In the past few years, the rules on when a trust needs to be registered with HMRC have changed.
In the past, it was mainly only trusts that were liable for tax that needed to be registered. Now, almost all express trusts need to be registered, regardless of whether or not any tax is due.
What type of trusts need to be registered?
The majority of express trusts will now need to be registered. An ‘express’ trust is a trust that has been created ‘expressly’. This means that it was done so willingly by the person who set it up (known as the ‘settlor’) and did not get created as a result of a judge’s ruling in court or because of new legislation.
All express trusts that are based in the UK are likely to need to be registered, as will express trusts based elsewhere that:
- Hold UK property or assets.
- Have involvement in UK business dealings.
- Are managed by at least one trustee based in the UK.
Some types of express trusts are exempt from the registration requirement. You can read about some of these exemptions in our Trusts & Estate Registration Help Guide. However, the rules on this are quite complicated and if you think your trust falls into an exempt category, you may wish to get legal advice to confirm this.
When is the registration deadline?
Most trusts will need to be registered by 1 September 2022.
If your trust was created very recently, the deadline may be slightly later, as you will have 90 days from creation to register.
According to a Freedom of Information request application made earlier this year, there may be as many as a million trusts that still need to be registered. If you are responsible for a trust, you may wish to start the process of gathering the required information and completing the registration in plenty of time in order to avoid any delays.
What will happen if trusts aren’t registered in time?
HMRC have not yet announced exactly what the penalty will be for late registrations. However, it is very likely that the penalty will involve a fine. It is expected that this could be up to £300 or 5% of the total tax liability of the trust, whichever is higher.
What should you do next?
If you are a trustee of an express trust that has not yet been registered with HMRC, we’d advise that you address this as soon as possible and consider instructing a professional to deal with the registration on your behalf.
Although it is possible for a trustee to register a trust online themselves, it is not as straightforward as it might first appear. This is especially so if you are not be familiar with some of the terminology used and/or know the answers to some of the questions, upon which guidance from a professional will be comforting.
By instructing a professional who will have an agent account with HMRC, you can ensure that the process is right first time and the information submitted is correct.
How Roche Legal can help
We are reassuring experts who can help you with a wide range of legal matters. Please get in touch if you need legal support with:
- Trusts and Estate Planning
- Probate and Estate Administration
- Contested Probate and Will Disputes
- Powers of Attorney
- Court of Protection matters
- Presumption of Death Applications
- Missing Persons Guardianship Applications
Need further help?
If you would like to discuss these issues further, please contact us.