How to register a trust – act now to avoid a fine!

Did you know that the trust registration rules changed back in September 2022? Before then, only trusts taxable in the UK needed to register with HMRC. However, since that date, the taxman has required registration by a number of different types of non-taxable trust. If you haven’t registered your trust correctly, you could now be liable for a fine of up to £5,000.

Unfortunately, the message has yet to reach many people.

HMRC seems to have realised that large numbers of people are unaware of these rules. In a subsequent Agent Update, the taxman says that: “No penalties will be charged for failure to register or late registration of a trust unless that failure is deliberate, in which case the trustee may be liable to a penalty of £5,000.”

That said, this may not remain the case, with HMRC urging: “Any trusts who have not yet registered and are required to do so should register as soon as possible.” As a result, we strongly recommend checking out the registration rules and, if needed, registering your trust as soon as possible.

So, what are the current rules? Let’s take a look at what they are, whether you need to register and – if you do – how to register a trust.

Changes to the trust registration rules

Changes to the trust registration rules date back to the EU’s Fifth Anti-Money Laundering Directive. This was implemented in the UK by the Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020.

These regulations required three categories of non-taxable express trust to register. (Express trusts are those created deliberately, such as with a Trust Deed or by being written into a Will). The three categories are:

• UK express trusts: where all trustees are resident in the UK, or at least one trustee is resident in the UK and the settlor (the person who put assets into the trust) was resident and domiciled in the UK.
• Non-UK express trusts: where one or more trustee is resident in the UK and the trustees enter into business with supervised persons or acquire an interest in UK land.
• Non-UK express trusts: where no trustees are resident in the UK, but the trustees acquire an interest in UK land.

I’m confused. Does that mean all non-taxable trusts need to be registered?

No. There are many different types of non-taxable trust that don’t need to be registered. Examples include:

• A trust that holds money or assets of a UK registered pension scheme
• A charitable trust that is either registered as a UK charity or is not required to
• Co-ownership trusts set up to hold shares of property or assets that are jointly owned by two or more people for themselves as ‘tenants in common’
• Trusts for bereaved children under 18, or adults aged 18-25, set up under the will (or intestacy) of a deceased parent or the Criminal Injuries Scheme.

There are many other examples in HMRC’s guidance, here.

I’m still unsure whether I need to register a trust

As you’ve seen, the trust registration rules are more complex than first meets the eye. If you want to delve into the detail, HMRC publishes a list of excluded express trusts, along with their definitions. You can find these documents here.

On the other hand, you can ask your THP account manager for advice or talk to one of our Wills and Trusts experts.

I’ve just created a trust. What are the registration rules?

If you have just set up a qualifying trust, you have 90 days to register.

The details of my trust have changed. What do I do?

If there is a change, such as a change in trustee, you also have 90 days in which to tell HMRC.

I now know I need to register my trust. What next?

HMRC provides full instructions on how to register a trust online. To do so, you’ll need to visit this link. In order to register, you’ll need a Government Gateway account.