Trust Registration Service (TRS)

DO YOU HOLD ASSETS ON BEHALF OF SOMEONE ELSE? SIGNIFICANT CHANGES TO HMRC REQUIREMENTS

Historically, it has been necessary to register all taxable trusts on the HMRC Trust Registration Service (TRS) but there has been a recent change in legislation which means that certain non-taxable trusts must now be registered.

The new scope for registration is very wide and all individuals must consider whether they are a trustee. Many will be surprised to learn that they are. The most common examples of arrangements which are, technically, trusts are:

parents or grandparents named on accounts containing money or investments belonging to their child
life assurance arrangements held on trust

Subject to various exclusions, all trusts in existence on 6 October 2020 or created since that date must be registered. However, please note that each trust need only be registered once, and the Trustees of each structure should liaise to decide who will deal with this.

The original deadline for registration set by HMRC was 31 August 2022 and, despite the fact they have been discussing the specifics of the TRS with various professional bodies for some time and also changing the scope of registration, HMRC have confirmed that the deadline will not be extended.

However, HMRC have confirmed that they will not issue penalties for registrations made after 31 August 2022:

where registration has been made voluntarily, or
where registration has been made in response to a notice to register issued by HMRC, within the deadline given in the notice

The reason for this stance is that HMRC are reluctant to extend the deadline, but they acknowledge their lack of public engagement around the TRS requirement and also that there have been delays in them confirming the exact scope of registration.

This means that HMRC will only issue penalties to trustees who they believe have deliberately avoided making the registration. We would therefore suggest that you make any required registrations at your earliest convenience as this will demonstrate to HMRC that this has been done voluntarily.

To assist you in identifying whether you need take any action, please work through our TRS requirement checker tool below. Please note there are guidance links under each question that will help you to answer at each step.

If you would like our assistance to identify whether a specific arrangement needs to be registered, we may be able to provide you with an answer in a quick telephone call or email exchange. In the first instance please speak to your usual Ryecroft Glenton contact and they will put you in touch with a member of our specialist trust team.

If your query cannot be answered simply or if you would like us to register the trust on your behalf, we will need to review the trust documentation so that we can provide you with a quote for the relevant work.

We would like to highlight that HMRC have been making regular changes to their guidance and we are expecting further changes to be made. We will keep the guidance on our website up to date as HMRC confirm any changes, but it is possible that a trust which needs to be registered now may subsequently fall within an updated exclusion.

Finally, we would like to point out that our guidance only deals with the requirement to register on the HMRC Trust Registration Service, which is a UK based platform. If your trust holds offshore investments, it may be necessary to register the trust in another country and we suggest that you speak to your investment adviser to confirm the position.

TRS requirement checker tool

Step 1 of 5

Are you a Trustee?

Find out if you are a trustee here

Is it a non-taxable or taxable trust?

Find out if the trust is non-taxable or taxable

AM I THE TRUSTEE OF A NON-TAXABLE OR TAXABLE TRUST AND DO I NEED TO REGISTER THE TRUST ON THE HMRC TRUST REGISTRATION SERVICE (TRS)?

Trustees are legally obliged to consider whether the trust must be registered on the HMRC Trust Registration Service (TRS) and failure to meet the registration requirements can result in penalties. The criteria for registration have recently evolved and it is important to understand what has changed.

There are two different types of registration:

Taxable trusts

In 2017, HMRC launched the TRS to enable the government to meet their obligations under the 4^th Money Laundering Directive (4MLD).

Only taxable trusts were required to register under 4MLD, that is, trusts with one or more of the following tax liabilities arising after 6 April 2016:

income tax
capital gains tax
inheritance tax
stamp duty land tax

Registration is the only way to obtain a Unique Taxpayer Reference, which is required to submit a self-assessment tax return. If a trust would have a tax liability but for the availability of reliefs, the trust must be registered, and relief claimed through self-assessment.

In the main, Trustees of taxable trusts will have already engaged a tax adviser to assist with their obligations.

