UK Trust Registration Service: what needs to be registered and when?

Following our update in June, we would remind you that the UK Trust Registration Service (TRS) was introduced in 2017 to comply with the Fourth EU Anti-Money Laundering Directive (4MLD). Essentially, it is a register of the beneficial ownership of trust assets.

Since 2017 most UK trusts and non-UK resident trusts with a UK tax liability (basically, those trusts which are subject to taxation in the UK) have been required to register with the TRS.

However, to comply with the Fifth EU Anti-Money Laundering Directive (5MLD), the scope of the TRS was widened further in October 2021 so that, by 1 September 2022, the following types of trust must be registered:

All UK resident express trusts whether or not they have a liability to taxation in the UK.

Non-UK resident express trusts which:

• Receive taxable income from a source in the UK (this would certainly include rent from a UK property, it might include UK bank interest if the trust has UK beneficiaries and generally would not include UK dividends); or
• Hold assets in the UK in respect of which the trustees are liable to income tax, capital gains tax, inheritance tax, stamp duty land tax; or
• Acquire an interest in UK land on or after 20 October 2020; or
• Have at least one UK resident trustee and enter into a business relationship with an “obliged entity.” An obliged entity could include a financial institution, an accountant, tax adviser, legal professional or estate agent.

Not all trusts are registerable on the TRS (provided that they have no liability to taxation in the UK). These are referred to as “excluded trusts”. A non-exhaustive list of excluded trusts includes:

• UK charitable trusts;
• ‘Pilot’ Trusts set up prior to 6 October 2020 holding assets worth less than £100;
• Trusts imposed by statute (e.g. intestacy or bankruptcy);
• Trusts with life policies paying out on death, terminal illness or disability (as distinct from life policies used as an investment vehicle); and
• Co-ownership trusts where the legal co-owners and underlying beneficial owners are identical)

Whilst it was originally anticipated that bare trusts (where trustees hold assets absolutely for the beneficial owner) would fall within the category of an “excluded trust,” this is not the case. Therefore, bare trusts will also need to be registered with the TRS.

Deadlines for registration

The key issue for trustees is ensuring that they comply with their obligation to register by the applicable deadline.

This is determined by reference to when the trust was established and when the trust first has a liability to UK taxation. We summarise the position in the following table:

A trust does not necessarily need to register with the TRS if information is filed for FATCA/CRS purposes, although it is still best practice to do so.

What trustees need to do now

• Gather together information about the trust, including details of the trust’s assets and its beneficiaries.
• Check the applicable deadline for registration with the TRS. Failure to register with the TRS (or failure to notify or any changes regarding the Trust within the 90-day deadline) may result in penalties.
• It is the responsibility of trustees to register their trust. They can either choose to do so directly using the TRS online service, or alternatively, appoint an agent to do so on their behalf.

Should you require assistance with any of the above in relation to international trusts and taxation, please contact Patrick Wooddisse, Stewart Jordan or Sarah Rust.