Register a Trust FAQ – on this page you will find a wealth of knowledge and useful information regarding registering a trust with the HMRC.
How to register a trust with HMRC?
New rules introduced from 1 September 2021 now require most trusts to be registered on HMRC’s Trust Registration Service (TRS) by 1 September 2022, or within 90 days of the trust’s creation if later. Certain trusts, called excluded trusts, do not need to be registered on the TRS but trustees may choose to register such trusts voluntarily as part of their general duty to maintain accurate trust information.
It is the trustees’ responsibility to register their trust and they have 2 main options:
(i) Trustees can register the trust on the TRS themselves on gov.uk for no cost, however, some trustees may find this process daunting and time-consuming; or
(ii) Trustees can appoint an agent to register their trust on the TRS on their behalf. An agent may be a solicitor, accountant or another company, such as Trustee Support Services Ltd, specialising in trust registration. An agent will charge fees for their services and the level of fees charged, and services provided, can vary widely across the marketplace, so trustees should look at several alternatives to fully understand the services provided and costs involved with the chosen agent.
The rules around the TRS are contained in the TRS Manual. This shows some of the complexity which may be involved.
If trustees fail to register a trust that requires registration, they may be subject to fines by HMRC and may also encounter other difficulties when administering the trust – more details are available here.
The deadline of 1 September 2022 to register an existing trust is fast approaching. Trustees should consider taking action sooner rather than later.
What is the Trust Registration Service?
The Trust Registration Service (TRS) was set up by HM Revenue & Customs (HMRC) in 2017 as an online service in response to the EU’s Fourth Money Laundering Directive (4MLD). Other European Economic Area (EEA) member states have also implemented similar systems. Initially, only trusts that had incurred a liability to UK taxes were required to be registered on the TRS.
Following the implementation of the EU’s Fifth Money Laundering Directive (5MLD), the scope of the TRS was widened and more trusts then required to be registered, including trusts that have not incurred a UK tax liability. Whilst the effective date for the new phase of the TRS was 6 October 2020, HMRC needed time to develop its systems and the new rules came into force on 1 September 2021. These are set out in HMRC’s TRS Manual.
The trustees are responsible for registering a trust on the TRS. Trustees can register a trust on the TRS themselves here, but they can also appoint an agent to act on their behalf. The deadline for registering a trust is by 1 September 2022 or within 90 days of the date of the trust’s creation, if later.
Certain trusts, excluded trusts, are not required to be registered on the TRS, but are required to be registered if they subsequently incur a UK tax liability.
Trustees of an excluded trust may, however, still wish to register voluntarily to meet their general duty to maintain up-to-date information on the trust.
Trustees who fail to register a trust that requires registration could face fines from HMRC and may also encounter difficulties when administering the trust, such as dealing with banks and/ or investment providers. Some of these implications are discussed further here.
The rules around registration can be complicated and daunting for trustees. Trustee Support Services can assist trustees with registering trusts and understanding their duties. Our website contains further information on the TRS and how we can act on the trustees’ behalf to register their trust(s).
How do I register a trust?
The responsibility for registering a trust lies with the trustees. Whilst trustees can register a trust on the Trust Registration Service themselves, many trustees may find the registration system daunting and time-consuming. In such cases, they may wish to consider appointing an agent to register their trust on their behalf.
Trustee Support Services offer a trust registration service to trustees. We can also provide a range of other consultancy services. Our current fee, as at April 2022, for registering a trust for UK resident trustees is £200.
To proceed with registration, trustees can open a secure account on our website and then open and complete our Trustee Questionnaire. This also allows copies of trust deeds and other related documents to be uploaded into the questionnaire. We will use this information to check the details provided in the questionnaire before we register the trust. If there are any anomalies, we will resolve these before proceeding with the trust registration.
What is a discretionary trust?
A discretionary trust is a legal arrangement whereby an individual (the settlor) makes a gift of assets for the benefit of a range of persons (the potential (or discretionary) beneficiaries) without any beneficiary having a right to benefit from the assets. Once the assets are placed into the trust, the trustees become the legal owners of the assets and they hold and manage these for the benefit of the beneficiaries.
The trustees have the discretion as to which of the potential beneficiaries benefits, by how much and when, during the lifetime of the trust. A discretionary trust can be established during the settlor’s lifetime or on the settlor’s death via the settlor’s will.
