Under proposed new legislation, new trusts created on or after 1 April 2020 will need to be registered under the TRS within 30 days of their creation. The 30-day deadline will also apply to any amendments required to the TRS, for example, when there is a change to the names or contact details of the trustees or the beneficiaries.
Additionally, the government proposes that all unregistered trusts already in existence on 10 March 2020 would have until 31 March 2021 to register under TRS.
The current TRS system, implemented in 2017, only requires trusts that have incurred a UK tax liability since its implementation to register. Consequently, there are a large number of trusts currently unregistered that will soon fall within the scope of the TRS requirements.
Under the new proposals, the following types of trust will have to register, regardless of whether they have incurred a UK tax liability (as this condition for registration is effectively removed):
- all UK tax resident ‘express trusts’ – as opposed to only those express trusts with UK tax liabilities as at present;
- non-EU tax resident express trusts that acquire UK land or property either on or after 10 March 2020; and
- non-EU tax resident express trusts that enter into a new business relationship with an obliged entity (basically entities that are obliged to comply with the UK money laundering compliance requirements) on or after 10 March 2020.
The new rules will mean that a great number of trusts, which did not have to register previously, particularly trusts connected with financial products such as life policies, investment bonds and discounted gift trusts, will now have to register. The onus will be on trustees and their agents to comply.
A new penalty system for late registration will also be introduced, as the current system, based on the self assessment penalty regime, will no longer be appropriate.
This is going to be a mammoth exercise and we would encourage anyone involved with the creation, management or administration of express trusts (trustees, beneficiaries, financial advisors) to consider these new requirements at an early stage.
This publication has been prepared by RRL LLP. It is to be treated as a general guide only and is not intended to be a comprehensive statement of the law or represent specific tax advice. No liability is accepted for the opinions it contains, or for any errors or omissions. All rights reserved.