Do I need to register a trust with HMRC?

If you are a Trustee, then it is likely that you will now need to register the trust with HMRC. If the trust is liable to income tax or capital gains tax, then it is almost certain that you will need to register your trust with HMRC. There are some exemptions for some trusts that do not need to be registered; however, these exemptions can be complex and professional advice should be sought.

Trust registration deadlines

• All taxable and non-taxable trusts that are not exempt must be registered within 90 days of being established.
• Any changes to taxable and non-taxable trusts (changes in trustees/beneficiaries/trust assets) must be reported to HMRC within 90 days of the change.

Penalties if a trust is not registered with HMRC

Normally, HMRC will write to Trustees to remind them that registration is a requirement and these letters can include a fixed penalty of £100. If a trustee fails to act on HMRC’s initial letter then more stringent penalties can follow, especially if trustees deliberately ignore the registration requirements.

Register a trust with HMRC using the Trust Registration Service (TRS)

The Trust Registration Service (TRS) is a digital platform to provide HMRC with beneficial ownership information. The purpose of the TRS is tax transparency. It also plays a part in the UK’s anti-money laundering and counter-terrorism financing regime.

Professional advisors who are involved in the creation of new trusts will often offer to assist with the registration process. However, it is ultimately the responsibility of the trustees of the trust to ensure that the trust is registered with the TRS.

Taxable trusts

If there is a tax liability on the trustees, including any liability for income tax or capital gains tax, then the trust will need to be registered as a taxable trust with HMRC. Once registered, taxable trusts will be issued with a Unique Taxpayer Reference (UTR).

Non-taxable trusts

Trusts that are not required to register as a taxable trust must (subject to certain exemptions) be registered as a non-taxable trust.

If the trust is not a taxable trust for the purposes of the registration requirements, and the trust does not fall within one of the exempt categories, the trust will need to be registered with HMRC and it will be issued with a Unique Reference Number (URN).

Updating the TRS

Trustees must update HMRC via the TRS of any changes to the trust within 90 days. Trustees must also use the TRS to inform HMRC when a trust has been ‘closed’. This requirement applies to both taxable and non-taxable trusts.

If the trust is taxable, the trustees must make an annual declaration to confirm that the details of the trust held on the TRS are accurate and up to date. This declaration must be made by 31 January of each year. Non-taxable trusts are not required to make an annual declaration.

Trustees must notify HMRC if a trust initially registered as non-taxable becomes a taxable trust later on. HMRC will issue the trust with a UTR and send this to the lead trustee (usually within 15 days).

Contact us

Rix & Kay’s specialist Private Client Team provide detailed Trusts support and advice to business owners, individuals and their families. For more information please contact Bruce Clarke e. BruceClarke@rixandkay.co.uk t. 01732 440 853