If you are a trustee, you must register your trust with HMRC. This is to ensure you and the trust comply with anti-money laundering regulations. You also need to register if you require a Unique Taxpayer Reference (UTR), which you would need when completing a self-assessment tax return in respect of the trust. You would need a UTR even if the trust is on the exemption list.
Why would I need to register a trust?
You must register if the trust becomes, or is, liable for any of the following taxes:
- Capital Gains Tax
- Income Tax
- Inheritance Tax
- Stamp Duty Land Tax
- Stamp Duty Reserve Tax
- Land and Buildings Transaction Tax (in Scotland)
- Land Transaction Tax (in Wales)
The following types of trusts must register even if they have no tax liability:
- all UK express trusts — unless they are specifically excluded
- non-UK express trusts, like trusts that:
- acquire land or property in the UK
- have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK
If the trust is not resident in the UK, the trust must be registered if it becomes liable for tax on income coming from the UK or on UK assets.
If the trust has a liability but this is covered by a relief, you’ll need to register the trust to claim the relief through self-assessment.
Trusts that do not need to registered
Some trusts do not need to be registered if any of the following criteria applies:
- the trust is used to hold money or assets of a UK registered pension scheme — like an occupational pension scheme
- the trust is used to hold life or retirement policies providing that the policy only pays out on death, terminal or critical illness or permanent disablement, or to meet the healthcare costs of the person assured
- the trust is holding insurance policy benefits received after the death of the person assured — as long as the benefits are paid out from the trust within 2 years of the death
- it’s a charitable trust that is registered as a charity in the UK or which is not required to register as a charity
- it’s a ‘pilot’ trust set up before 6th October 2020 and holds no more than £100 — pilot trusts set up on or after 6th October 2020 will need to register
- it’s a co-ownership trust set up to hold shares of property or other assets which are jointly owned by 2 or more people for themselves as ‘tenants in common’
- it’s a will trust created by a person’s will and comes into effect on their death providing they only hold the estate assets for up to 2 years after the person’s death
- it’s a trust for bereaved children under 18, or adults aged 18 to 25, set up under the will (or intestacy) of a deceased parent or the Criminal Injuries Compensation Scheme
- it’s a ‘financial’ or ‘commercial’ trust created in the course of professional services or business transactions for holding client money or other assets
However, any of the above will need to be registered if they have a liability to UK tax.
Furthermore, there are other, less common, types of express trusts which are set up for particular purposes that are excluded from registration unless they are liable to pay tax.
More details can be found here.
The deadline for registrations is on or before 1st September 2022 for non-taxable trusts that were created on or before 6th October 2020. The deadline is also 1st September 2022 for non-taxable trusts created after 6th October 2020.
Register your trust within 90 days of it being created or becoming liable for tax, or on or before 1st September 2022 (whichever is later).
For trusts that are taxable, the registration deadline depends on the following:
- when the trust was created
- the tax the trust is liable for
- if it has been liable for Income Tax or Capital Gains Tax before
Further information can be found here.
As always, if you would like any further information regarding the above, please feel free to contact our offices by email firstname.lastname@example.org.