For some, the word trusts conjure up thoughts of super-rich families trying to protect their money, but in fact, many of us use trusts in our routine financial planning. The most used trusts are will trusts, inheritance tax planning trusts, or trusts set up by grandparents to support future grandchildren’s educational needs.
For several years now, HMRC has been trying to create a central register for UK trusts and overseas trusts with UK assets. Since September 2021, they have had an online reporting tool for trustees to declare their interests. Only trusts that have a UK tax liability needed to be registered at that time.
The main reason HMRC established the register is to find out how many trusts are in existence and to combat money laundering. The register is not a way to tax trusts. HMRC expects any trust to pay tax if it is due.
There has now been an expansion of the regulations. Even trusts that do not have a UK tax liability now need to register. Investment providers also have new duties under the Anti-Money Laundering Regulations that require them to report to HMRC material discrepancies on an ongoing basis that is linked to trusts.
As a result, providers such as abrdn Standard Life and Transact now require evidence from trustees that the trust they administer has been registered with HMRC’s Trust Registration Service (TRS).
Once registration is completed, or if a trust has already been registered, the trustees should download and print a letter, directly from the TRS system, as evidence that the trust is registered.
Without this evidence, your investment provider will delay any new instructions you ask of them until it is provided. You will not be able to request withdrawals, top up your investment, make a death claim, change a bank account, or surrender the investment.
If the provider asks you for evidence that the trust has been registered and evidence is not provided within 90 days, the provider is obliged to report the issue to HMRC.
Unsurprisingly, most, but not all trusts need to be registered, so it is important that trustees identify whether their trust has or needs to be registered now.
Here at Capital, we’re looking at the trusts we provide investment advice to and will be in contact with clients who are likely to be affected by this update, to help them with this registration.
There may be clients who are trustees of trusts we do not manage investments for, so we advise all trustees to speak with their solicitor, accountant, or adviser on this matter and ensure all trusts comply with the new rules as soon as possible.
For further information, please refer to HMRC’s web page:
Register a trust as a trustee – GOV.UK (www.gov.uk)
