Perhaps Trusts are something you do not encounter every day, but there are many instances when a Trust might be established to help with future planning. Family protection trusts seek to protect assets for the benefit of children and Trusts created within a Will for the benefit of children until the reach maturity are just two of the many types of Trust used when planning for the future.
Up until recently, most Trusts had to be registered with HMRC. However, the requirement to register a wider range of Trusts has come about as a result of the Money Laundering, Terrorist Financing and Transfer of Funds (information on the Payer) Regulations 2017.
What Trusts need to be registered?
Up until 1 September 2022, Trusts which were liable to pay tax needed to be registered. Since 1 September 2022, most express Trusts will also need to be registered whether they are liable to pay tax or not. An Express Trust is created deliberately by an individual during their lifetime through a declaration of trust (such as a family protection Trust) or in a Will which comes into effect once the individual has died. That means Trusts which may not be liable to tax, now need to be registered with HMRC.
The regulations also mean that any Trust which was in existence on 6 October 2020, even though they might have been wound up, need to be registered with HMRC. If the Trust has been wound up, after registration, the account should be immediately closed.
Are there any exemptions?
There are some exemptions from registration and these can be found on the HMRC website. The main exemptions from registration are:
- Charitable Trusts (provided they are registered with the Charity Registrar)
- Pension Scheme Trusts
- Some Insurance policy trusts
- 18 – 15 Trusts (set up for children in the Will of a parent or someone with parental responsibilities
- Children’s Bank or Building Society Trust Accounts
As you might expect, it is important to check if the Trust you are dealing with is exempt. For detailed information on exempt Trusts, please visit the HMRC website by clicking here.
It is also important to note that a Trust set up in a Will that runs for two years or less, does not need to be registered. However, if it runs over two years, it must be registered.
What is required with the registration?
Details of all trustees, the beneficiaries and the individuals who set the Trust up need to be included in the register. In addition, details about the date the Trust was set up and what assets it holds need to be disclosed. One of the Trustees needs to be nominated as a “lead trustee” and the lead trustee needs to provide some additional details.
If there are any changes to the Trust, the register needs to be updated.
HMRC has acknowledged that having all Trusts registered is a colossal task and that this procedure will be very new to many trustees. Because of that, whilst there is no “grace period” HMRC has indicated that there will be no penalties for late registration unless the trustees have behaved in such a way as to deliberately delay registration.
All new registerable Trusts must be registered within 90 days of their creation and, finally, an annual declaration must be completed each year confirming that all details are complete and up to date.
What help is there available?
As solicitors, we are well placed to advise our clients on all aspects of Trust registration. If you are involved in a Trust or are considering setting one up or if you are a Trustee seeking information or advice, please get in touch with us.