Non-taxable trusts

The 5^th Money Laundering Directive (5MLD) issued in early 2020 extended the scope of registration significantly to encompass all ‘express trusts’ in existence on 6 October 2020, although HMRC have confirmed that there will be various exclusions.

An express trust is any arrangement created intentionally by the settlor under which legal and beneficial ownership are different.

As a result of the 5MLD changes, individuals must now:

identify all arrangements of which they are Trustees
identify if the trust is a taxable trust or a non-taxable trust
consider if any non-taxable trust is subject to an exclusion
register all taxable and non-taxable trusts that are not excluded

HMRC set the deadline for registration of non-taxable trusts as 31 August 2022 but given that they have not raised public awareness of these requirements, and that they have delayed in confirming the scope of the registration obligations, they have now confirmed that they will not issue penalties for registrations made after 31 August 2022 provided the registration is made voluntarily.

This acknowledges the fact that the deadline is impractical following the delays caused by HMRC, but we would recommend that trustees register their trusts at their earliest convenience to ensure HMRC accept that voluntary registration has been made.

If you have identified that you need to register a non-taxable trust on the TRS, please see our instructions for how to register a non-taxable trust on the HMRC Trust Registration Service. Alternatively, if you have identified that you need to register a taxable trust on the TRS, please contact us urgently and we can advise how to bring matters up to date. Our private client team contact details are on our Trusts & Estates sector page.

Do any of the exclusions apply?

Find out Exclusions that may apply & what to watch out for here

Exclusions that may apply & what to watch out for

Please note that although a trust may be excluded from registration, if a tax liability arises, it must be registered as a taxable trust.

Trust arrangements that are excluded from the requirement to register	Watch Out For

BARE TRUSTS
Bank & building society cash deposit accounts & Junior ISAs (JISAs) held on bare trust for a minor. For example bank accounts in parents’ names on behalf of their child. Bank & building society cash deposit accounts held on bare trust for an adult who lacks mental capacity.	This only applies to straight forward cash accounts. The exclusion does not apply to any other assets held on bare trusts including but not limited to shares & securities held personally or on a managed basis. NB All bare trusts holding assets for individuals aged 18 and over must be registered other than cash accounts held for individuals who lack mental capacity.
Where land or property is transferred to two or more persons and one of those is under 18, the adults are treated as holding the property on trust for themselves and the minor. Such trusts are excluded from registration.	This is a trust imposed by legislation (under TLATA 1996) and is therefore excluded from registration. NB HMRC have not yet confirmed the position but it is thought that a property trust for a single minor or where all beneficial owners are minors will need to be registered.
Land & property owned by more than 4 persons	A maximum of 4 owners can be listed as the legal owners of land with the Land Registry and these 4 are effectively holding the asset on trust for all beneficial owners. However, as this is a trust imposed by legislation it is excluded from registration.
When an asset such as a property is transferred or sold and a third party holds legal title on bare trust until it can be transferred to the purchaser, the trust is excluded. Similarly, where personal representatives (PRs) appropriate assets, the bare trust period between appropriation & transfer is excluded. This applies even where the assets are sold by the PRs and the proceeds transferred.	HMRC have not yet confirmed the treatment of the bare trust arising when assets are appointed from an existing trust but it is thought that the same principle should apply.

TRUSTS THAT RECEIVE ASSETS ON THE DEATH OF THE SETTLOR
Trusts created under the terms of a will that receive assets only from the estate and which are wound up within 2 years of death.	HMRC have confirmed that the deadline is the later of 2 years from death or 90 days from the date assets are formally transferred into the trust. This exclusion does not apply to lifetime trusts (including pilot trusts) that receive assets under the terms of the deceased’s will. This exclusion does not apply to trust created by Deed of Variation as these are not effected by will and so they will be subject to the normal rules of exclusion & registration. If the trust receives assets other than from the deceased’s will, the exclusion falls away. Where there is an absolute interest in the residue or a specific gift and the legacy has not been appropriated within 2 years the bare trust must also be registered.
Trusts holding life assurance policies that pay out only on death and the funds are paid to the beneficiaries within 2 years of death.	If funds have not been paid to the beneficiaries within 2 years of death, the trust must be registered. If it is possible for the policy to be surrendered during the settlor’s lifetime, the trust will be registerable as soon as a surrender has been made. Policies which are designed to provide regular or periodic payments in the form of surrenders or part surrenders do not fall within the exclusion.
Trusts holding healthcare & retirement policies only payable on death.
Trusts for bereaved minors where they become absolutely entitled at 18.
18 – 25 trusts where the beneficiaries become absolutely entitled at 25.
Trusts arising under the intestacy rules.	As this is a trust imposed by legislation it is excluded from registration.

