There is still a need to register existing and new trusts through the online Trust Registration Service. This article will provide a general overview of the types of trust that require registration.
Since 2017, HMRC have required any tax-paying trusts to be registered with them through the online Trust Registration Service (TRS). The latest 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 register on the Trust Registration Service, 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 register, even if not required to register as registrable express trusts.
If a trust falls within one or both of these categories, the trustees must register the trust 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 here 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 has the right to all of the capital and income of the trust at any time if they’re 18 or over. This means the assets donated by the settlor will always go directly to the intended beneficiary.
|If a bare trust is an express trust it should register on TRS. There are several exclusions that may apply to common bare trust arrangements. *They are not required to register 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 person under 25. These trusts are usually 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 to the whole of the assets.
|These trusts set up under a will do not have to register on 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 register.
|Where trustees have discretion to make decisions about how to use capital and income of the trust.
|In general, discretionary trusts should register on TRS. However, there are several exclusions that could apply, depending on the terms and use of the trust.
|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 register on TRS, unless the particular circumstances mean that one or more of the exclusions from registration applies.
|A trust created deliberately by a settlor, usually (but not always) in the form of a document such as a written deed or declaration of trust. Most trusts are express trusts, including most of the other types of trusts included in this table.
|The registration consequences will depend on what type of trust it is.
|Interest in Possession trust and Lifetime 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 register on the TRS. However, there are several exclusions that could apply, depending on the terms and use of the trust.
|Non-UK resident trust
|Trust where the trustees are not resident in the UK for tax purposes.
|In general, non-UK trusts do not have to register on TRS, however they do have to register 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.
|Trusts which hold not more than £100 and were already in existence before 6 October 2020 are not required to register. Conversely, trusts created on or after 6 October 2020, or that have funds added after that time so that the trust now holds more than £100, are required to register.
|Trusts set up to hold assets for the benefit of a beneficiary whilst protecting the assets in the event that certain conditions specified in the trust deed are breached.
|In general, most protective trusts are required to register. However, there are several exclusions that could apply, depending on the terms and use of the trust.
|A trust set up automatically under the terms of legislation.
|Statutory trusts are not express trusts and therefore do not generally have to register on TRS.
Trusts where registration is not required:
- Charitable trust
- Child Trust Funds and Junior ISAs
- Disabled person or persons trust (unless for taxable purposes)
- Unit trusts (authorised and unauthorised)
There is still a need to register any outstanding and newly created trusts. If you require further guidance on this, there are the following resources available:
On Techlink, we have created a series of documents and videos to help you guide your clients through the registration service.
In addition to the online guides, we provide a comprehensive TRS Mezzanine service which can you book here.
This is an opportunity for either you or one of your support team to receive step by step guidance on how to create a Government Gateway Organisation ID and step by step guidance on how to complete HMRC’s Trust Registration Form. Through screen sharing over Zoom one of our consultants will talk you through the completion process.
Additionally, you can choose to have the Mezzanine with one of your lead trustee clients attending. You should include their name and email address on the booking form. This Mezzanine incurs a fee of £60 (£50 plus VAT).
Book your appointment here
To request further information or any queries please contact:
email@example.com or firstname.lastname@example.org