Around 1mn trusts are yet to be registered with HM Revenue and Customs before the deadline, despite a sharp increase in registrations this year.
HMRC received over 36,000 registrations in May and June of this year, almost twice as many as was received for the whole of 2021, according to a Freedom of Information request submitted by Canada Life.
In total, 61,692 trusts were registered within the first six months of 2022, bringing the entire number of registrations to 211,381 since the Trustee Registration Service (TRS) began in June 2017.
Tax and estate planning specialist at Canada Life, Stacey Love said that while this jump is positive, the “clock is ticking” and there is still a long way to go to ensure all trusts that are required to register do so before the September 1 deadline.
“Using a trust has been such a fundamental part of the tax and estate planning landscape for so long it's entirely possible the existence of a trust may have faded into the background,” Love said.
“As a result, many ‘ordinary’ people who are trustees may not realise that TRS registration still applies, unless they pay close attention to the financial press or receive regulatory updates from HMRC.”
In Love’s view, because there is no central communication from HMRC about the process, the onus is on advisers and providers to highlight it to trustees.
The TRS, which was set up in 2017, initially only required trustees to register if the trust was liable to pay UK tax, including income tax, capital gains tax, and inheritance tax.
But that changed in 2020 because of the fifth money laundering directive.
New rules now require the trustees of any UK express trust to register key information including personal details, named beneficiaries, class of beneficiaries and the mental capacity of individuals.
The rules also cover trusts that use an offshore bond.
After the September 1 deadline, new trusts must be registered within 90 days of creation.
Elsewhere, a survey from HSBC Life revealed that advisers are worried about their clients failing to register their trusts.
Around 63 per cent of advisers said they were concerned about a failure to register, 27 per cent of advisers believed their clients did not know their responsibilities as trustees, and 8 per cent of advisers were unaware of the rule change.