Trust Registration Service – everything you need to know
The Trust Registration Service is an online system to help trustees (the people who are responsible for taking care of a trust) register a trust.
This is an important thing to do. Most trusts in the UK need to be registered in order to avoid fines and make sure the correct tax is being paid. There are also rules in place to prevent money laundering and terrorism.
To be connected to a specialist solicitor near to where you live, please either call us now on 0845 1391399 or complete a Free Online Enquiry.
But what is a trust? Why would you want to register one? Let’s take a deeper look:
What is a trust?
A trust is an arrangement used to hold assets (such as money, property, or investments) on behalf of someone.
A “settlor” puts these assets in a trust. The trust is managed by a “trustee” (they are supposed to follow the settlor’s wishes, much like the executor of a will). Eventually, a “beneficiary” – or several beneficiaries – will benefit from it.
There is a huge variety of different types of trust. These are treated differently for tax purposes and most have different rules, benefits, or purposes attached.
Why register a trust?
There are a number of reasons why you might want to register a trust. The most common are:
1) Protection and control of your assets
The way a trust works can be controlled via the documents (a Deed of Trust) used to set it up in the first place.
You might be able to set things like whether the trust is revocable (whether you can access it during your lifetime) or who the assets you’ve placed in trust pass on to.
2) Protection of young people or the incapacitated
If a young person has inherited a great deal of wealth or other assets – such as investments – that they don’t know how to deal with, it’s common for a trust to be set up to protect them.
The same is true of people who have become incapacitated for one reason or another.
3) Protection of your legacy
Some types of trust (often called a “will trust”) can be used to pass on assets to someone after you die. A trust can protect the assets you want to pass on to that person from creditors.
It’s also sometimes used to protect beneficiaries from themselves. If you’ve ever seen (perhaps in a movie) someone who isn’t allowed to access their trust until they reach a certain age or accomplish a certain life goal, this is the kind of stipulation to picture.
Do I have to register a trust?
There is a high likelihood you will have to register a trust with HMRC. However, some types of trusts and circumstances may make you exempt from this. In general, you will need to register a trust for reasons of:
- Legal compliance – most trusts need to be registered because there are legal requirements designed to protect against money laundering and the financing of terrorism.
- Tax return accuracy – income from trusts usually needs to be declared. To get a UTR (Unique Taxpayer Reference number), you need to register a trust.
- Tax liability – if your trust becomes liable for any of a wide range of taxes (income tax, capital gains, stamp duty, and many others) you will need to register.
- Specific trust types – even if you have no tax liability, you still need to register any UK express trust and non-express trusts that acquire UK land or property, have at least one trustee in the UK, or enter into a business relationship in the UK.
If in doubt, it’s always worth consulting a specialist trust solicitor. Otherwise, you risk falling afoul of laws largely created to prevent money laundering and terrorism financing. Being set against these laws is rarely a good thing.
How to register a trust
1) You can Do It Yourself (but it might not be a good idea)
It is possible to register a trust yourself. You can do so using the Trust Registration Service (TRS) for free.
It is worth knowing before you start though, that the system is not exactly simple to use. If you don’t have any understanding of how trusts work from a legal standpoint, it can be more than a little intimidating.
That’s why most people work with a trust solicitor or another expert representative.
2) Collect information
To register a trust with HMRC, you need to collect a great deal of information about:
- Settlors
- Trustees
- Beneficiaries
- Anyone else who has control over the trust
3) Verify information
It’s very important to provide the correct information when registering a trust. Unfortunately, the legal descriptions of some details are not always clear to someone without training.
Even something as simple as the “trust date” can vary dramatically depending on the type of trust that is being registered.
Getting help with the Trust Registration Service
Making mistakes with this information can leave you open to all kinds of fines and penalties. Again, this is why it’s usually smart practice to work with a solicitor you trust (pun not intended) so that the Trust Registration Service gets the correct information and your assets stay protected.
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Trust Solicitors Near Me
To be connected to a specialist trust solicitor near to where you live, please either call us now on 0845 1391399 or complete a Free Online Enquiry.
