Previously, only ‘taxable relevant trusts’ with a liability to a UK tax were required to register under the Fourth Money Laundering Directive. However, from 6 October 2020, under the Fifth Money Laundering Directive, the registration requirement was extended to all UK trusts, apart from certain types of trust that are exempt.
In May 2021, HMRC published its Trust Registration Service Manual, which includes detailed information on the new requirements. From 1 September 2021, the extended Trust Registration Service opened for non-taxable trust registrations with non-taxable trusts having until 1 September 2022 to register.
Anyone with a “legitimate interest” will be able to view information on the TRS from late 2022. HMRC has stated that “each request will be reviewed on its own merits, and access given only where there is evidence that it furthers work to counter money laundering or terrorist financing activity”. There are also safe-guarding measures to protect trusts with minors and vulnerable beneficiaries from requests for information from third parties
Extension to registration requirements
Extension of UK Trusts within the scope of the TRS
All UK express trusts now have to register, regardless of whether the trustees incur a liability to UK tax, unless they fall into one of the categories of trusts specifically excluded from registration.
Non-express trusts are generally not required to register.
Extension of non-UK Trusts within the scope of the TRS
Non-UK express trusts with UK assets will continue to be required to register if they incur any of the specified UK tax liabilities.
Non-UK express trusts that acquire an interest in UK land or property on or after 6 October 2020 will be required to register unless they fall into one of the below exemptions.
Non-UK express trusts with at least one trustee resident in the UK that enter into a new business relationship with a UK relevant person, on or after 6 October 2020, will be required to register unless they fall into one of the below exemptions. A UK relevant person includes, but is not limited to, credit and financial institutions, auditors, accountants, tax advisors, legal professionals, trust or company service providers, and letting and estate agents.
Trusts excluded from registration on the TRS
The following types of trust are specifically excluded from the requirement to register:
- Trusts imposed by legislation or court order
- Trusts of jointly held property, if the legal and beneficial owners are the same
- Estates (apart from registrable complex estates) and trusts created on death that are only in existence for a period of two years from the date of death
- Certain Trusts holding insurance policies and compensation pay-outs
- Certain employee share scheme trusts
- Charitable trusts
- UK pension schemes registered under Part 4 Finance Act 2004
- Trusts where a disabled person is the beneficiary
- Pilot trusts created before 6 October 2020 with assets not exceeding £100
- Trusts in relation to financial and capital markets
- Trusts created in the course of professional services and commercial arrangements
- Approved maintenance funds for historic buildings
- Trusts created for public authorities
- Trusts registered on another European Economic Area register, unless the trust is a non-UK trust with no UK trustees where the trustees acquire UK land.
- Child bank accounts which are held as bare trusts
An excluded express trust will have to register if it becomes subject to UK tax.
Registerable taxable trusts are required to register by 31 January following the end of the tax year in which the trust had a liability to UK taxation, or 5 October after the end of the tax year for a first time liability to Income Tax or Capital Gains Tax.
The Money Laundering Regulations currently require registerable express trusts to register on TRS by 10 March 2022. HMRC has announced they will extend this deadline until 1 September 2022, to give trustees sufficient time to register
From 2022 onwards, any beneficial ownership information of a trust registered on TRS must be kept updated. Trustees must notify HMRC of any changes to registered information within 90 days from the date the trustees become aware of the change: further guidance and confirmation of procedures is expected from HMRC in due course.
The rules are complex, and the full guidance is not yet available. We can help Trustees understand their likely obligations under these rules and assist with the UK Trust registration process if required. Please get in touch with Fiona Hall.
HMRC's Trust Registration Service Manual