Unlike in past when trustees were only required to register a Trust if a tax liability was triggered due to:
- Capital Gains Tax (when a property/investment is sold), or
- when Income Tax is payable, or
- when Inheritance Tax is due (e.g. the ten-yearly charge on relevant property Trusts, which Trustees may not always be aware has become due), or
- less frequently, when Stamp Duty Land/Reserve Tax reporting was required
The landscape has now changes with the implementation of 5th Money Laundering Directive (5MLD). A much broader range of new Trusts (including basic trusts) as well as large numbers of existing Trusts are now required to be registered by 01 September 2022 regardless of tax reportable event.
Under new regulations, all UK express trusts — unless they are specifically excluded and all non-UK express trusts, like trusts that acquire land or property in the UK, or have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK must be registered unless they are exempt. The timeframe requires:
- New UK express Trusts to be registered within 90 days.
- All existing express trusts that are not exempt must be registered by 01 September 2022.
- Trusts with a tax event are required to report by 5 October each year for most Capital Gains Tax and Income Tax events and 31 January for other reporting requirements.
The trustees have the obligation to meet these deadlines and HMRC will impose financial penalties if these deadlines are not met.