Just two weeks left to register a trust with HMRC or risk a penalty

by | Aug 18, 2022

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HMRC’s deadline for registering a non-taxable trust is fast approaching. As such, Quilter is advising planners whose clients hold money in an express trust and are yet to register their trust with HMRC to be aware of the new rules and understand what their clients need to do.

In September 2021, HMRC launched the new trust register as part of the Fifth Money Laundering Directive. Prior to this date, only trusts that had incurred a UK tax liability needed registering. However, now all existing trusts within scope of the new legislation will need to register by 1 September 2022, or within 90 days of the trust being set up – whichever is the latter. Trusts set up on or after the deadline will need to register within 90 days.

It is the responsibility of the trustees to ensure the trust is registered online by the deadline, and where there is more than one trustee only one ‘lead trustee’ can register the trust. If the deadline is missed, HMRC may impose penalties, so it is very important that clients understand the rule changes and what this means for them.

A trust will need to be registered on the UK trust register if it meets any one of the following criteria:

  • All trustees are UK resident
  • There is at least one UK resident trustee AND the settlor is resident
  • There is at least one UK resident trustee AND the trust enters a UK business relationship
  • The trust holds UK property or land
  • The trust holds UK assets AND has a UK tax liability

Registering a trust is an important, but relatively quick and easy process for clients to complete. To support advisers in making this process as smooth as possible for their clients, Quilter recently released ‘A step by step guide for registering your trust’ which is available on Quilter’s platform website.

To add the trust to the register, clients will first need to create a new government gateway ID for the trust, then they will be asked to provide personal information for each settlor, trustee and named beneficiary, as well as some details about the trust itself, such as name, date of declaration and any discretionary ‘classes’ of beneficiary.

In recognition of the fact that the registration requirement will be an unfamiliar obligation to many trustees, HMRC says there will be no penalty for a first offence of failure to register. However, if HMRC believes failure to register is deliberate, a £5,000 penalty may be charged per offence.

Shaun Moore, tax and financial planning expert at Quilter, said:

“With the trust registration deadline fast approaching it presents a great opportunity for advisers to perform some essential maintenance checks with trustee clients. Not only does it mean ensuring these clients are prepared and have the documentation ready, but also ensures that an adviser can check their letter of wishes is in place, the current trustees are up to date, and the suitability of the investments held by the trust are reviewed. Trust registration is a straightforward process and is as easy to complete as registering for self-assessment, so it should give advisers time to run a bit of a trust MOT for their clients.

“It can also give you the chance to engage with clients who may benefit from creating a trust but are unsure how they work. Trusts can be a useful tool that can provide a great option for sensible family financial planning that allows a beneficiary to receive money at the right time and in line with a family’s wishes. This approaching deadline can be used as an opportunity to discuss financial planning with a multitude of clients across a number of generations, reinforcing the trust they already place in the adviser. 

“Thanks to the government gateway system that is in place, the process is simple enough to complete. Should additional guidance be required by clients who are affected, there are many resources available to help, including ‘A step by step guide for registering your trust’ which is available on Quilter’s platform website, as well as HMRC’s online trust registration guidance.”

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