As a result of the 4th EU Money Laundering Directive, new reporting obligations for certain express Trusts were introduced on 26 June 2017.
All express Trusts with a relevant UK tax liability should register on the Trust Registration Service (TRS).
Relevant UK taxes
- Income Tax
- Capital Gains Tax (CGT)
- Inheritance Tax (IHT)
- Stamp Duty Land Tax (SDLT)
- Stamp Duty (SD)
- Stamp Duty Reserve Tax (SDRT)
- Land and Buildings Transaction Tax (Scotland)
Where an offshore Trust’s only relevant UK tax liability is inheritance tax, and this arose solely by virtue of the rules introduced on 6 April 2017 (indirectly owned UK residential property – Schedule A1), HMRC has confirmed that the Trustees are not required to register the Trust on TRS.
Deadlines for tax liabilities that arose in 2017/18
- New tax liability – register by 5 October 2018 following the end of the tax year.
- Existing tax liability – register by 31 January 2019 following the end of the tax year.
Penalties for late registration
- £100, if late but under three months
- £200, if over three months late but less than six months
- £300 or 5% of the total tax liability in the relevant year, whichever is greater, if more than 6 months after the deadline (the deadline for filing for 2016/17 liabilities was 5 March 2018, so if you have not yet registered, you will have incurred the full penalty).
- A UK Trust was created in 2010. The Trust was registered with HMRC using a form 41g (no longer available).The only asset of the Trust is a UK residential property which has never been let out. There was no need to register the Trust by 5 March 2018 as the Trust did not have a tax liability during the 2016/17 tax year. However, during the 2017/18 tax year, the property was sold, which generated a capital gains tax liability. In this case, the Trust must be registered before 5 October 2018 to avoid penalties.
- A Trust fund is fully invested in non-income producing assets. The Trust has never had a UK tax liability. The Trust has reached its first ten year anniversary on 3 February 2018 and has an IHT liability. The Trust must be registered by 5 October 2018 to avoid penalties.
- The Trust fund had an income tax liability during the 2016/17 tax year. The agent (on behalf of the Trustees) registered the Trust on the TRS for the 2016/17 tax year. The Trust has an income tax liability for the 2017/18 tax year. In this case, the Trust must be registered before 31 January 2019 to avoid penalties (although the means to do so are not available at this time).
Contact us for more information on the Trusts Registration Service and how we can help you to avoid penalties.