18 August 2022
HMRC’s deadline for registering a non-taxable trust is fast approaching. As such, Quilter is warning people who hold money in an express trust* and are yet to register the trust with HMRC to be aware of the new rules and understand what they need to do.
In September 2021, HMRC launched the new trust register as part of the Fifth Money Laundering Directive. Prior to this date, only trusts that had incurred a UK tax liability needed registering. However, now all existing trusts within scope of the new legislation will need to register by 1 September 2022, or within 90 days of the trust being set up – whichever is the latter. Trusts set up on or after the deadline will need to register within 90 days.
It is the responsibility of the trustees to ensure the trust is registered online by the deadline, and where there is more than one trustee only one ‘lead trustee’ can register the trust. If the deadline is missed, HMRC may impose penalties, so it is very important that you understand the rule changes and what this means for them.
A trust will need to be registered on the UK trust register if it meets any one of the following criteria:
- All trustees are UK resident
- There is at least one UK resident trustee AND the settlor is resident
- There is at least one UK resident trustee AND the trust enters a UK business relationship
- The trust holds UK property or land
- The trust holds UK assets AND has a UK tax liability
Registering a trust is a relatively quick and easy process. To add the trust to the register, you will first need to create a new government gateway ID for the trust, then you will be asked to provide personal information for each settlor, trustee and named beneficiary, as well as some details about the trust itself, such as name, date of declaration and any discretionary ‘classes’ of beneficiary.
In recognition of the fact that the registration requirement will be an unfamiliar obligation to many trustees, HMRC says there will be no penalty for a first offence of failure to register. However, if HMRC believes failure to register is deliberate, a £5,000 penalty may be charged per offence.
Quilter recently released ‘A step by step guide for registering your trust’ which you can find on Quilter’s platform website.
Shaun Moore, tax and financial planning expert at Quilter, said:
“With the trust registration deadline fast approaching it is important that people get prepared and have their documents ready to ensure the registration is completed by the deadline to avoid facing any penalties. While it may sound daunting, trust registration is a fairly straightforward process that is as easy to complete as registering for self-assessment. Ultimately, if you have nothing to hide then you have nothing to fear.
“Thanks to the government gateway system that is in place, in many cases it will not be necessary for people to seek professional help when registering a trust as the process is simple enough to complete. In the first instance, individuals who may be affected by the changes should consult HMRC’s online trust registration guidance. However, if further assistance is required then you should seek professional advice as soon as possible to ensure you meet the deadline.
“Trusts can be a useful tool when it comes to financial planning, and while there has previously been a misconception that trusts are used to hide money from the taxman, that is not the case. In reality, they provide a great option for sensible family financial planning that allows a beneficiary to receive money at the right time and in line with a family’s wishes and can ensure loved ones have good financial stability for the future.”
