‘You Asked’ is a series of insights from the boosst team. You, our clients, have a wonderful ability to ask relevant and thought-provoking questions… which are often (but not always!) related to financial planning. boosst is a trusted source of knowledge and independent advice, so it makes sense that you come to us with a broad range of questions – which can vary from ‘Which car should I buy?” to “What’s the best way to teach our children about money?”.
This ‘You Asked’ post was written by Josh.
You Asked: How can I register a Trust using the Trust Registration Service?
The Trust Registration Service has been around for a long time, however only certain Trusts needed to be registered. In 2015 under the 4th Money Laundering Directive (4MLD) all taxable Trusts had to be registered under the scheme. The EU further updated their legislation and recently introduced the 5th Money Laundering Directive (5MLD), which although the UK sits outside of the EU, we as a country have chosen to adopt and progress this legislation. The registration service now captures nearly all Trusts.
This means that many UK Trusts need to be registered with HMRC before 1st September 2022.
This guide has been written to help you understand what types of Trust need to be registered and how to go about registering. Whilst boosst are unable to register Trusts for you, we can certainly assist with understanding whether your Trust needs to be registered and what you will need to do.
All trusts need to be registered unless they fall under one of the following exclusions:
Excluded Trusts:
- All UK Charitable Trusts
- Bereaved Minors Trust – established in the event of a minor being the beneficiary of a Will
- Trust imposed by Statute – established in the event of a minor being a beneficiary where the deceased died intestate (without a Will) and intestacy rules are in place
- ‘Pilot Trusts’ that were established to receive an asset at a later date and do not currently hold more than £100 of value. Historically these types of Trust were commonly setup with a £10 note, so they would be excluded at this time.
- Life Assurance Trusts where the Trust has no value. This type of Trust could be known as a Flexible Trust, a Split Trust or a Discretionary Trust. Most insurance policies that we arrange for clients are placed in Trust to hasten payment upon claim and to provide tax benefits. Until a successful claim is paid to the Trust (upon death or critical illness) the Trust will have no value, so is excluded. This exclusion ends two years after funds are received by the Trust, unless all funds have been distributed by this point.
- Will Trusts where the deceased passed away less than two years ago. Where someone has died and assets of the Will remain in Trust for more than two years, the Will Trust must then be registered.
All other types of Trusts must be registered.
Most Trusts that need to be registered are known as ‘Express Trusts’. This is where an asset is held on Trust for specified beneficiaries. This is usually achieved by writing a Trust Deed.
Examples of an Express Trust would include:
- Any Trust established where the asset is explicitly for the benefit of others. For example, a Bare Trust (also known as an Absolute Trust), a Discretionary Trust (also known as a Flexible Trust) or an Interest In Possession Trust. Most Trusts established to pass an asset to a specific person or group of people (children/ grandchildren etc) will fall under this category.
- Any Trust set up for Trustees to manage funds where the beneficiary is unable to manage the fund themselves, most commonly due to their age or health.
- Any Trust set up for Inheritance Tax Planning – eg. Discounted Gift Trust, Loan Trust, Gift & Loan Trust
- Any Trust that you have taken a loan from, ie. have Loan Notes
Now that we have established the types of Trust that need to be registered, we can expand on the registration process…
Who is responsible? The responsibility of the registration of the Trust sits with the Trustees. Trustees should know the identity of all other Trustees. Where there are multiple Trustees, you will need to nominate a ‘Lead Trustee’. The Lead Trustee will be the point of contact for HMRC and responsible for registering the Trust and keeping the register updated with changes throughout the life of the Trust. If you are the Lead Trustee for multiple Trusts, you will need to register each Trust separately.
What will you need? We have put together a handy guide for all the details that you will need to have to hand in order to register the Trust with HMRC. Click HERE to download.
Where do you login? You’ll need to login via this webpage: LINK
How do you login? Before you can register a Trust, you will need an Organisation Government Gateway User ID and password. If you do not have one, you can click ‘create sign-in details’ to create a new ID. You’ll need a Government Gateway User ID for each trust you want to register. Please remember to keep a secure log of your Government Gateway ID Numbers and login details. The back of an envelope does not count as secure!
When is the deadline? All Trusts need to be registered by 1st September 2022
Once the Trust is registered, it is the responsibility of the Lead Trustee to keep the register up to date. You will need to make edits if any of the following happen:
- A Trustee resigns or a new Trustee is appointed
- A change of personal details for any existing Trustee, such as their name or address
- If a settlor dies (the settlor is the person who originally placed the money/asset into Trust)
- A change of Trust Name
- A change to the personal details of a Beneficiary(name/address)
- Updating a ‘class of beneficiary’ (for example, ‘all grandchildren’) to confirm personal details of a newly born beneficiary who qualified under this class.
- You do not need to update the value of the Trust on the register
- Changes must be updated on the register within 90 days.