From 1 September 2022 it will become necessary for trustees to comply with their registration obligations under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. This requires the lead trustee of the majority of trusts, or nominated agent, to register the beneficial ownership of their trusts with HMRC.
Most trusts will require registration although there are exceptions that will not ie
- Pension scheme and death benefit trusts
- Life Assurance Trusts that receive death benefits as a result of ill-health only
- Will trusts that are wound up within 2 years of death
- Existing trusts holding less than £100 that were created prior to 6 October 2020
- Charitable trusts
- Joint ownership Declaration of Trusts where assets are held in unequal shares
- Trusts settled for parents for bereaved children or adults 18-25
- Personal Injury trusts
- Financial or commercial trust arrangements for holding clients' money
- New Pilot Trusts dated from 6 October 2020
- Family Life Assurance trusts
- Family Joint Life Assurance Trusts
- Declaration of Trust Large Life Policy
- Shareholders Trust
- Family Pension Death Benefits Trust
- Pilot Trusts dated before 6 October 2020
- All pilot trusts created prior to 6 October 2020 that hold less than £100
ALL OTHER TRUSTS WILL REQUIRE REGISTRATION WITH THE EXCEPTION OF TRUSTS CREATED UNDER THE LAWS OF INTESTACY
Once the trust has been registered there is also an obligation to update the Trust Registration Service (TRS) on any registrable event ie
- When a trust becomes taxable
- Any changes in trustees or beneficiaries
- If a settlor or trustee dies or loses capacity
- When any assets are added to the trust or any are sold
- When any distribution or loan is made by the trustees
There are also limits as to who can register a trust. Clearly one of the trustees can, and appoint themselves as the lead trustee in doing so. Some accountants and larger solicitor firms are offering this service although they tend to be outsourcing the role to 'pop-up' companies. Most IFAs and solicitors cannot perform the registration role on behalf of clients unless they are a tax agent.
If you have a trust in place and are concerned about whether or not it falls into the category of needing to be registered, and/or you are concerned about performing the role yourself, then please get in touch. We can help with the whole process.
