Confused? You’ve a right to get into a lather about the Trust Registration soap opera

Tue 02 Jan 2018

The series of relaxations in the deadline for registering trusts online through HMRC’s Trust Registration Service, or TRS, may appear to carry the hallmarks of a bad TV drama script but for trustees there are still risks if they fail to register with HMRC by one of the three possible deadlines: while others may rush to get registered when they don’t yet need to. So let’s see if we can rinse away some of the froth that’s gathered.

But HMRC know about my trust already

Being on HMRC’s books already doesn’t excuse trustees from joining in TRS: the system isn’t just a way of capturing information about previously unregistered trusts; it also picks up additional information about trusts HMRC have already got records for and may bring some of that information up to date.

Which taxes drag a trust into the TRS net?

A trust can only be liable to register through TRS if, in 2016/17, they incurred a liability to income tax, capital gains tax (CGT), inheritance tax (IHT), Stamp duty land tax (SDLT), Stamp duty reserve tax (SDRT) or the Scottish equivalent of SDLT, land and buildings transaction tax (LBTT).

small income exception

There’s also a get-out for trusts whose income is small, less than £100 in 2016/17. It’s not a statutory exemption and may not last but it will spare a lot of trustees the need to register if that small income was all the trust received in 2016/17 and the trust had no capital gains.

one-off gains exception

If the trust made a gain in 2016/17 but for 2017/18 it expects to have no gains and no taxable income above the £100 threshold the trustees don’t need to register solely because of that gain.

The three deadlines

5 January 2018- unregistered trusts with income tax or CGT liabilities

This is the deadline for trusts that are not already registered with HMRC but only if they incurred a liability to income tax or capital gains tax (CGT) in the year ended 5 April 2017.

31 January 2018- unregistered trusts with other tax liabilities

This is the deadline for trusts that aren’t already registered with HMRC and don’t have income above £100 or capital gains that mean they must comply with TRS.

These trusts must register if, in 2016/17, they incurred a liability to inheritance tax (IHT), Stamp duty land tax (SDLT), Stamp duty reserve tax (SDRT) or the Scottish equivalent of SDLT, land and buildings transaction tax (LBTT).

5 March 2018- existing trusts with a 2016/17 tax liability

This was the last of the deadline deferments, announced just in time for Christmas. Existing trusts only have to enter TRS if they had one of the above-mentioned tax liabilities in 2016/17 and don’t qualify for the small income or one-off gains exception. Strictly speaking none of the deadlines has actually been deferred: what HMRC have done is say they won’t enforce penalties for missing the statutory deadlines, but only provided the relaxed deadlines are still met.

There, at least that’s one New Year headache treated.