As is well known by now, since 2017, HMRC have required any tax-paying trusts to be registered with them through the online Trust Registration Service (TRS) and the 2020 UK Money Laundering Regulations extended this requirement to include most non-tax-paying trusts.
All UK express trusts and some non-UK express trusts are required to be registered on the TRS, unless explicitly excluded from registration (‘excluded express trust’).
An express trust is a trust created deliberately by a settlor, usually in the form of a document such as a written deed or declaration of trust. This ‘declaration’ can be written or oral. Express trusts can be created to take effect during the settlor’s lifetime or on death (by will).
UK and non-UK trusts with a liability to UK taxation are required to be registered as “taxable trusts”, even if not required to be registered as registrable express trusts.
If a trust falls within one or both of these categories, the trustees must have the trust registered with the TRS and provide certain information on the trust.
Below is a table of common types of trusts and their likely registration requirements. This is not a comprehensive list of trusts and a general overview only. Please refer to the HMRC Trust Registration Service Manual for full guidance on specific conditions whereby a trust may be required to register:
Any trust with a liability to UK taxation is required to register unless stated otherwise.
|Type of trust
|Does the trust have to register?
|Assets in a bare trust are held in the name of a trustee. However, the beneficiary is absolutely entitled to all of the capital and income of the trust. This means the assets donated by the settlor will always go to the intended beneficiary.
|If a bare trust is an express trust, it should be registered on the TRS. There are several exclusions that may apply to common bare trust arrangements. Bare trusts are not required to be registered for taxable purposes.
|Bereaved minor trust and 18-to-25 trust
|Trusts for the benefit of a bereaved child under 18 or, in the case of an 18-to-25 trust, for a bereaved child under 25. These trusts are set up under the will of a deceased parent. They are used as a means for a parent to pass assets to a child whilst (for 18-to-25 trusts) being able to specify the age at which the child becomes absolutely entitled.
|These trusts set up under a will do not have to be registered on the TRS as registrable express trusts. Bereaved minor trusts may also arise in England and Wales through the intestacy of the deceased parent. In those cases, they are not required to be registered.
|Where trustees have discretion to make decisions about how to use capital and income of the trust.
|In general, discretionary trusts should be registered on the TRS. However, there are several exclusions that could apply, depending on the terms of the trust and the type of asset they hold.
|Employee benefit trust (EBT)
|A trust (usually a discretionary trust) set up by an employer for the benefit of their employees. An EBT is generally used as a vehicle in a scheme to reward and motivate employees. The benefits may be pensions, sick pay, a share of profits, shares or almost anything the employer chooses.
|In general, EBTs should be registered on the TRS, unless the particular circumstances mean that one or more of the exclusions from registration applies.
|Interest in possession trust
|A trust where the trustees must pass on all trust income to the beneficiary as it arises (less any expenses), or where the beneficiary has a right to use the trust property. The beneficiary is referred to as having an ‘interest in possession’ in the income of the trust or in the trust property.
|In general, interest in possession trusts should be registered on the TRS. However, there are several exclusions that could apply, depending on the terms of the trust and the type of asset they hold.
|Non-UK resident trust
|Trust where the trustees are not resident in the UK for tax purposes. (Also, if there is a mixture of UK resident and non-UK resident trustees acting at the same time, the trust is a non-UK resident trust, for TRS purposes, if the settlor of the trust was not resident or domiciled in the UK at the time when the trust was set up or when the settlor added funds to the trust.)
|In general, non-UK trusts do not have to be registered on the TRS if they have no UK tax liabilities. However, they do have to be registered if they acquire UK land or, in some circumstances, enter into a business relationship with a UK business.
|Trusts that are set up holding a nominal amount. They are typically set up for potential future use, when more substantial amounts will be added, but in practice they remain dormant until that time.
|Pilot trusts created before 6 October 2020 where the value of the property held by the trust does not exceed £100 are not required to be registered. If further funds are added to the trust, so that the trust fund exceeds £100, the trust will have to be registered at that point. However, all pilot trusts created on or after 6 October 2020 are required to be registered, even if they only hold a nominal amount.
|A trust set up automatically under the terms of legislation, e.g. a trust arising under intestacy in England and Wales.
|Statutory trusts are not express trusts and therefore do not generally have to be registered on the TRS.
Trusts where registration is not required:
There is still a need to register any outstanding and newly created trusts. Whilst Finura are not able to act as an agent on your behalf, we are happy to support you. To help, here is a Frequently Asked Questions (FAQ) factsheet with key information as well as a Guide on How To Register Your Trust. There is also a step-by-step video guide.
If you or your family members have any questions about registering your Trust(s), please get in touch with your financial planner.
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