The Issue:
From 6 October 2020, new rules came in that extend the number of trusts that now need to be registered with HMRC’s Trust Registration Service (TRS).
Trusts that had not traditionally needed to be registered because there was no tax to pay, such as life interest trusts, some property co-ownership situations and estate administrations when a person has died that last more than 2 years, now need to be registered.
If you are a trustee of a life interest trust that was set up because of a death more 2 years ago, you may not have realised that the Will Trust and possibly a property trust need to be registered with the TRS.
There are a few non-taxable trusts that still do not need to be registered; however, the list is now very short.
Many trustees are unaware of their obligations, and HMRC have done very little to advertise the new requirements and it is now when we are seeing clients on different matters that we are spotting that a trust needs registration.
Trustees who deliberately do not register a trust or who do not keep the TRS information up to date can face penalties of up to £5,000 per offence.
Deadlines
The deadlines for the registration of non-taxable trusts are:
- non-taxable trusts created before 4 June 2022 – by 1 September 2022. Clearly these are overdue and action should be taken now to avoid penalties.
- non-taxable trusts created after 4 June 2022 – within 90 days of creation.
- changes to the trust details or circumstances – within 90 days of the change.
There is no annual reporting requirement for non-taxable trusts. Where the trust is a taxable trust, however, now there is an annual requirement for the trustees to update the TRS to either confirm that the register has been brought up to date with any relevant changes or confirm on the register that no changes are required.
Next Steps
If you are a trustee of a trust that has not been registered and needs to be, we can review your trust documents and advise you on the steps you need to take to ensure your trust is compliant.
Consult our Wills, Trusts, Capacity and Probate solicitors in Banbury, Bicester and Rugby
If you have any concerns and would like to speak to one of our experienced trust solicitors, please do get in touch. Our team of highly qualified solicitors will be able to assess your situation and guide you through any steps necessary.
We have offices in Banbury, Bicester and Rugby, working with clients across Coventry and Warwickshire, the West Midlands, Oxfordshire and nationwide.
