The UK trusts register – changes ahead
Since 2017, all trusts that are liable to pay UK tax of any kind (including non-UK trusts) must be registered on the UK trust register which is web-based and operated by HMRC. Trustees must have a Government Gateway account in order to report the relevant information at https://www.gov.uk/guidance/register-a-trust-as-a-trustee. Not only does the register ensure that trusts are properly registered with HMRC, it also meets the requirements of the EU’s Fourth Money Laundering Directive.
The Fifth Money Laundering Directive, which was implemented on 10 January 2020, introduces significant changes to the register, many of which non-professional or non-UK trustees may not be aware of. The main changes are as follows:
- the register is no longer only available to government authorities, it will now also be accessible by third parties with a legitimate interest;
- trusts which have registered previously will be required to provide additional information;
- regardless of whether tax liabilities are due, all UK trusts are required to register;
- trusts outside of the EU which enter into business relationships with a UK service provider or acquire UK real estate, will be required to register; and
- when entering into a business relationship with an “obliged entity” (i.e. an entity subject to AML rules such as banks, estate agents, accountants or solicitors), trustees must supply the trust’s registered beneficial ownership information. It is the responsibility of the service provider to report any discrepancy between information received from trustees as part of due diligence procedure and the register.
When registering, the following information will be required:
- name of the trust;
- formation date of the trust;
- place from which the trust is administered;
- details of the trust’s assets including location and value;
- ‘Identity’ of the settlor, trustees, protector and any other persons who have control over the trust; and
- ‘Identity’ of the beneficiaries or classes of beneficiary.
For the purpose of identifying individuals, there is a requirement to report their name, date of birth and national insurance number (if UK resident). For non-UK resident individuals, an address and passport/ID number must be provided.
The following registration deadlines apply:
- Trusts formed prior to 10 March 2020 must register by 10 March 2022
- Trusts formed after 10 March 2020 must register within 30 days
- If there are any changes to the beneficial owners of the trust, the register must be updated within 30 days from the date of change
Once registered, trustees will be required to make an annual declaration that the details on the register are correct. Information provided will be retained on the register for 6-10 years after the trust is terminated or at the point at which information becomes outdated.
As mentioned previously, all UK trusts must register along with any non-UK trusts that have a UK tax liability (such as income tax, capital gains tax, inheritance tax or stamp duty). However, there are some exceptions to this where information is already available via other platforms (i.e. Charitable trusts registered on the Charity Commission) and/or there is minimal risk of the trust being used for money laundering or terrorist financing purposes.
HMRC are still to provide further guidance with regards to exempted trusts; however, some examples of those confirmed to be exempt are listed below:
- Charitable trusts
- Registered pension schemes
- Statutory trusts, for example trusts arising from intestacy or upon a court order such as a divorce. This also includes implied and constructive trusts
- Trusts created for the benefit of vulnerable beneficiaries
- Employee trusts, including approved share option and profit sharing schemes
- Trusts holding life/critical illness policies where there is no surrender value
It is important to point out that although these trusts are not required to register in order to comply with the EU’s Fifth Money Laundering Directive, if a trust has a UK tax liability then it will still be required to register, regardless of whether it is listed as exempt from registration for EU Directive purposes.