What is the Trust Registration Service?
The Trust Registration Service (TRS) is an online register of the beneficial ownership of trusts. When the TRS was set up in 2017, essentially only trustees of trusts that paid tax were obliged to register details of the trust with the TRS.
New rules introduced in October 2020 extend the scope of the TRS so that many UK and some non- UK trusts must now be registered whether they pay tax or not, there are however certain exclusions from these rules. The purpose behind this is stated to be to assist with the prevention of money laundering, counter terrorist financing and other criminal offences.
Which trusts must be registered?
In everyday life different types of trust are used for a variety of purposes, many of which will now require registration by their Trustees. The TRS rules are complex and the requirement to register will depend both upon type of trust and may also turn on whether the trust pays tax or not.
Common examples of everyday Trusts that are may well require registration include:
A life interest trust where the beneficiary of a trust might have the right to enjoy the trust’s assets, or to income from the trust assets for their life, but after the death of that beneficiary the benefit passes to a different individual. This is a common arrangement set up between spouses or a couple with the intention of preserving funds in the family home for the next generation.
A discretionary trust where the trustees have the ability to dictate how to use the trust’s capital assets and income
A bare trust where a trustee might hold assets in their name, but a third party actually has the right to these assets if they called for them.
A disabled person trust, set up to benefit a disabled person, this is registerable if the trust pays tax
A Will Trust, this may be registerable if the income earnt between the death of the person who made the Will and the winding up of the estate produces a liability for income tax or Capital gains Tax over a certain threshold. It will also require registration if the estate has not been concluded within two years from the date of death.
However certain types of trust are specifically excluded from the TRS rules, this includes most trusts of life policies whilst the life assured is still living, most pension trusts, and charitable trusts.
What is required to Register a trust?
Registerable trusts must be registered online. Details of the settlor, trustees, protector, and beneficiaries will be required. Further information may be required depending on the type of trust.
When must the trust be registered?
Existing registerable non- taxable trusts must be registered by 1 September 2022.
Non-taxable trusts created after 1 September 2022 must be registered within 90 days.
The rules for registration of taxable trusts are more complex and a trustee should seek advice here from their tax advisor.
Going forward there is an obligation upon the trustees to update the TRS register within 90 days of any changes in the details of settlor, trustees and beneficiaries and an annual declaration of the accuracy of information will be required for taxable trusts.
Penalties for failure to register
There is the potential for a financial penally to the trustees of a trust who fail to carry out their duty both to register the trust by the appropriate deadline and then to update the TRS as necessary.
Assistance from R&N
Please feel to contact our Private Client team based in both Norwich and Attleborough with queries regarding the TRS.