There’s a big deadline approaching if your estate planning includes a Trust. Under the snappily-named Fifth Money Laundering Directive (5MLD for short), Trustees are required to register more Trusts than under previous systems including the paper Form 41G (Trust).
Acronym alert: we apologise in advance for the number of acronyms this article includes. That’s HMRC for you (darn it!).
Why you need to register with the Trust Registration Service
The new requirement is for the vast majority of Trusts to be registered online using the Trust Registration Service (TRS). This will give HMRC a digital record of all applicable Trusts .
Whilst most Trusts made recently should be registered, older Trusts may not be. In the past, the HMRC stated that Trustees poised to used Form 41G (Trust) to register a new trust may not need to do so.
“If there is no income arising, and no likelihood of income or gains in the future, you do not need to complete this form”.
Times have changed, and now nearly all types of trusts need to be registered. Once registered, Trustees can get a Self-Assessment (SA) Unique Taxpayer Reference (UTR). Every Trust registered requires its own UTR in order to submit the SA tax return. You can’t have multiple Trusts under one UTR.
Frankly, this is all a bit of a headache if you have set up multiple Trusts to achieve specific goals at different stages in your estate planning.
What Trusts need to be registered?
Previously, any Trust that incurs a tax liability will need to be registered. This includes so-called express Trusts:
“The term “express trust” means a trust that was deliberately created by a settlor expressly transferring property to a trustee for a valid purpose, as opposed to a statutory, resulting or constructive trust.”
According to the HMRC, any Trust liable for the following taxes must be registered:
- 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)
AND (and that’s the new bit) the following types of trusts even if there is 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
Are there any exceptions?
A few - you can find them on this page under the heading: Trusts that do not need to be registered unless they are liable to pay UK tax.
There’s a user-friendly explanation of some exempted Trusts here too.
What information is required by the TRS?
Quite a lot, including (and not limited to) details of:
- The name and details of the Trust
- Assets and the market value for the Trust
- The settlor
- The trustees including a lead Trustee for correspondence
- Any other person with control over the trust
- All beneficiaries (whether actual or potential)
For each person identified, the TRS will require at least:
- Their name
- DOB
- NINO (NI number -who knew that one???) OR address and passport number
That’s a lot of work for Trustees!
Last call for information
To add to the pressure, 5MLD widens the previous requirements to all UK Trusts whether there is a tax liability or not. There is now one crucial deadline for older Trust registrations:
- Non-taxable trusts in existence on or after 6 October 2020 must be registered by 1 September 2022.
- Non-taxable trusts created after 6 October 2020 must be registered within 90 days of it being created or becoming liable for tax, or on or before 1 September 2022 (whichever is later).
Other deadlines apply to other types of Trust. If you don’t register a Trust before the appropriate deadline, you may have to pay a penalty.
Yikes! I’ve got Trusts! What can I do?
Act now. According to an article by KPMG:
“Given the significant changes and recent extension to the scope of the TRS, it is imperative that trustees review their position to assess their registration obligations in relation to both registering and updating the Trust Register, to avoid penalties.”
Who can help me?
At the moment ,there seems to be mixed views from accountants, solicitors and financial advisors as to who should be helping clients. This is a lot of admin work for anyone involved. If you have a relationship with any of these professionals, then talk to them to see what they are offering.
- If you’re a Panthera Estate Planning client, you can relax. All Trusts made with our assistance, direct by Paul Hammond, and through our previous sister company Panthera Wealth will be identified and we will be contacting you very soon to discuss the next steps.
- If you’re not a client, consult your own financial advisor to discover what steps they will be taking. Some may include it as part of the service.
- If you need stand-alone help because you’ve set up your own Trusts or can’t remember who did set them up, there are companies offering to help at a cost of around £250 + VAT per Trust UTR.
Ultimately it is the duty of the Trustees to get involved or possibly pay for someone else to do the work.
Can I talk to you, Paul?
Yes, you can. Under Panthera Estate Planning we are able to help. We cannot actually register trusts on your behalf. However, we can help make the process smoother with making sure you have the right information.
As an individual, I am also a regulated financial advisor with True Potential, so can help with both advice and help with setting up new Trusts for existing clients if required.