Trusts – the new requirements

Trusts – the new requirements

The recently-introduced EU Money Laundering regulations, along with increasing demand for transparency, have brought with them obligations on trusts to maintain specific data on their settlors, trustees and beneficiaries.

Under the new rulings, all trusts that are eligible for tax must now provide the information to HM Revenue & Customs via its compulsory Trusts Registration Service (TRS) which, whilst not a public record, will be available to all law enforcement agencies.

There are significant reporting burdens associated with this new legislation, with fines and possible criminal convictions for non-compliance, so trustees need to be fully aware of their additional responsibilities and the effect of any changes to beneficiaries and family situations.

Which trusts need to use the TRS?

Any trust with a taxable consequence in the tax year 2016/17 must report information relating to the trust to the TRS by the deadline of 31 January 2018 and thereafter for each year in which the trustees are liable to one or more of the following taxes:-

  • Income Tax
  • Capital Gains Tax
  • Inheritance Tax (IHT)
  • Stamp Duty Land Tax (SDLT)
  • Land and Buildings Transaction Tax (LBTT)
  • Stamp Duty Reserve Tax

Most trusts in the self-assessment system will be subject to TRS reporting requirements, although bare trusts and those where all the income has been mandated to beneficiaries and where it is no longer required to submit a tax return, will be exempt.

What information is required?

In addition to basic information, such as the name of the trust and correspondence address, the TRS requires details of the trust’s beneficial owners and assets. Beneficial owners are the settlor(s), trustees and beneficiaries. Any protectors (unlikely unless the trusts has an offshore aspect) and any other person who has control or influence over the trust will also need to be included.

Registration deadline for new trusts and complex estates

For any new trusts and complex estates that first became liable to self-assessment in tax year 2016/17, the deadline for registration would usually be 5 October 2017. However, HMRC has extended the registration deadline to 5 January 2018 for this year only due to delays in setting up agent access to the new service.

A ‘complex estate’ is defined as one where either (i) the estate is valued at over £2.5million, (ii) the tax due for the whole period of administration will exceed £10,000, or (iii) the estate will make sales of assets exceeding £500,000 (£250,000 for estates resulting from a death prior to 6 April 2016).

For more information on how we can manage your trust’s registration on your behalf to ensure you meet all the requirements placed on you under the new legislation, contact Karen Chadwick.

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