In order to comply with EU regulations and to come in line with the financial sector’s current agenda for transparency, an online trusts register was introduced by HMRC in June following the general election result. This non-public register will record all trusts both within and outside the UK – including occupational pension trusts, employee ownership trusts and charitable trusts which have UK tax liability. Information on all relevant parties to a trust will be recorded, including the settlor, actual and potential beneficiaries and advisers.
Trusts will only be required to be registered if they meet two requirements. Firstly, they need to be either a UK express trust or a non-UK express trust with either UK assets or UK source income. If a settlor knowingly and intentionally sets up a trust to expressly transfer property to a trustee, this is considered to be an express trust.
Secondly, the trustees need to have incurred a tax liability related to income tax; capital gains tax; inheritance tax; stamp duty land tax; stamp duty reserve tax; or if located in Scotland, land and buildings transaction tax. The tax liability needs to have been incurred at trust level, so the trust won’t need to be registered due to liabilities falling on the settlor, beneficiaries or any underlying companies directly.
As well as identity details of the settlor, trustees, advisors and others such as protectors and beneficiaries, the details and market value of the trust assets at the settlement date need to be recorded. The register needs to be updated regularly by the trustees if a liability to pay any relevant UK taxes has been incurred in the previous year. For any trusts with a UK tax liability during the 2016-2017 tax year, the deadline to register or update details falls on 31st January 2018.
It’s important that trustees ensure that all the relevant information on their trust is present and up-to-date. Trustees will also need to think about whether or not to inform relevant parties that their information will be registered. If any party objects to this, the trustees will need to carefully consider their position, as failure to register by the deadline date will result in the trust incurring a penalty.