Our guide to registering a trust with HMRC

A trust is a legal entity that can hold funds or other assets (for example, property) for the benefit of a third party, called a beneficiary. 

There are many reasons you might establish a trust, from providing legal protections for your assets to transferring your estate to future generations. If your business is held by a trust, then you should be aware that there is a good chance that it needs to be registered with HMRC.

What is HMRC’s Trust Registration Service?

The Trust Registration Service (TRS) was created in 2017 in response to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations. It’s managed by HMRC, and is the government’s way of keeping a record of trusts in the UK.

The TRS also keeps track of who the beneficial owners of trust assets are. So, if the trust legally ‘owns’ an asset or a collection of assets, there is a separate record of who the eventual beneficiaries of these assets will be.

Originally, the TRS was only for trusts that had certain tax liabilities, but from 6 October 2020, the need to register under the TRS was extended to cover many other types of express trusts – even the most simple arrangements where there is no tax liability.

Which trusts need to register?

UK trusts that are subject to the following taxes are required to register under the TRS:

• Capital Gains Tax
• Income Tax
• Inheritance Tax
• Stamp Duty Land Tax
• Stamp Duty Reserve Tax
• Land and Buildings Transaction Tax (in Scotland)
• Land Transaction Tax (in Wales)

As a general rule, from 6 October 2020, UK non-taxable express trusts need to register under the TRS. However, this is subject to some exemptions.

Express trusts that do not need to register under the TRS, if they do not have a tax liability, include:

• Pension schemes
• Charitable trusts
• Trusts set up in a person’s will if the trust is brought to an end within two years of death
• Certain trusts that pay out upon death or critical illness
• Existing trusts with a value of less than £100 created prior to 6 October 2020
• Trusts set up to hold jointly-owned property, where the legal and beneficial owners are the same
• Disabled persons trusts and certain other trusts for vulnerable beneficiaries, such as those set up for children with a deceased parent

See also: Our UK personal tax accounting services.

When are the trust registration deadlines?

For taxable trusts created on or after 6 April 2021, the deadline for registration is within 90 days of becoming taxable.

Different registration deadlines applied for taxable and non-taxable trusts created before 6 April 2021.

• Where they are liable for income tax or Capital Gains Tax for the first time, they must register by 5 October in the tax year after the trust receives income or has any capital gains and becomes liable for tax.
  
• Where they have been liable for income tax or Capital Gains Tax before, they must register by 31 January in the tax year after the trust receives income or has any capital gains and becomes liable for tax.
• Where they are liable for other taxes, such as Inheritance Tax, they must register by 31 January in the year after the tax liability has arisen.
• Where more than one tax is due, the earlier deadline applies.

The deadline for registering non-taxable trusts depends on when the trust was created:

• For non-taxable trusts created on or before 6 October 2020, the registration deadline was 1 September 2022.
• For non-taxable trusts created after 6 October 2020, the deadline is 90 days from its creation or 1 September 2022, whichever is later.

How to register your trust

HMRC has advised that the process set out in the step-by-step guide can change without notice. Therefore, this guide is shared with the caveat that it’s correct as of the date of publication.

Before you can register a trust as a trustee, you need to have an Organisation Government Gateway user ID and password. This is different to an Individual Government Gateway user ID and password. You will not be able to use these login details to register a trust.

You’ll need a different Organisation Government Gateway user ID for each trust you are responsible for. You can create one when you register. Select ‘Organisation’ on the screen that is displayed after you have created your password.

You’ll need:

• An email address (this will be linked to the trust’s Organisation Government Gateway account)
• Your full name
• A landline or mobile phone number

Register now

The following information is needed for both taxable and non-taxable trusts: 

• The name of the trust
• The date the trust was created
• To say if the trust is an express trust or not
• Details about if a non-UK trust has a business relationship in the UK
• Details about any UK land or property the trust has purchased 

However, if you are registering a taxable trust there is extra information that you may need to provide. Such as:

• The type of trust
• Details about how it was set up
• The trust’s Unique Taxpayer Reference, if it has one
• To say if the trust is listed as a Schedule 3A trust — trusts in this position are only registered if they need to get a Unique Taxpayer Reference to declare a tax liability

What happens if you do not register on time

If you deliberately fail to register the trust on time and do not keep the register up to date, you may have to pay a £5,000 fine.

However, if HMRC becomes aware that a trust is not registered when it should be, they may issue a ‘warning letter’, giving the trustees an opportunity to register (or update the register) before issuing any penalty, as long as this action wasn’t deliberate.

Our qualified accountants offer essential and valuable business advisory services for you and your business. If you need assistance, get in touch with one of our experts on +44 (0) 20 7759 5307 or accounting@sableinternational.com