HMRC – Trust Registration Service

Over the last few years, a Trustee’s requirement to register a Trust with the HMRC Trust Registration Service has been changing. A Trust is a ‘vehicle’ that can be used to hold money or property for people.

The Trust Registration Service has been, slowly but surely, expanding the scope of Trusts but now need to be registered. As of September 2021, all Express Trusts need to be registered with HMRC (unless they are one of the types of Trust that are specifically excluded).

Trustees, the people who manage the Trust and its money or property, are obliged to maintain certain records about the Trust but, until recently, the obligation to register Trusts with the Trust Registration Service was limited to Express Trusts with taxable consequences.

Therefore, all Express Trusts (except those who do not need to register, which are referred to in more detail below) must now be registered with HMRC.

Trusts that do not have to be registered are: –

1. Will Trusts, created on death that only receive assets from the estate and are wound up within 2 years of death. HMRC has confirmed that any Trust created under the terms of a Will (or as part of the administration of an estate) will only need to be registered from the point that the Trust commences – that is at the point when the assets actually vest in the Trustees – and only if this is more than 2 years following death;
2. Statutory Trusts, for example Arising on an Intestacy or Bankruptcy:
3. Co-ownership Trusts where the Trustees and the beneficiaries are the same. This will exclude most Trusts created due to joint ownership of land or other assets, such as Bank accounts or other jointly held investments.  There will, however, be an ongoing requirement to register this type of Trust if there are beneficial owners who are not also the legal owners, for instance if parents hold a property on trust for themselves and their children who are under the age of 18;
4. Pilot Trusts holding less than £100 and which were set up before the 6^th October 2020. Please note, however, that a Pilot Trust established after the 6^th October 2020 is required to register even if it holds less than £100 of assets;
5. Certain Express Trusts established to meet legislative conditions, for example if there is a Trust for a disabled person or for bereaved minors, or a Trust for a beneficiary between the ages of 18 and 25, Personal Injury Trusts, Maintenance Fund Trusts for historic buildings and tax advantaged share incentive plans (SIPS) and Trusts associated with SAYE option schemes;
6. Trusts consisting solely of an Insurance Policy, such as a Life Insurance Policy which is a pure protection policy and payment is not made until the death or terminal illness of the person insured;
7. Trusts imposed by Court Order;
8. Registered Pension Schemes held in Trust but are already subject to regulation by either the Financial Conduct Authority or the Pensions Regulator;
9. Trusts that are already registered in another EU Member State;
10. Charitable Trusts.

The consequence of this Legislation is that the majority of Express Trusts will now need to be registered. Some common examples are: –

1. Discretionary Trusts;
2. Immediate Post death Interest Trusts;
3. Bare Trusts.

If help, advice or assistance is required in relation to the Trust Registration Service please do not hesitate to contact Martyn Prowel Solicitors on 02920 470909