New rules are coming into effect in 2020 meaning that all express trusts will need to be registered, whether or not they are liable to UK tax. Currently, you only have to register a trust if they have a relevant tax liability including, Income Tax, Capital Gains Tax, Stamp Duty Land Tax and Inheritance Tax.
So, why the changes? It’s all part of HMRC’s crackdown on money laundering schemes and tax avoidance.
What are express trusts?
Express trusts are generally defined as trusts that have been deliberately created by a settlor, as opposed to being created in other ways, such as through court order or through statute. This description is likely to include discretionary trusts, interest in possession trusts, many types of bare trusts, charitable trusts and employee ownership trusts. At Ellacotts we deal with express trusts frequently.
As the UK government acknowledges that in order to allow existing trusts the time to register, there will need to be an adequate deadline. It is, therefore, proposing that trusts in existence on 10 March 2020 will have until 31 March 2021 to register.
New trusts created after 1 April 2020
For new trusts set up on or after 1 April 2020, the timings will be much tighter. The UK government is proposing a 30-day deadline for registration for new trusts. The same 30-day deadline will ultimately apply to updates of information – although, as the consultation document notes, the facility to update trust registrations is not currently available.
Around 200,000 trusts are currently within the existing requirements to register, but these new changes could see it expand to an estimated 2 million trusts.
What happens if I don’t register my trust?
The trustees may have to pay a penalty if the trust is not registered before the registration deadline.
Do you need advice on your trust?
We have an expert tax team who can advise you on trust issues including whether you will need to register and any tax implications your trust may incur. Speak to our dedicated trusts expert Ann Bibby on firstname.lastname@example.org or 01295 250401 or contact us here.