Most trusts in the UK must be registered with HMRC’s Trust Registration Service, but certain trusts are exempt, such as those imposed by a court or created through legislation. Trustees are legally responsible for ensuring registration where required. Failing to do so can lead to penalties, so it is important to confirm your obligations with a solicitor or a tax adviser.
In this article we focus on the registration of non-taxable Trusts, which is a Trust that has no UK tax liability. Here we set out some key information in respect of registering a non-taxable Trust with HMRC. Trusts can be a tricky concept and so it is always encouraged to seek professional advice in respect of whether a specific Trust needs to be registered or not.
What is a non-taxable trust?
A non-taxable trust is a trust that does not currently incur any UK tax liability, such as Income Tax, Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax or Stamp Duty Reserve Tax. Non-taxable trusts often arise where the trust holds assets that do not generate taxable income or gains, or where the trust qualifies for an exemption under tax law.
What types of non-taxable Trusts need to be registered with HMRC?
Prior to a change in September 2021, only taxable Trusts were subject to registration, however, following a change in the HMRC rules, there is now a requirement for most non-taxable express Trusts to be registered too. An express Trust is a type of Trust which is created deliberately by the Settlor (the person who created the Trust) and there will usually be a document, such as Deed, which creates the Trust. Express Trusts can be made either during the lifetime of the Settlor or they can be created on their death if their Will creates a Trust.
What types of Trusts are exempt from registration?
There are, however, some exceptions to the types of non-taxable express Trusts that need to be registered. Schedule 3A of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 sets out specifically the types of Trust that are excluded from the registration requirements. It is important that you check to see whether the type of non-taxable Trust you are considering falls into any of the exclusions.
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How do I register a Trust as a trustee with HMRC?
Trusts need to be registered with HMRC using their online Trust Registration Service (TRS). The Trustees need to make an account to do this and then input and submit all of the information required. You should then be issued with a Unique Reference Number (URN) for the non-taxable Trust.
Once the Trust is set up on the TRS, the Trustees are then responsible for keeping the information on there up to date, as and when anything changes. It is important to remember that the responsibility to keep the TRS information up to date is an ongoing responsibility and should be done as part of the administration of the Trust.
Who is responsible for registering a Trust with HMRC?
In England and Wales, trustees are legally responsible for registering a trust with HMRC’s Trust Registration Service, unless the trust is exempt. They must register accurately and on time, and keep details updated to avoid penalties. As the rules can be complex, it’s important to seek expert legal advice to confirm whether registration is required and ensure full compliance.
Thornton Jones Solicitors advise that trustees should take these duties seriously to avoid costly penalties and protect beneficiaries’ interests. Early legal guidance can clarify obligations and help manage the registration process efficiently.
Contact our solicitors today for tailored advice on trust registration.
What is a Secret Trust?
Often thought to no longer be relevant in modern law, the archaic concept of secret trusts still exist in Wills today. This little known but fascinating topic does appear from time to time. The law concerning secret trusts is complex, but in the most simple terms, a secret trust is created when a person (known as a testator) makes a gift in a Will to one person but really intends that the person receiving that gift (the secret trustee) to hold that gift for another person instead (the beneficiary). A Blog by Liz Fyfe.
Does it matter when the non-taxable Trust was made?
- Non-taxable Trusts created on or before 06 October 2020 should have been registered on or before 01 September 2022.
- Non-taxable Trusts created after 06 October 2020 should be registered within 90 days of the Trust being created or it no longer being excluded under Schedule 3A mentioned above.
What happens if I do not register a Trust in time?
If a Trustee deliberately fails to register a Trust on time or fails to keep the Trust Registration Service information up to date, HMRC may impose a fixed penalty of up to £5,000. Before deciding to charge a penalty. HMRC will consider whether the failure was deliberate. As such, whether HMRC charge a penalty is considered on a case-by-case basis.
Registering a Trust with HMRC FAQs
A Trustee is a person who will manage the money or assets that have been appointed to another individual and will decide when and how the inheritance will be allocated to the beneficiary. The trustee must act in the best interests of the beneficiary or beneficiaries and follow the terms as they are laid out in the Will.
The settlor is the person who sets up the trust, who owns the trust and reserves the right to amend or revoke the trust. The settlor also specifies who will be the trustee, who should benefit from the trust assets, and under what circumstances.
An express trust, that is a trust that is intentionally made by the settlor, is any trust created deliberately by a settlor in express terms. The opposite of an express trust, in legal terms, is an implied trust, which is implied by the circumstances.
The settlor is the person who puts assets into a trust.
In England and Wales, most trusts must be registered with HM Revenue & Customs (HMRC) through the Trust Registration Service (TRS). As a trustee, you are legally responsible for ensuring the trust is registered if it meets the registration requirements. You will usually need to register a trust if it:
1. Is liable to pay UK tax, or
2. Is a UK express trust, or
3. Is a non-UK trust with certain UK connections (such as UK property ownership or income from the UK).
Steps to register a trust:
• Gather required information – This includes the trust’s name, date of creation, details of all trustees, settlors and beneficiaries, and any assets held by the trust.
• Create a Government Gateway account – You will need this to access the TRS online.
• Complete the TRS form – Provide all required details accurately.
• Submit the registration – Once complete, you will receive a unique reference number for the trust.
Deadlines vary depending on when the trust was created and whether it becomes liable for UK tax, so it is important to register promptly to avoid penalties.
If you are unsure whether your trust needs to be registered or you require assistance with the process, a solicitor experienced in trust law can provide tailored advice and manage the registration on your behalf.
How can we help you register your trust with HMRC?
Thornton Jones can assist in dealing with the registration of Trusts on the Trust Registration Service on behalf of the Trustees. We are also able to provide Trustees with advice in respect of the ongoing administration of the Trust. If you do require any professional advice or assistance with all manner of Trust queries, then please do contact a member of the Team.
The content of this blog post is for information only and does not constitute formal legal advice and should not be relied upon as advice. Thornton Jones Solicitors Limited accepts no liability for any such reliance upon this content. Where the post includes links to external websites, Thornton Jones Solicitors Limited accepts no responsibility for the content of such sites. Any link to a third party website should not be construed as endorsement by Thornton Jones Solicitors Limited of any content, products or services which are outside our direct control.