CO-OWNERSHIP TRUSTS
Co-ownership trusts where the trustees and beneficiaries are the same.	This covers the scenario where legal & beneficial ownership are the same – such as joint tenancies of property and bank accounts or declarations of trust that simply redefine the proportionate shares. However, where the legal and beneficial ownership differs, the exclusion does not apply. For example, a declaration of trust made by parent in favour of their children or by one spouse in favour of the other must be registered.
Where there is a severance of joint tenancy in favour of tenants in common.

PILOT TRUSTS
Pilot trusts created before 6 October 2020 containing assets of less than £100	If such a trust receives assets on the death of the settlor, it must be registered within 90 days of death. Pilot trusts created after 6 October 2020 do not fall within this exclusion no matter what they contain.

OTHER CATEGORIES OF TRUST
Legislative trusts such as intestacy or bankruptcy.
Trusts imposed by the court such as during divorce proceedings or on identifying a resulting trust.
Trusts established in a EEA member state and registered on that states equivalent trust register.	This exclusion falls away where a non-UK trust with non-UK trustees acquires land in the UK or if a UK tax liability arises.

TRUSTS FOR SPECIFIC PURPOSES
Disabled Persons Trusts
Charitable trusts, UK registered pension trusts, personal injury trusts, SAYE, share option scheme or SIP plans, & maintenance trusts for historic buildings
Financial & commercial trusts created in the course of professional services such as authorised unit trusts, custody services, handling client money, lending & guarantees, trading on behalf of customers, escrow facilities & holding tenant contributions.
Public authority &local government trusts that exist to assist public bodies to carry out their functions.

Examples of trusts that are not excluded

Examples of types of Trust arrangements now registerable under 5MLD

Please note that although a trust may be registered as non-taxable, if a tax liability arises, it must be upgraded to a taxable trust.

Example	Watch Out For

Dormant trusts containing non income producing assets such as a share of a property, a loan or a life assurance bond. These could be any type of will trust or lifetime trust including family protection or care home fee protection trusts.	If at any point income arises, asset disposals are made, tax reliefs need to be claimed or inheritance tax or stamp duty land tax is payable the registration will have to be upgraded to reflect the fact that the trust is taxable. NB Will trusts & trusts containing life assurance bonds are subject to certain exclusions and please see the accompanying notes.
Life interest trusts containing assets that produce income but that income is mandated directly to the life tenant. These could be lifetime trusts or will trusts.	The definition of mandated income is strict and the income must not pass through the hands of the Trustees in any way. The trust must be monitored to identify any events that affect the registration and this must be upgraded to reflect the fact that the trust is taxable if applicable.
Pilot trusts created after 6 October 2020, irrespective of the value of assets settled, these will all be lifetime trusts.	This type of trust is an almost empty trust which is set up to receive assets in the future. Typically, a nominal amount of between £5 & £100 will be settled in order to create the trust.
Bare trusts	There are a few exclusions detailed on the accompanying notes. However, currently all other bare trusts must be registered. This would include bank accounts, assets & investments held in your name for others, land & property held on behalf of others, arrangements created under Declarations of Trust and effective trusts arising from an estate of which you are an Executor.
Over-arching property trusts.	As outlined in the separate exclusions summary, co-ownership trusts need not register where the trustees and beneficial owners are the same. One particular scenario where this will not be the case is when a partial share or property is held on trust. For example, say spouses hold their property as tenants in common and on 1^st death a 50% share or property passes to an immediate post death interest trust for the survivor. The trustees are the life tenant and their daughter. It will be apparent that the life interest trust must be registered. However, it is also necessary to register the property trust. Legal ownership of the property lies 50% with the surviving spouse and 50% with the life interest trustees. However, beneficial ownership lies 100% with the surviving spouse. As the legal and beneficial owners are different the property trust must be registered as a non-taxable trust.
Non-UK trusts which acquire UK land on or after 6 October 2020.
Non-UK trusts with at least one UK trustee which enter into a business relationship with a UK relevant person after 6 October 2020.

