Trust Registration Services from Solidus

The UK signed up to the 5^th Money Laundering Directive (5MLD) and although Trusts were recognised as relatively low risk in terms of money laundering abuse they were included under the new initiative.

The updated legislation requires new Trusts that previously did not require registration to now be registered. The legislation impacts a much broader range of newly created Trusts (including most bare trusts) as well as large numbers of existing Trusts which now require registration by the end of August 2022, even if there is no reportable tax event.

1. Under the new regulations, all UK express Trusts must be registered, unless they fall under a small number of exemptions.
2. There is also a greater, more demanding requirement to provide further information than previously required, including additional details on the Settlors, Trustees and Beneficiaries as well as details of beneficial interest.
3. The time frames for reporting require special attention.

• New express Trusts will require registration within 90 days in the future.
• All existing express trusts that are not exempt must be registered by end of August 2022.
• Trusts with a tax event will be required to report by 5 October each year for most Capital Gains Tax and Income Tax events and 31 January for other reporting requirements.

Although the requirement for registration is not revenue-related, it will be implemented as an extension to the existing trust reporting for tax purposes. It is likely that this process will identify a number of unexpected events that impact asset ownership and potential tax reporting/accuracy, however, it is an opportunity for lay-Trustees to put their house in order.

An express Trust is where the legal owner(s) of property* (assets) declare that they hold said property on Trust for specified Beneficiaries. The declaration will also set out ways and proportions in which the beneficial interest is to be held.

*the legal definition of property is broader than physical property

Learn more about Trusts Requiring Registration

The exemptions in the regulations are relatively clear providing care is taken. They include Trusts for life assurance that hold only death benefits; “Pilot Trusts” set up before 6 October 2020 with less than £100 as a Trust fund; certain co-ownership trusts set up to share an interest in property; most registered pension schemes and most UK charitable Trusts. Both existing and new trusts created by Wills on death, such as life interest or Nil Rate Band Trusts, will require registration unless they are closed down within two years of death. Trusts for minors are also not exempt as a class, however, some may qualify for an exemption. Executors are advised to seek clarification and advice if required.

A Trust can only be registered by using HMRC’s online Trust Registration Service. You should decide if you want to use a company to provide Trust Registration Services to carry out Registration or if you will self-register.

If you are a Trustee of a Trust which requires registration and you do not comply with the legislation you may be subject to a penalty regime of fines which start from £100 and are similar to other tax reporting non-compliance penalties.

Yes, any changes to the Settlors, Trustees or Beneficiaries will need to be updated on the register. If the Trust has a tax liability, an annual declaration will need to be made to confirm that the details are up to date.

On their website, HMRC state the following:

Law enforcement agencies can already get information on the register about a Trust and its beneficial owners to help counter money laundering and terrorist financing. The new rules will allow HMRC to give information to an outside party in specific limited circumstances. In addition, Trustees will use the register to share their own information with an obliged entity.

You may wish to visit the HMRC website.