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Technical View

HMRCs new online Trust Register

 

Both new and existing trusts that generate UK tax consequences, along with complex estates, will need to register using the online service (the paper registration method was withdrawn in April 2017). As it stands only lead trustees and personal representatives are able to use the service. Functionality extending the service to agents is due to follow in the coming months.
 
The Registration Service can be accessed via GOV.UK.
   
To find out more and for further clarification of what is needed please read on.

Background

For a number of years Form 41G (Trust) was used as the means by which new trusts were notified to HMRC. The form captured information including the trustee’s details, details of any professional agents acting, the governing law of the trust and whether it was created in lifetime or on death by will or intestacy. Registration of a new trust was required where income or gains were likely to arise under the trust, if there was no future likelihood of income or gain arising then there was no need to complete Form 41G (Trust). Trusts which held non-income producing investment bonds were by and large not required to notify HMRC of their creation.

What’s new?

As part of HMRCs moving towards a digital tax strategy and to comply with the Fourth Money Laundering Directive (4MLD) the creation of a new Trust Registration Service has been announced and Form 41G (Trust) was withdrawn at the end of April 2017. The new Trust Register will be an online service and HMRC have stated that it will be launched in June 2017 although at the time of writing it is yet to appear.

So what do trustees need to do?

The trustees of a trust which generates UK tax consequences (which includes income, capital gains, and inheritance taxes along with stamp duty) will be obliged to register the trust irrespective of whether it is UK or non-UK resident. Any trusts which have previously been notified to HMRC via the paper based Form 41G (Trust) route will also need to be registered using the new online service where they have ongoing UK tax consequences.

What information is required under the registration process?

The register will ask for:

  • details of the trust assets, with addresses and values,

  • the identity of the settlor(s), trustees, protector (if any), all persons exercising effective control over the trust (if any) and the beneficiaries or where there are classes of beneficiaries a description of those classes.

Particular information required for the likes of settlors, trustees, protectors, persons exercising effective control and named beneficiaries includes:

  • name,

  • date of birth,

  • NI number for UK residents unless a minor,

  • address and passport or ID number for non-UK residents without a NI number.

Once registration is complete the service will generate a unique taxpayer reference (UTR) for the trust. Completing the initial registration is not the end of matters as trustees will need to update the register each year that the trust generates a UK tax consequence using the UTR to access their records. 

Are there any trusts that do not need to register?

The good news is that along with trusts that do not create UK tax consequences, the likes of bare trusts and pension scheme trustees should not have to register.

Further positive news is that IHT solutions such as Discounted Gift Trusts and Loan Trusts using non-income producing investment bonds as the underlying investment with any gift falling in the available nil rate band often do not generate UK tax consequences, or at least not immediately, so should not need to register. Further down the line events such as a chargeable event gain after the settlor’s death might give the trustees a tax liability and a requirement to register at that stage.

Complex estates

Personal representatives dealing with complex estates will also need to use the registration service to obtain a UTR and to update records online. An estate is classed as complex where:

  • the value of the estate exceeds £2,500,000,

  • tax due for the whole administration period exceeds £10,000,

  • the value of assets sold in any tax year for date of deaths up to April 2016 exceeds £250,000 or £500,000 for dates of deaths after April 2016

Information similar to that necessary to register a trust will be required for the deceased and the personal representatives.

Practicalities

HMRC have asked that trustees and personal representatives delay notifying them of a trust or complex estate until the new online service is operational. Initially only lead trustees and personal representatives will be able to use the service but an enhancement pencilled in for October 2017 should allow agents to complete registrations.

When the service is available users will be able to save partially completed details and come back to finish off the registration at a later date provided this is within 28 days of starting the process.

Need to know

Advisers, planners and anyone dealing with trusts or estates should be aware of the new registration process and may need to be on hand to guide clients and help them meet their obligations. 

A PDF version of this article is available.

This document is for information purposes only and should not be treated as advice. Content is based on current tax law and HMRC practice as at June 2017 and may be subject to change in the future. Whilst we have made every effort to ensure the accuracy of this material, we cannot accept responsibility for any consequence (financial or otherwise) arising from relying on it. 

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.