A legal expert has warned there is still confusion around trust registration rules, as the September deadline fast approaches.
Trethowans partner and head of private client, Mihiri Gajraj said that a number of exceptions to the rules exist that clients need to be aware of.
Gajraj outlined how the rules are far reaching, using the fact they apply to investments owned in the name of grandparents but held in trust for their grandchildren as an example.
“They also include property registered to one person but where the rent is paid to more than one and many companies which provide bonds are also writing to clients to say they may have a trust that needs registering,” she added.
Gajraj highlighted that trustees can register their trusts online through the gov.uk website or instruct a solicitor to do it for them, but that it is worth being aware of the exceptions before doing so.
“For example, if you and your husband own a property in your names but have a declaration of trust saying you own 60 per cent and he owns 40 per cent then you would think that given the word 'trust' is in there you would have to register it.
“But in this instance, you do not, because the people who own it are the same people who have the interest in it,” Gajraj said.
Trusts created by the rules of intestacy are also exempt, as are personal injury trusts according to Gajraj.
“The best advice is: if you own something but it is not owned purely for you, then find the documents and show them to your solicitor or accountant. They should be able to tell you whether it needs to be registered.”
HMRC has indicated that it will not fine those who register late, but Gajraj pointed out that no one knows when this will change.
“Anyone who thinks they may be a trustee or involved in any trust should take advice as soon as possible,” she said.
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.
According to a freedom of information request by Canada Life, around 1mn trusts are yet to be registered with HM Revenue and Customs, while a survey from HSBC Life found advisers are worried about their clients failing to register their trusts.