11th July 2022

Non-taxable trusts need to be registered by 1 September 2022

New rules introduced by HM Revenue & Customs (HMRC) require trustees to register the details of most non-taxable trusts with the Trust Registration Service by 1 September 2022.

After that date, trusts must be registered within 90 days of creation; and any changes to the trust details or circumstances must be notified within 90 days of the change.

HMRC requires trusts to be registered to ensure compliance with anti-money laundering regulations, and to facilitate provision of a Unique Taxpayer Reference. But even where there is no tax liability, there is a now a requirement for non-taxable trusts to be registered with the Trust Registration Service.

‘If you are a trustee, it is important to take steps to register any non-taxable trusts in accordance with the new rules in time,’ explains Joanna Watson-James, an Associate in the Wills, Probate and Trusts team with MacDonald Oates LLP. ‘Failure to register the trust on time or to update the register with any changes within 90 days could incur a financial penalty of £100 per offence from HMRC.’

A trust is ‘non-taxable’ if it does not incur a UK tax liability such as income tax, capital gains tax or inheritance tax.

There are a number of exceptions to the new rules which include:

  • charitable trusts;
  • legislative trusts and those imposed by court order (for example, trusts ordered by the court in divorce proceedings or estate disputes);
  • co-ownership – where the trustees and beneficiaries of jointly-held property are the same people;
  • personal injury trusts – where a trust is holding a claim amount or is a disabled person’s trust;
  • insurance policy trusts – where the trust is paying out a sum only, for example, on death;
  • pilot trusts – which are not worth more than £100 and were set up before October 2020;
  • pension scheme trusts – not including pilot trusts set up to receive pension death benefits;
  • trusts created on death – where the trust will be wound up within two years of death;
  • accounts held for minors and people who lack mental capacity.

It is worth noting that some financial products and arrangements use the word ‘trust’ in their branding or description, such as the Child Trust Fund or venture capital trusts, but these are not trusts so do not need to be registered.

All trustees are equally legally responsible for the trust, but a ‘lead’ trustee is required as a main point of contact for HMRC to receive a Unique Reference Number (URN) which can be used to keep information up to date. Alternatively, you can appoint a solicitor as an agent to manage this on behalf of the trust.

The information required by HMRC includes:

  • the name of the trust;
  • the date the trust was created;
  • whether the trust is an express trust or not;
  • details of a non-UK trust’s business relationships in the UK;
  • details of UK land or property the trust has purchased;
  • details of beneficiaries.

Keeping on top of the registration and reporting duties for a trust can be onerous, so it is a good idea to seek help from a legal expert with experience of trusts and their regulation.

For advice on whether you need to register a trust or to discuss further information on setting up a trust, or any other wills or probate matter, please contact Joanna Watson-James in the wills and probate team on 01730 268211or email MacDonald Oates LLP has offices in Petersfield, Hampshire and Midhurst, West Sussex.

This article is for general information purposes only and does not constitute legal or professional advice. Please note that the law may have changed since the date this article was published.