Do I need to register my trust?

The answer is, probably, yes. The new Fifth Money Laundering Directive extends the requirement to register trusts on the Trust Registration Service to almost all trusts. This register is intended to disclose information about the trust and the underlying beneficiaries to HM Revenue and Customs.

The government’s aim is to prevent trusts being used for the purpose of money laundering or terrorist-financing, but these rules apply to even the most innocent of trusts.

This means that those which are set up under wills on the first death of a married couple will need to be registered, including:

• “Life Interest” trusts holding a share in the marital home, allowing the surviving spouse to live at the property for their lifetime.
• “Nil Rate Band” trusts. In this situation it is common for the trustees to have lent the whole trust fund – which may be up to £325,000 – to the surviving spouse on an interest-free loan.

Pilot trusts created before 6 October 2020 are also required to be registered where the trust assets are greater than £100. For trusts below this amount, registration will be required when added funds take the trust value over £100. There is no negligible amount for pilot trusts created on or after 6 October 2020.

These and other trusts caught by the new extended rules are required to be registered by 1 September 2022 to avoid penalties. New trusts and settlements will have 90 days from creation to register. In addition, any changes to the registered data should be updated within 90 days of the change.

Only a limited number of trusts, which must have been created prior to 6 October 2020, are excluded. These are:

• Pension schemes
• Charitable trusts
• Will trusts wound up within two years of death
• Policy trusts paying out on death
• Critical illness and existing trusts with a value of less than £100

If you are a trustee of any trust, you should take advice on your obligations under the Fifth Money Laundering Directive. If you would like us to register your trust for you, please let us know by 30 June 2022.