Trustees take note: extension of trust registration service
The new regulations for the trust registration service (TRS) were laid before Parliament on 15 September 2020. These modify the registration requirements in accordance with the fifth EU anti-money laundering directive. The regulations come into force 21 days after they were laid.
What has changed?
Historically only trusts that had a tax liability had to register. Registration requirements are being extended to include most express trusts including those that do not have a tax liability. More non-UK trusts must now register as well.
What are the timescales?
Trusts in existence on or before 9 February 2022 must register by 10 March 2022. New trusts created after that date will have 30 days to register. Guidance about when and how trustees will be able to register will be provided in due course.
Which trusts are affected?
All UK express trusts, including bare trusts, must be registered unless specifically exempted. The exemptions include:
- UK registered pension trusts
- Charitable trusts regulated in the UK
- Pure protection life insurance policies and those paying out on critical illness or disablement, including group policies
- Trusts for vulnerable beneficiaries or bereaved minors
- Personal injury trusts
- Maintenance fund trusts
- Co-ownership trusts, where the trustees and beneficiaries are the same persons
- Will trusts created on death that only receive assets from the estate and trusts that only receive death benefits from a life insurance policy and are wound up within 2 years of death
- Existing trusts holding assets valued at less than £100 unless or until further assets are added
In addition, the following non-UK trusts must also register:
- All non-UK Trusts which acquire UK property after March 2020
- All non-UK Trusts which have at least one UK resident trustee and which forms a “business relationship” in the UK – i.e. they use a UK based lawyer, accountant or other professional
What happens if I fail to register a trust?
Failure to register on time or keep up-to-date and correct records will incur fines and penalties. As previously, in the absence of deliberate behaviour, initial failures to comply will result in fines starting at £100 but penalties of 5% of the tax liability can also be imposed.
How can Greenwoods GRM help you?
If you are a trustee of an unregistered trust, you must consider whether the extension of TRS now applies to you. We can help you determine if the trust falls within one of the exemptions and if not, assist you with the registration process.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. For advice, get in touch with your usual Greenwoods GRM contact or scroll down to complete our enquiry form.