Once assets have passed into the trust, they no longer form part of the settlor’s estate although, should the settlor die within 7 years (14 years in some cases) of making the gift into the trust, the value of the gift is treated as forming part of the deceased settlor’s estate for inheritance tax purposes to the extent that it is not covered by inheritance tax exemptions. A gift into a discretionary trust is treated as a chargeable lifetime transfer (CLT) to the extent it is not exempt for inheritance tax purposes.
Discretionary trusts typically have a lifetime of 125 years. If any assets remain in the trust at the end of its lifetime, these then pass to the default beneficiaries nominated on the trust deed in their specified shares.
One benefit of holding assets in a discretionary trust is that, as none of the potential beneficiaries has a right to benefit from (an absolute interest in) the trust, the trust assets do not form part of a beneficiary’s estate for inheritance tax purposes. As the trust assets are not attributable to any beneficiary during the lifetime of the trust, discretionary trusts are subject to a special tax regime. This is beyond the scope of this answer.
The settlor, the settlor’s spouse and trustees can all be included as potential beneficiaries but, if the settlor or settlor’s spouse can benefit during the settlor’s lifetime, the arrangement will not be effective for inheritance purposes.
Do pilot trusts need to be registered on the TRS?
A pilot trust is generally set up with a nominal amount (say, £10) or a covenant that the settlor will pay the trustees an amount on demand. Whilst the trust may not receive any further assets for, sometimes, many years, it is important to understand that a valid trust exists from the date that the trust is created (the date of the trust deed). Spousal bypass trusts are a form of pilot trust.
For the purposes of the Trust Registration Service (TRS), a pilot trust that was created before 6 October 2020 and which holds, currently, less than £100 is an excluded trust, provided it has not incurred a liability to UK tax, is not required to be registered on the TRS.
Any pilot trust created after 5 October 2020, regardless of its value, is required to be registered on the TRS, as are any pilot trusts created before 6 October 2020 whose current value exceeds £100 or which have incurred a liability to UK tax.
Further details about pilot trusts and spousal bypass trusts.
Should I register my trust myself, or is it better to use an agent?
The simple answer is, it’s up to you! Trustees can register their trust, at no cost, via gov.uk, but many trustees may find the registration process daunting and time-consuming. The system assumes that the person registering the trust will have a good knowledge of trusts and their terminology.
An alternative is for the trustees to appoint an agent to register the trust on their behalf. Using an agent will generally incur a fee for registering the trust.
Once the trust has been registered, whether directly or by using an agent, the trustees remain responsible for ensuring that the information held on the Trust Register remains correct and up-to-date. If any details change, the trustees are required to update the Trust Register within 90 days of the date of the change (again, an agent could be appointed to deal with the update).
Trustees of ‘taxable trusts’, trusts that have incurred a UK tax liability, are also required to confirm that the details held on the Trust Register are correct, even if no changes have occurred. This confirmation must be provided by 31 January each year.
More details on the options available to trustees are available here.
What is a lead trustee?
When registering a trust on the TRS, the trustees need to nominate a ‘lead trustee’. This just means selecting one trustee to act as the main point of contact with HMRC. Additional details are collected on the lead trustee, including their National Insurance number, address, email address and telephone number. The National Insurance number is used to check details held on HMRC’s systems during the trust registration process.
Being the lead trustee does not give that trustee any additional powers and the trustees, collectively, remain responsible for the administration of the trust.
Should any details of the trust held on the Trust Register change, the Trust Register should be updated within 90 days of the date of the change. While the lead trustee may normally be the person expected to update the Trust Register, the update can be performed by any of the trustees. The lead trustee should, therefore, share the login details to the trust’s Government Gateway account with the other trustees to allow this. The trustees have a general duty to maintain accurate and up-to-date trust records and could face penalties from HMRC if they fail in this duty.
What happens if the trustees cannot access the internet to register the trust or maintain the trust’s details?
The TRS is an online service. If all trustees are unable to access the internet then the trustees should consider appointing an agent to register the trust on their behalf.
Alternatively, they can telephone HMRC’s helpline on 0330 123 1072 for assistance.
In situations where, for example, the settlor or some trustees are not comfortable accessing the internet, they should consider appointing another trustee who may be comfortable accessing the internet and using email as the lead trustee.
Trustee Support Services can register trusts on behalf of trustees but will charge a fee for their services.
