TRUST REGISTRATION SERVICE – CO-OWNERSHIP OF LAND AND PROPERTY

The Trust Registration Service (TRS) was launched in 2017 as a register of the beneficial ownership of trusts.  Information entered on the register includes details of the Settlor, Trustees, Beneficiaries and the trust assets.

Initially, Trusts were only required to register with the TRS if they were liable to pay any of the following taxes: Income Tax, Capital Gains Tax, Inheritance Tax or SDLT and co-ownership trusts of land were generally exempt from the requirement to register if none of the specified tax liabilities was incurred by the trustees.

However, new rules were introduced from 6 October 2020 as part of the UK’s implementation of the Fifth Money Laundering Directive (5MLD). These rules extended the scope of the requirement to register so that, with only a few exceptions, all UK Express Trusts now have to register regardless of whether the Trustees have incurred a tax liability in any given tax year. A penalty may be incurred for failure to register.

One of the exclusions to register is for co-ownership of land and property trusts, but this exemption only applies where the trustees, the legal owners, and beneficiaries of the property are the same people. The legal owner(s) will typically be the name(s) on the title deeds at the land registry, whereas the beneficial owner is the person entitled to the income or proceeds of sale.

HMRC have confirmed that registration is not required where there are more than four joint owners but only four are on the legal title which is the maximum permitted.  For example, if there are six beneficial owners and four are on the legal title then registration is not required. However, if there are six beneficial owners and only three are on the legal title then registration is required.

Other trusts that may need to be registered but that could have been forgotten about are bonds or life assurance products that were originally set up in a trust or later assigned in to trust.

The registration deadline is 1st September 2022 although HMRC has confirmed a soft-landing approach to penalties provided there is no deliberate intent to avoid registration.

Please contact us for more information or if you need assistance with the registration process.

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