HMRC registration of trust requirements – don’t miss the deadline

The requirements refer to trust arrangements, but the truth is, many family and business agreements will now need to be registered. 

The Trust Registration Service (TRS) was created to provide transparency around the ownership of trust assets, although in fact its original introduction wasn’t in response to a trust issue imposed by HMRC.

To better explain the wide-reaching nature of the trust requirements, we answer some frequently asked questions. However, it is important to seek advice for your specific situation.

I have heard I need to register a trust following a gift of shares to my minor children. What are the rules?

This situation is effectively a bare trust – you hold an asset on behalf of your minor children – and is commonly used because restrictions often apply to children owning assets outright as legal owners. The shares are registered in the parents’ name and the parent holds the shares as trustee for their child who is the beneficiary.  

In these circumstances, the answer is ‘yes’.  Where the bare trust holds shares for children or grandchildren, these arrangements will need to be registered.

There is a specific exclusion from registration where a cash deposit account is held for a minor child. But this is for cash only and does not extend to other assets.

It is important to note that not all types of child savings accounts involve trusts.  For example, Child Trust Funds and Junior ISAs are not trusts and are not required to register.

We have property in our partnership, but only my father’s name is shown on the title deeds. Has this created a registerable trust?

At present, HMRC’s view is that there will be a registerable trust only where the land or property is explicitly stated to be held on trust. This is more likely to be the case where there is a partnership with a number of unconnected parties.  It is perhaps less applicable to family situations. However, it is important to review all the partnership documentation.

It is not yet clear if HMRC’s view is correct so that makes it particularly important to document steps taken to deal with the issue correctly. There are also exclusions that may be applicable, for instance, where land or property is owned by more than four persons.

I made a declaration of trust in respect of the let property I originally bought on a 50:50 basis with my husband. The declaration changes the beneficial ownership to 99:1 in favour of my husband. Do I need to register this arrangement?

No, you do not need to register this because the trustees and beneficiaries are the same irrespective of the split of legal and beneficial ownership.

I bought a property in my sole name but recently have transferred 50% of the beneficial interest in this property to my new wife. Does this need to be registered?

Yes, this arrangement must be registered with the TRS because the trustee – you the husband – is not the same as the beneficiaries – you and your wife.

Registrable trust deadlines

Taxable trusts – Registrable taxable trusts must register by 31st January (or 5th October in some cases) following the end of the tax year in which the trust had a liability to UK taxation.

Non-taxable trusts – Registrable non-taxable express trusts that were in existence on or after 6th October 2020 must register by 1st September 2022.

Who is exempt from trust registration?

There is a list of situations that are excluded from the requirement to register here. Again, it is important to take advice on your individual circumstances.

More details on registration deadlines can be found from HMRC here. If you fail to register a qualifying trust before the deadline, HMRC can impose penalties.

Need more help?

Anybody who has concerns about trusts should seek urgent advice so their affairs can be reviewed in time to meet the 1st September 2022 deadline. Please call 01202 122272 or use our online enquiry form if you need further help with your tax and accounting needs.

Date published 18 Jul 2022 | Last updated 19 Jul 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.