Trust Registration Service

Over the summer we have been very busy trying to identify trusts which are now required to be registered under the extended Trust Registration Service rules.

Previously trustees or their agents on their behalf have been required to register trusts under the Trust Registration Service (TRS) if the trust was liable to pay tax.

These rules have been extended and now include all UK and some non-UK trusts that are currently open or have been in the period from 6 October 2020, whether or not the trust has to pay any tax, but with some specific exclusions.  The deadline for registering theses additional trusts Is 1 September 2022.

If you are aware of a trust which may need registering please contact us soon as possible. We have included some brief details below on the types of trust that need to be registered and those that are excluded.

Trusts that need to be registered

These are broadly:

• All UK express trusts, unless they are specifically excluded
• Non-UK express trusts:
  • Acquire land or property in the UK
  • Have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK

Trusts that do not need to be registered

Certain trusts do not need to register unless they are liable to pay UK tax. These include:

• Trusts used to hold money or assets of a UK-registered pension scheme, such as an occupational pension scheme
• Trusts 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
• Trusts holding insurance policy benefits received after the death of the person assured, providing the benefits are paid out from the trust within 2 years of the death
• Charitable trusts which are registered as a charity in the UK or which are not required to register as a charity
• ‘Pilot’ trusts which were set up before 6 October 2020 and which hold no more than £100 – pilot trusts set up after 6 October 2020 will need to register
• Co-ownership trusts set up to hold shares of property or other assets which are jointly owned by 2 or more people for themselves as ‘tenants in common’
• Will trusts which are created by a person’s will and come into effect on their death providing they only hold the estate assets for up to 2 years after the person’s death
• Trusts for bereaved children under 18 or adults aged 18 to 25 set up under the will (or intestacy) of a deceased parent or the Criminal Injuries Compensation Scheme
• ‘Financial’ or ‘commercial’ trusts created in the course of professional services or business transactions for holding client money or other assets

Trusts which are not set up deliberately by a settlor but are imposed by Courts or created by legislation, are not ‘express trusts’ and therefore do not have to register unless they are liable to tax. Examples of such trusts include a trust:

• Set up under the intestacy laws when a person dies without a valid will and the assets in the estate are held by a trust before passing to relatives
• Set up under a Court Order to hold compensation payments
• To hold jointly owned assets, such as a home jointly owned with a spouse, partner or relation as ‘joint tenants’, or a joint bank account

Some financial products and arrangements with ‘Trust’ in their description, such as the Child Trust Fund or Venture Capital Trusts, are not really trusts and so do not have to be registered.

Article written by Mary Plant.