Understanding the Trust Registration Service (TRS) and How to Avoid Potential Penalties

As we approach a busy month with rising concerns about the new Government’s budget announcement on 30th October, many are speculating on what changes may be in store. While we can make educated guesses about possible adjustments to Capital Gains Tax (CGT) rates and Inheritance Tax (IHT) reforms, the truth is, no one outside of the government’s inner circle knows what will be revealed.

Gander Tax Services are hopeful that any significant changes won’t take effect until April 2025. In the meantime, let’s focus on something that remains unchanged: the Trust Registration Service (TRS).

What Is the Trust Registration Service (TRS)?

Introduced in October 2020, the TRS is a mandatory system for the registration of express trusts. All such trusts, unless specifically exempt, must be registered if they were in existence on 5th October 2020. Even if a trust has since been closed, it still needs to be registered on the system and marked as closed afterward.

Taxable vs. Non-Taxable Trusts

Trusts can be registered in two ways: as non-taxable trusts or as taxable trusts. Registering a trust as taxable means that a Unique Tax Reference (UTR) will be issued, which allows trustees to submit tax returns for the trust. Taxable trusts are also required to make an annual declaration via the TRS to confirm that no changes have occurred within the trust. If any changes have occurred—whether for taxable or non-taxable trusts—the TRS must be updated within 90 days.

Potential Penalties for Non-Registration

HMRC has become more strict with trust registration in recent months. While they initially adopted a lenient approach, they are now issuing more challenges and penalties for trusts that haven’t been registered. Failure to comply can result in harsh penalties, making it crucial for trustees to ensure their trusts are properly registered and updated.

Unsure If Your Trust Needs to Be Registered?

If you have a trust that hasn’t yet been registered, or you’re unsure whether a particular document qualifies as a trust, it’s important to seek guidance. Gander Tax Services can help assess whether registration is required and complete any necessary compliance work.

This includes handling trusts such as Discounted Gift Trusts, will trusts that are still in existence more than two years after the settlor’s death, and situations where there is a disparity between the legal title owners and beneficial owners of assets.

Trusted Tax Specialists in Petersfield and Surrounding Areas

If you have any questions or need assistance with trust registration, contact Gander Tax Services in Petersfield at hello@gandertaxservices.co.uk or call 01730 231054. Our experienced team of Tax Specialists are here to help ensure you meet your compliance obligations and avoid any penalties.