As part of the EU Anti-Money Laundering Law (known as 5AMLD) the government is expanding the requirement for trusts to be registered with HMRC.
According to the Association of Taxation Technicians (ATT) the extension of the online UK Trust Registration Service (TRS) which covers express trusts is likely to increase the number of registrable trusts from approximately 200,000 to two million when new legislation comes in during 2020. The UK government has already confirmed that this will happen irrespective of Brexit.
The majority of the regulations required to implement the Fifth Money Laundering Directive in the UK came into force on 10 January 2020, but these do not currently include updated regulations relating to the trust registration service (TRS).
In December 2019, HMRC confirmed that it would publish a technical consultation on the TRS changes in 'early 2020’. We will provide further information as and when it becomes available, but, assuming there are no changes to the technical consultation when published, the following rules should apply.
What new rules apply to express trusts?
The new rules will apply to all express trusts (that are formed by a Deed or Will) even if there isn’t a relevant tax liability. Trustees will have 30 days to register a new trust created after April 1st 2020.
If a trust already exists at 10th March 2020, trustees will be able to register by 31st March 2021, unless a relevant tax liability exists.
The following trusts will now have to be registered with the TRS:
- all UK resident “express trusts” (not just those with UK tax liabilities);
- non-EU resident express trusts that acquire UK land or property either on or after 10 March 2020; and
- non-EU resident express trusts that enter a new business relationship with an “obliged entity” on or after 10 March 2020.
What data will be required by HMRC?
The UK Trust Registration Service will ask trustees to register the identity of trust beneficiaries, the value of trust assets and other information regarding the administration of the trust.
‘Our independent financial advisers have been reviewing the trusts we manage for our wealth management clients to identify any trusts we need to report to ensure that we are ready to register them before the relevant deadline. If you have previously set up a trust or are a trustee and you are not sure if you need to register it, these are the type of trusts that may be covered by this new legislation.
- Holding a property for a beneficiary to live in
- “Pilot Trusts”
- Charitable trusts
- Life insurance policies written into trust
- Bare trusts *
- Holding shares where all dividends are paid to the beneficiary
‘Our independent financial advisers are experienced in offering financial advice to clients looking to set up a trust for themselves or their family. If you would like to learn more about trusts and the difference between different types of trusts, read Howard Goodship, chartered financial planner Ringwood – What is inheritance tax planning? Our financial advisers offer a free initial one-hour consultation to discuss your financial circumstances before we offer estate planning advice. We charge based on a fixed project fee where appropriate. If you require further information, please contact us on 01727 845500 or complete our booking consultation form.'
* The current position now is that bare trusts aren't required to register and under the ongoing technical consultation relating to changes to the trust register it is proposed that bare trusts continue to be excluded from the requirement to register, but the consultation runs until 21 February 2020 so the final outcome will only be known then.
‘The Financial Conduct Authority does not regulate estate planning, tax advice, wills, trusts or Cashflow Modelling.’