On 10 January 2020, a new HMRC directive called the 5th Money Laundering Directive (MLD5) came into force, resulting in a major change to trust registration requirements that will impact many trustees.

Prior to MLD5, trusts only needed to be registered with the Trust Registration Service (TRS) if they were express trusts with UK tax consequences. As a result of this directive, there will soon be a requirement for all express trusts to register with HMRC, regardless of whether there are any tax implications (with some exceptions).

Trustees of express trusts. An express trust is one that is intentionally declared by the creator of the trust.  This will include such as discretionary, absolute/bare, interest in possession, discounted gift and loan trusts.

This will not, however, cover trusts in relation to life policies, pensions or charitable trusts, or anything that’s statutory, such as bereaved minors, personal injury and disabled trusts.

It is the duty of the Trustees to ensure that the relevant information is collated and the trust is registered with the TRS.  It is also their duty to ensure that the TRS is updated of any changes to the trust. Failure to do this may result in a fine and interest penalties.

Trusts can now register on the TRS from 1 September 2021. Trusts that incurred a tax charge before this date were already able to register on the TRS.

HMRC have now announced that all existing non-taxable express trusts will need to register by 1 September 2022.  For a non-taxable express trusts created after 1 September 2022, registration must be within 90 days.

There are different deadlines however for registration if a tax liability has been incurred by the Trust and also depending on the type of tax liability.

Trustee(s) will therefore need to be aware of these deadlines as late registration may be subject to a penalty.

Receiving ongoing, professional financial advice is crucial to ensure your financial planning situation isn’t adversely impacted by the lack of awareness in legislation changes, particularly when dealing with investments held within trusts.

If you’d like to speak to us about your need for financial advice, please feel free to get in touch.