Private Client Partner, Antony Caulfield, discusses the fast-approaching deadline from H M Revenue & Customs to register non-taxable trusts where there was previously no requirement to register.
I am finding that a lot of my clients are completely unaware of a fast-approaching deadline from H M Revenue & Customs to register non taxable trusts where there was previously no requirement to register.
In June 2017, the 4th Anti Money Laundering Directive came into force which required all taxable trusts be registered with HM Revenue and Customs. This requirement was extended under the 5th Anti Money Laundering Directive, which came into force in October 2020, meaning that all express trusts, with a few minor exceptions, must be registered online with HM Revenue and Customs by 1 September 2022, or 90 days after the trust was set up with their Trust Registration Service. These changes were introduced as a way of tackling both money laundering and tax issues.
The only trusts which are excluded from registration are Legislative trusts, trusts imposed by Court Order, Pension scheme trusts, Trusts of insurance policies, Charitable trusts, some Pilot trusts, trust wound up within two years of the Settlor’s death and co-ownership trusts.
Certain situations can arise where it is not obvious that a trust is created, for example where the legal owner and beneficial owner of a property are different. This situation creates a trust and must now be registered. Another common example is grandparents often invest money on behalf of their grandchildren which could give rise to a bare trust, if the child’s name does not appear on the account. Many bare trusts are now registerable trusts.
Once a trust has been registered with HM Revenue and Customs, any changes to the trust or beneficial owners needs to be kept up to date or if any of tax (i.e. income tax, Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax or Stamp Duty Reserve Tax) subsequently becomes payable.
It is important to take action without delay and register those existing trusts which now require registration, before the 1st September deadline, to avoid an unexpected penalty from H M Revenue & Customs. If you are unsure if your trust requires registration, or need help registering your trust, you should seek professional assistance now.
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