The trust must be registered.

Please follow our guidance here

HOW TO REGISTER A NON-TAXABLE TRUST ON THE HMRC TRUST REGISTRATION SERVICE

As you go through this process you should make a note of all elements marked in bold below and ensure that these are kept in a safe place. You will need these each time you access the Government Gateway.

PLEASE NOTE THAT A SEPARATE GOVERNMENT GATEWAY MUST BE SET UP FOR EACH TRUST TO BE REGISTERED. IT IS NOT POSSIBLE TO USE YOUR OWN PERSONAL GATEWAY OR TO REGISTER MORE THAN ONE TRUST THROUGH THE SAME GATEWAY. FOR EXAMPLE, IF YOU ALREADY HAVE A PERSONAL GATEWAY AND NEED TO REGISTER 3 TRUSTS YOU WILL NEED TO SET UP 3 NEW GOVERNMENT GATEWAYS TO DO THIS.

Copy and paste this link into your browser: https://www.gov.uk/guidance/register-a-trust-as-a-trustee
Scroll down the page until you see a green button marked ‘Register now >’ and click this.
You will see boxes for a Government Gateway user ID and password but ignore these. Click ‘Create sign in details’ underneath.
You will be asked for your email address. Enter this and click ‘Continue’.
You will be asked to enter a code to confirm your email address. This will be sent to you at the email address provided but it does not always arrive promptly. However, this screen will hold for half an hour or so and you should just leave it open until the code arrives.
Once you have the code, enter this and click ‘Confirm’
The next page will show that your email address has been confirmed. Click ‘Continue’
Enter your full name and click ‘Continue’
You will be asked to create and confirm a password then click ‘Continue’
You may be asked to set up recovery password: if so, then do so and then click ‘Continue’.
You will be asked to choose the type of account you set up. You should click on ‘Organisation’, then ‘Continue’.
You will be asked to set up additional security: make your choice and then click ‘Continue’. If you select the mobile phone option, you will receive a text to your mobile which you should then enter into the webpage.
You will view your Government Gateway User ID then click ‘Continue’. Shortly after, you will receive an email containing your User ID but this will not reference your password or recovery word.
You will be asked how you want to receive access codes which will be sent to you each time you want to access the TRS record. Choose ‘text message’, voice call’ or ‘authenticator app’ and click ‘Continue’
You will then be taken through a process specific to your choice and at the end you should click ‘send access code’ and a code will be sent by your chosen method.
On the next page under ‘Enter the access code’ you should enter the 6 digit code that has been sent to you and click ‘Continue’
You will be given confirmation that you have set up additional security and click ‘Continue’
You will be asked if the trust is already registered online. Choose no and click ‘Save & Continue’
You will be asked if the trust has a Unique Taxpayer Reference. Choose no and click ‘Save & Continue’
You will be asked if you are registering an express trust. Choose yes and click ‘Continue'
You will be asked if the trust has any tax liability for the year ended 5 April 2023. Choose no and click ‘Continue’
You will be asked if the trust has had any tax liability in the last four tax years. Choose no and click ‘Continue’
You will be shown a ‘Before you continue’ page providing some information about the process. Read through this and then click ‘Continue to register the trust’
You will be shown a page headed ‘Registration process’ with various sections showing as NOT STARTED. You will need to work through each section and provide the various information requested.