transaction Tax (Wales)
• Stamp Duty Reserve Tax

Exclusions

Certain types of trust will be excluded from the requirement to register, including will trusts, bank accounts for children, disabled person’s trusts, charitable trusts and certain life insurance policy trusts, amongst others.

Deadlines

Trusts with a UK tax liability created before 6 April 2021 must register by 31 January following the end of the tax year in which they first become taxable. This deadline is brought forward to 5 October if the liability is to Income Tax or CGT as the registration is linked to the request for a tax return to be issued.

All other trusts (non-taxable trusts and post 5 April 2021 taxable trusts) with a requirement to register must register by 1 September 2022 or 90 days from the date the requirement to register is triggered, whichever is later.

If a trust created pre-6 April 2021 has a requirement to register as a taxable trust and does not fall within the exclusions, then the earlier deadlines apply.

Any changes to the information held on the register must be notified within 90 days of the change.

Taxable trusts are required to make an annual confirmation that the register is up to date by 31 January each year.

Penalties

Whilst HMRC originally outlined a penalty scheme, it has stated that these will not be automatically issued, and a pragmatic approach will be followed. However, we would expect this approach to harden, and trustees should use their best endeavours to meet deadlines.

Retention of data and access to the register

Certain information must be held by the trustees and from 1 September 2022, those with a legitimate interest will be able to request limited information. Further details of this will be issued in the coming months.

Professional trustees must retain the data for five years from the date of the final distribution of assets and they must then delete the records unless they have permission to retain it or reasonably believe it may be required under an enactment or for the purposes of court proceedings.

For further information please contact Stephanie Parker, Trust Director, or your usual haysmacintyre contact.