The Trust Registration Service (TRS) has undergone significant expansion in recent years, placing new obligations on Trustees across the UK. Originally introduced in 2017 as part of an EU anti-money laundering directive, the TRS was designed to create a central register of the beneficial ownership of Trusts. The TRS regime was then expanded in 2020, which has placed further obligations on Trustees.
This article provides an overview of the TRS, recent changes, and what Trustees should be doing now to ensure they meet with HMRC’s obligations. However, this is a changing landscape and seeking up to date advice is key.
What is the Trust Registration Service?
The TRS is an online system maintained by HMRC, which holds key information about Trusts, the nature of assets held and their beneficial owners – including Settlors, Trustees, and Beneficiaries. It aims to increase transparency and combat money laundering.
Originally, only Trusts with an Income Tax liability were required to be registered. However, reforms in 2020 expanded the scope significantly.
Key Changes to the TRS
Under the broadened regime, the following types of Trusts now need to be registered, even if they have no UK tax liability:
• All UK express Trusts
• Non-UK express Trusts that acquire UK land or have at least one UK-resident trustee and enter into a business relationship in the UK
It is important to note that where the administration of an Estate has continued for more than two years, this creates a registrable Trust for the purposes of the TRS.
Key Deadlines for TRS Compliance
• Non-taxable trusts in existence on or after 6 October 2020 were required to be registered by 1 September 2022
• Trusts that became registrable after that date are to be registered within 90 days
• Changes to Trust details (such as new Trustees or updated addresses) must also be reported within 90 days of the change
Certain Trusts are excluded from the Trust Registration Service unless they become liable to pay UK tax. These include:
• Charitable Trusts
• Will Trusts that are wound up within two years of death
• Trusts holding jointly owned property for themselves (e.g., joint bank accounts)
• Trusts created by statute (e.g., personal injury trusts)
• Certain Bare Trusts and child Trust funds
However, the rules around exemptions can be complicated, and legal advice is often necessary to determine whether a Trust must be registered.
Common Trusts that will fall under the TRS rules include:
• Trusts of property – commonly where property is transferred or owned as Tenants in Common, and the legal and beneficial ownership is different
• Trusts created by a Will
• Trusts created by someone in their lifetime
Trust Registration: Consequences of Non-Compliance
Trustees who fail to register or keep the register up to date may be subject to penalties imposed by HMRC. While initial penalties may be light-touch (typically warnings), repeated or significant breaches could lead to financial penalties.
How Can We Help?
Trusts can be a useful tool to manage tax planning. However, navigating the TRS can be complex, particularly for lay Trustees unfamiliar with the Trust structure or their obligations.
If you are acting as a Trustee, or you’ve recently established a Trust, it is crucial to understand your duties under the TRS.
If you are a Trustee and are unsure of your obligations, please contact us.
