Definitions;
“Settlor” (The person responsible for creating a trust)
“Trust” (Assets or money)
“Trustee” (The person appointed by the settlor to manage the trust)
“Beneficiary” (The person(s) benefiting from the trust)
In 2020, the government held a consultation to review the trust registration service (TRS) in accordance with the implementation of the Fifth Money Laundering Directive (5MLD). Under the new directive, the government has confirmed that the current TRS will undergo some significant changes.
Importantly;
- Registration of all UK and some non-UK trusts, whether or not the trust is liable to pay tax.
- Information held on the register will now be widely available for those with a legitimate or third country interest.
- More information to be included about about settlors and beneficiaries.
Trusts that need to be registered
- All UK express trusts.
- Non-UK express trusts that obtain property in the UK.
- Have at least one trustee resident in the UK that you have entered into a business relationship with.
Trusts that do not need to be registered
- Trusts that hold money or assets of a UK-registered pension scheme.
- Trusts used to hold life or retirement policies.
- Trusts holding insurance policy benefits providing the benefits are paid out from the trust within 2 years of the death.
- Charitable trusts.
- Pilot trusts which hold no more than £100.
- Co-ownership trusts set up to hold shares of property.
- Will trusts which are created by a persons will and come into effect on their death. Estate assets can only be held up to 2 years after the persons death.
- Trusts for bereaved children under 18 or adults aged 18- 25 set up under a will.
- Financial or commercial trusts which hold client money or other assets.
Trusts imposed by the court do not have to be registered unless they are liable to pay tax.
Examples;
- Trusts set up under intestacy laws were assets in the estate are held by a trust.
- Trusts set up under a court order to hold compensation payments.
- A trust that hold jointly held assets.
- Financial products or arraignments with ‘Trust’ in their description.
What You’ll need to register
Trustees will need to give some basic information about the persons involved in the trusts (settlors and beneficiaries)
Requesting information on the register
Two types of requests for information from the register;
- Legitimate interest
Individuals or organisations conducting an investigation into suspected money laundering or terrorists financing activity. They are obliged to give details about their suspicion and explain how they will use the trust data. Speculative searches will not be available.
- Third country entity requests
Holding a controlling interest in a non- EEA (third country) company or other legal entity. (For example, a trust holding a Swiss Company) Trusts hold more than 50% of the shares or can control it in some other way.
Please note that law enforcement agencies will continue to have access to TRS information.
Information to be provided
Beneficial owner (Including legal entities such as businesses)
- Name
- Country of residence
- Nationality
- Nature and extent of their beneficial interest.
- Registered/ principle office (if beneficial owner is a legal entity)
Restricted data
HMRC will not give information about beneficial owners if:
- They are under 18.
- Lack mental capacity.
- At risk of un-due influence.
New rules require solicitors to register trusts before the relationship can start.
Penalties
- The failure to register on time.
- The failure to keep the record up-to-date and correct.
Initially trustees will receive a “nudge letter”. If a trustee still fails to register, they could be liable to pay a financial penalty of £100 for each trust unregistered.
Deadlines for registration
- Many trusts will not need to register before 10 March 2022.
- You will have 12 months to register from the date that the TRS is ready to accept registration.
REFERENCES
Fifth money laundering and trust registration service
Trust registration extension- An overview
https://www.gov.uk/guidance/trust-registration-extension-an-overview
Farrer & Co