Taxable Trusts

Requirements for registering a Trust that has a tax liability has not changed.  You must register your Trust for taxation and anti-money laundering purposes with HMRC 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

The lead Trustee (or Trust Registration Agent) will be required to apply for a Unique Taxpayer Reference (UTR) and then fill out the required tax return by the required date. Even if your Trust has a tax liability that is covered by a relief, you will need to register the Trust to claim the relief through Self-Assessment.

The lead Trustee (or Trust Registration Agent) will be required to register the Trust to comply with 5MLD regulations.

If the Trustee is not resident in the UK, you must register the Trust if it becomes liable for tax on income from the UK or on UK assets.

Trustees are not required to register for taxation if:

• The Trust has to pay less than £100 of Income Tax from interest
• The trust is a pension trust registered with HMRC
• The trust is a bare Trust
• The tax due is only from the Settlor or Beneficiary of the Trust
• The Trust is a charitable Trust and tax is not due on either income or assets

Trustees should check with HMRC on reporting deadlines and guidance, however, please see the requirements for non-taxable Trusts that must be registered unless they are exempt.

Under the new Regulations, all UK express Trusts will have to be registered by September 1st, 2022.

Most Trusts are Express Trusts. This simply means one that is created knowingly and intentionally by the Settlor either in their lifetime or on their death, usually in writing, giving express instructions as to how the Trust property* is to be held for the Beneficiaries. This is unlike implied Trusts which are imposed by law, e.g. in the event that a Trust fails and the beneficial interest is returned to the Settlor (a resulting Trust) or a Trust party acts improperly (a constructive Trust).

*the legal definition of property is broader than physical property

Express Trusts will include most Trusts, such as Discretionary Trusts, Life Interest Trusts, many investment trusts, and even bare trusts. Trustees should check with their Trust provider or request a Trust audit from a Trust Registration Agent. The common Trusts that do not require registration are listed below.

Which Trusts are exempt?

The exemptions in the regulations are relatively clear providing care is taken. They include the following plus some less common specialist Trust arrangements:

• “Pilot” Trusts established before 6 October 2020, holding assets valued at less than £100
• Vulnerable persons trusts
• “Pure” life assurance policies
• Trusts imposed by statute
• Bereaved minors Trusts
• UK-registered pension Trusts
• Charitable Trusts regulated in the UK
• Will Trusts created on death that appoint assets within two years of death
• Personal injury Trusts
• Save-as-you-earn schemes and share incentive plans
• Authorised unit Trusts
• Co-ownership Trusts for property

Please note that it is only UK Trusts, or non-UK Trusts that acquire land or property in the UK or enter a business relationship in the UK and have at least one UK Trustee, that must be registered.

Now that the online software is available, reportable Trust Registration may be carried out by your Trust Registration Agent or by your nominated lead Trustee.