Robert Cartmell explains which types of Trust are required to be registered with the Trust Registration Service
There has been much recent talk around the uses and benefits of Trusts and that has been heightened by the Government’s recent requirements to have Trusts ‘registered’ with the Trust Registration Service (TRS).
I, Robert Cartmell, have seen many families who have Trusts within their Wills and estates and where for some years the Trust has been inactive or ‘dormant’. Furthermore, many people have simple property arrangements using deeds such as Declarations of Trust in connection with their property ownership. Such ‘Trusts’ are often forgotten by the family or misunderstood. With heightened awareness of Trust Registration requirements, this has led families to seek consultation on the scope and nature of their Trust, as well as the registration requirements of it.
Why is Trust Registration now a requirement?
UK Government have set out a registration requirement for all main types of Trust (including discretionary trusts and life interest trusts). The obligation is on the Trustees to register any Trust that is ‘active’ and holding a value of £10 or greater. Any Trust that is an Income tax-paying trust is already deemed active and was under an obligation to be registered by 1st September 2022 or within 90 days of execution of trust documents.
What types of Trust are required to be registered?
As such, the TRS is a register of the ‘beneficial ownership’ of trusts. It is to ensure that there is more transparency of ownership. As such, the following are required to be registered with the TRS:
- Any Trust that becomes liable for one of the UK standard taxes. Those taxes include Capital Gains Tax, Income Tax, Inheritance Tax and Stamp Duty Land Tax.
- Any Trust that is declared to be an ‘express trust’. Those will include Discretionary Trusts and Life Interest (Interest-in-Possession) Trusts as well as Bare Trusts.
- Declarations of Trust such as one property owner declaring that the underlying ownership is with another person (in full or in part) is likely to also be required to be registered.
- Deeds of Variation to the extent that a Trust is created, will be required to be registered.
What trusts are not required to be registered at the Trust Registration Service?
As a general rule the following are not required to be registered:
- Pension schemes;
- Charitable trusts;
- Will-Trusts if the trust is brought to an end within two years of death;
- Certain trusts that pay out on death or critical illness;
- Existing Discretionary trusts with a value of less than £100 created prior to 6 October 2020
- Trusts relating to property that is jointly-owned, where the legal owners (at HMLR) and the beneficial owners are the same; and
- Certain other trusts for vulnerable beneficiaries including disabled persons trusts
Is there any Government guidance available?
Yes, there is a particularly helpful section on the gov.uk website. It also provides a framework for making a registration application as Trustee.
The link is https://www.gov.uk/guidance/register-a-trust-as-a-trustee.
Before you embark on Trust Registration, take expert and experienced advice from us to ensure you understand the requirements for your Trust and what information is required to be provided.
If you would like help or advice from Robert Cartmell on the issues raised in this article, please get in touch. Email Robert Cartmell Consulting at info@robertcartmell.co.uk to make an enquiry or arrange a discussion.