NEW REGISTRATION RULES FOR TRUSTS AND WHAT YOU NEED TO DO ABOUT IT
Blogs
Previously trusts only needed to be registered with HMRC’s online Trust Registration Service (TRS) if they generated a tax consequence but new rules, introduced to tackle money laundering as part of the EU Fifth Anti-Money Laundering Directive (5AMLD), mean that many more will need to register. Trustees need to take note.
The new rules for trust registration mean far more trusts will be brought into scope. Although some trustees will already be familiar with the system, many more will soon need to be up-to-speed on which types of trusts need to register and by when.
There are two key deadlines to remember:
10 March 2022: all existing trusts need to register or update their records if they are already registered
The 30-day rule: all new trusts and updates will need to be registered within 30 days. There is currently a transition period for this rule which comes to an end on 9 February 2022
An exception to this is trusts created by a Will, since administering an estate following death may be expected to take longer than 30 days.
Failure to register can result in £100 fixed penalties as well as nudge letters, although higher penalties may be introduced for trustees that deliberately ignore the registration rules.
Although some types of trusts will be exempt (see page 6 of the government’s consultation response*) it is worth noting that bare trusts are not exempt and will need to be registered.
The latest rules on registration are just one example of how the role of a trustee and the responsibilities involved have expanded in recent years. Today, trustees must perform duties as specified in the Trustee Act 2000, as well as be conversant with trust terms and understand numerous complex regulations. Trustees also have considerable administrative duties, including preparing tax reports, accounts and returns and administering payments. In addition, they have the duty to review the suitability of investments and consider the tax implications of any decisions. They also have a duty to act impartially, balancing the needs of the settlor whilst understanding their responsibilities to the beneficiaries.
All of these tasks can be a considerable burden for a lay trustee and ensuring full adherence to all the rules and regulations can be arduous and difficult. This is why some families choose a professional trustee to help manage their affairs. We can refer you to professional trustees who offer a professional and expert trustee service for all types of trust. Keeping up to date with changes to legislation is just one of many jobs professional trustees do on a daily basis. By nature of their expertise and independence, professional trustees are able to meet all their legal and administrative
responsibilities without conflict of interest, providing peace of mind to families.
So if you or your relatives have trusts, you haven’t yet registered them and you are unsure whether or not they should be registered, do get in touch with us. You know it makes sense**.
**The Financial Conduct Authority does not regulate tax or trust advice. The contents of this blog are for information purposes only and do not constitute individual advice. All information contained in this article is based on our current understanding of taxation, legislation and regulations in the current tax year. Any levels and bases of and reliefs from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. Although endeavours have been made to provide accurate and timely information, we cannot guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.