How can the trustees pay an agent to register the trust if it holds no cash?
Whilst it is the trustees’ responsibility to pay an agent’s fee for registering the trust (or, perhaps, other trust expenses or even HMRC penalties), many trusts may not hold cash, or sufficient cash, to meet the charge. In such circumstances, there are other options available but it is important to understand the potential tax implications that different options may have, especially if a trustee or beneficiary of the trust intends to make the payment from their own resources.
In such circumstances, it is usually likely to be better for the individual making the payment to make an interest-free loan, repayable on demand, to the trustees for the amount of the payment. The trustees can then repay the loan when, for example, an investment is encashed or a policy held in the trust pays out. The different options available and their tax consequences are discussed here. A draft loan agreement is available here.
Who are Trustee Support Services?
Trustee Support Services was set up by Nick Edwards and John Woolley to assist trustees with registering their trusts on the Trust Registration Service and to provide trustees with additional consultancy services. Between us, we have over 80 years’ experience in financial services.
We both also run our own consultancy companies, Nick runs Consultniks Limited and John Wooltech Limited, providing a wide range of financial services, technical and marketing consultancy services to financial advisers, product providers and professional bodies, amongst others.
Must all trusts be registered on the TRS?
Whilst the majority of trusts are required to be registered on the TRS, certain trusts, ‘excluded trusts’ are not required to be registered. However, trustees need to be aware that, even if a trust is an excluded trust today, it may be required to be registered on the TRS in the future. If a trust that was an excluded trust incurs a UK tax liability, the trustees are then required to register the trust on the TRS at that time.
Trustees of an excluded trust may wish to consider registering the trust on the TRS voluntarily to meet their general duty to maintain accurate and up-to-date trust information. The trust’s information will then be held in a format to allow a third party with a legitimate interest to access the trust’s information, for example, for anti-money laundering purposes.
Executors or administrators of an estate where the administration has continued for more than 2 years are also required to register the estate on the TRS. Once the administration of the estate is subsequently completed, the estate should then be marked as closed on the Trust Register within 90 days of the date of the end of the administration period.
Who can ask for proof of the trust’s registration?
From the 1 September 2022, ‘obliged entities’, which include financial institutions and other intermediaries, are required to ask for proof of a trust’s registration on the TRS (or proof that the trust is an excluded trust and not required to be registered) when starting a business relationship with the trustees to comply with their anti-money laundering duties under the Fifth Money Laundering Directive.
Trustees who have registered their trust on the TRS can download a certificate of the trust’s registration here by accessing the trust’s government gateway account. This certificate can then be provided to the entity asking for proof of registration. These entities cannot access the trust’s entry on the Trust Register directly themselves.
It is not inconceivable that some entities may ‘gold plate’ the legislation and ask trustees to provide proof of registration where there are existing business relationships.
I registered my trust years ago, do I still need to register on the TRS?
Before 2017, trustees were required to complete a Form 41(g) and send it to HMRC if the trust incurred a tax liability. HMRC would then provide the trustees with a UTR (unique taxpayer reference) to allow an SA900 Trust and Estate tax return to be submitted.
Even if a Form 41(g) has been submitted to HMRC, the trustees are still required to register the trust, as a taxable trust, on the TRS by 1 September 2022. More information is required by the TRS for anti-money laundering purposes than was originally provided on the Form 41(g).
How much does Trustee Support Services charge to register a trust?
Do I have to register my child’s Child Trust Fund or Junior ISA?
The Trust Registration Service (TRS) Manual confirms that Child Trust Funds are not trusts and do not require to be registered on the TRS. HMRC has also confirmed to us that Junior ISAs are also outside of the scope of the TRS and do not need to be registered. This has now been added to the TRS Manual in its updates on 14 April 2022.
Who can be a trustee?
Generally, it is up to the person creating the trust (the settlor) to choose who they wish to act as trustees. A trustee should be aged at least 18 and sane. From a practical viewpoint, if trustees all live locally, it will be easier to sign documents etc. A non-UK resident trustee may also face potential tax issues in their country of residence, so they may wish to determine any such issues, and their implications, before accepting the role of trustee.
Whilst there is no limit to the number of trustees (unless the trust holds land or property when the number is limited to a maximum of 4), again, from a practical viewpoint, trust administration is likely to become complicated if there are more than 4 trustees.
Further considerations around appointing trustees can be found here.