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HMRC is launching a new Trusts Register

Graeme Robb, Senior Technical manager, summarises of HMRC's new Trusts Register and what it will mean for trustees.

Key points

  • Paper Form 41G used to register a trust is no longer accepted
  • HMRC are launching an online Trust Registration Service
  • Trusts with UK liabilities will be required to register whether UK or non UK resident
  • The Register will not be open to the public
  • This implements the requirements of the Fourth Money Laundering Directive (4MLD)
  • Bare trusts will be excluded from reporting

Many advisers will be aware of the longstanding requirement to complete HMRC Form 41G(Trust) to register a new trust with HMRC. This captured important information such as the names and addresses of the trustees, details of any professional agent acting, the governing law, lifetime trust or will trust, and so on. HMRC did state, however, “If there is no income arising, and no likelihood of income or gains in the future, you do not need to complete this form.” This was a useful exclusion in situations where the trust fund simply comprises a non-income producing investment bond.

The reason for the past tense used in the paragraph above is that HMRC is now both embracing the new digital world, and recognising the UK government obligations under 4MLD, meaning that Form 41G(Trust) has not been accepted since the end of April 2017.

What does this mean for trustees?

HMRC plans to launch the Trusts Registration Service in June 2017 as an online service for lead and corporate trustees. Trustees will need to update the register each year that the trust generates a UK tax consequence. An advantage of trustees holding a non-income producing investment bond perhaps? In other words, annual reporting by the trustees will only be necessary if it generates tax in that tax year. This includes those trusts that have already registered using the 41G(Trust) form. Bare trusts will be excluded from reporting and new guidance will be produced in due course.

UK resident trusts with UK tax liabilities will be required to register, as will trusts that are resident outside of the UK but have a UK tax liability. This will apply, therefore, to a non-UK trust that receives income from a source in the UK or has assets in the UK on which there is a UK tax liability (income tax, capital gains tax, inheritance tax, stamp duty land tax or stamp duty reserve tax).

The register will not be open to the public.

The register will ask for:

  • details of the trust assets including address(es) and values
  • the identity of the settlor, trustees, protector (if any), all other persons exercising effective control over the trust (if any) and the beneficiaries or class of beneficiaries

The information required will include:

  • name
  • date of birth
  • National Insurance (NI) number if they are UK resident - unless a minor
  • an address and passport or ID number for non-UK residents, if there’s no NI number

Complex estates

In addition, personal representatives and their agents will need to register complex estates and update their records online, replacing the current paper process.

An estate is considered complex if:

  • the value of the estate exceeds £2.5 million
  • tax due for the whole of the administration period exceeds £10,000
  • value of assets sold in any tax year for date of deaths up to April 2016 exceeds £250,000 or £500,000 for date of deaths after April 2016

Be patient!

Until the Trust Registration Service is available, HMRC have asked customers to delay notifying HMRC of a new trust or complex estate until the new service is operational.

The project is being delivered through a number of phases and initially only lead trustees or personal representatives will be able to use the Trusts Registration Service. The ability to update a trust that has registered on the Trusts Register will also be introduced in the autumn.

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About the author

Graeme Robb leads the tax and trusts 'wing' of Prudential's Technical team which is based in Craigforth, Stirling.

Graeme is a Chartered Accountant and Chartered Tax Adviser, specialising in tax and trusts. Graeme joined Scottish Mutual's Technical Support Unit in 1996 providing taxation and trust expertise to its onshore and offshore operations. His role evolved to support other businesses under the Abbey National umbrella - Scottish Provident, Scottish Provident International, Cater Allen Bank and James Hay. Graeme also worked as a Technical Manager for Santander Private Banking UK and has held positions at accountancy firms Ernst & Young and Grant Thornton.

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