Prior to September 2021, only trusts which were liable to pay certain UK taxes were required to be registered with HMRC via the Trust Registration Service (TRS).
New rules mean that certain other trusts need to be registered too (even if there is no tax to pay) and there are strict deadlines to do so. If the deadline is missed, the trustees may have to pay a financial penalty so it is important to know if your trust needs to be registered.
Apart from a few exceptions, a trust must be registered if it becomes or is liable for Capital Gains Tax, Income Tax, Inheritance Tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax, Land and Buildings Transaction Tax (in Scotland) or Land Transaction Tax (in Wales).
The earliest deadline to register the trust is 31st January in the tax year after the one in which your trust has any tax liability. So, for example, if the trust received some interest in December 2021 (the 2021 to 2022 tax year) and became liable to Income Tax on it, the trust would need to be registered by 31st January 2023 (in the 2022 to 2023 tax year).
All express trusts (UK or non-UK) must now be registered even if there is no tax liability – unless it is specifically excluded.
One example of a trust which does not need to be registered is one created through a person’s Will where there is no tax to pay and the assets are only held for up to two years after the person’s death.
So, if a Will includes a Life Interest Trust (for instance), that trust will need to be registered if the asset is held for more than two years or the trust becomes liable for tax.
If the trust existed on 6th October 2020, the deadline to register the trust is 1st September 2022.
If the trust was created after 6th October 2020, the trust must be registered within 90 days of being created or otherwise becoming registerable, or by 1st September 2022 (whichever is later).
The link to register a trust as a trustee can be found at https://www.gov.uk/guidance/register-a-trust-as-a-trustee