Trusts have been used in the UK for many years as a tool for effective wealth management, estate planning and safeguarding of assets for future generations.

However, recent changes to the law, particularly the expansion of the Trust Registration Service (TRS), mean that trustees now face significant new obligations. Understanding these obligations is crucial to ensure that your trust remains compliant and to avoid the risk of penalties for non-compliance.

What is the Trust Registration Service (TRS)?

The TRS is an online register maintained by HM Revenue & Customs (HMRC). It was initially introduced in 2017 to record details of trusts with a UK tax liability. However, the scope of the TRS was expanded in October 2020 (following the Fifth Money Laundering Directive) meaning that most UK express trusts, even those with no tax liability, now need to be registered.

The main aim of the TRS is to increase transparency around trust ownership, helping to combat money laundering and terrorist financing. This means that HMRC now has a comprehensive database of who controls and benefits from trusts.

Does your trust need to be registered?

While there are some specific exemptions (for example, certain types of charitable trusts, trusts holding life insurance policy benefits that pay out within two years of death and some bare trusts for minors) most express trusts now fall within the TRS requirements.

This includes, but is not limited to:

• Taxable trusts: those liable for UK taxes such as income tax, capital gains tax, inheritance tax or stamp duty land tax.
• Non-taxable trusts: many trusts that historically did not have a tax liability, such as:

• • will trusts that continue for more than two years after the death of the testator.
  • life interest trusts
  • discretionary trusts
  • bare trusts (with some exceptions, such as bank accounts for minors)
  • co-ownership trusts where property is held as tenants in common (though some basic co-ownership arrangements may be exempt)
  • partnership assets
• Non-UK resident trusts if they acquire UK land or property, or enter into a business relationship with a UK service provider.

Special considerations for co-ownership property and partnership assets

Co-ownership property trusts

The way property is owned in the UK often gives rise to a trust, even if it is not explicitly declared in a formal trust deed. This is where the legal ownership (the names on the HM Land Registry title deeds or the unregistered deeds) and the beneficial ownership (who is entitled to the equity, income, or proceeds of sale) can differ.

Key distinction: legal versus beneficial ownership

• Legal owners: these are the individuals whose names appear on the title deeds. They hold the legal title to the property.
• Beneficial owners: these are the individuals who are entitled to the economic benefit of the property. They hold the ‘equity’ in the property.

When does a co-ownership trust need to be registered?

The key point for co-ownership trusts is whether the legal owners and the beneficial owners are identical.

• Exemption when legal and beneficial owners are the same: if the individuals named on the title deeds are the same individuals who are beneficially entitled to the property (for example, a husband and wife owning their family home as joint tenants or tenants in common, where they are both legal and beneficial owners) then this co-ownership arrangement is excluded from TRS registration. This is a common scenario and generally means that the family home, owned directly by those who live in it, does not need to be registered.
• Requirement to register if legal and beneficial owners are different: if the legal owners and the beneficial owners are not the same, then an express trust exists that will likely need to be registered. Common scenarios include:
   
  • Parents holding property for children: if parents buy a property and put it in their names but declare that it’s held for the benefit of their children (who are not on the legal title), this is a registrable trust.
  • Declaration of trust: if individuals are on the legal title, but a separate declaration of trust specifies different beneficial interests (for example, a couple owning a property in unequal shares where only one or both are on the legal title, but a third party has a beneficial interest due to a financial contribution), this can create a registrable trust.
  • More than four legal owners: the Land Registry only allows a maximum of four legal owners to be registered. If a property is beneficially owned by more than four individuals, a trust is implicitly created where the first four named on the legal title hold the property on trust for all beneficial owners. Crucially, HMRC guidance clarifies that this specific scenario (where there are more than four beneficial owners but only four legal owners, as a matter of statutory limitation) is also excluded from TRS registration. This is because the trust arises by operation of law rather than as a deliberate “express” trust in the usual sense. However, if fewer than all beneficial owners are on the legal title (for example, six beneficial owners but only three on the legal title), then this would likely require registration.
  • Property held for a disabled person or minor: while some trusts for vulnerable beneficiaries have exemptions, specific advice should be sought to ensure that the exact nature of the trust falls within the exempt categories. Bare trusts holding investments for a minor, for instance, generally need to be registered, although a simple bank account for a child may be exempt.

Partnership assets

Partnerships, unlike companies or LLPs, do not have a separate legal personality. This means that partnership assets, including land and property, cannot be held directly by the “partnership” itself. Instead, they are legally held by the individual partners, often on behalf of the partnership. This arrangement can create a trust, and therefore, potentially a TRS registration requirement.

When do partnership assets need to be registered?

The situation for partnerships depends on how the assets are held and whether there is a formal written agreement.

• No written partnership agreement (Partnership Act 1890): if there is no written partnership agreement, the Partnership Act 1890 generally presumes that any property purchased with partnership money or for partnership purposes belongs to the partnership. In such cases, where one or more partners hold assets for the benefit of all the partners, this is generally considered a “statutory trust” or an “implied trust.” These types of trusts, arising by operation of law rather than an explicit declaration, are generally excluded from TRS registration.
• Written partnership agreement or declaration of trust: this is where the situation becomes more complex and often requires registration. Many professional partnerships (for example, farming partnerships, GP practices or legal firms) have formal written partnership agreements. It is common for these agreements to contain an express provision stating that certain assets (such as land, buildings or equipment) are held by some or all the partners on trust for the benefit of the entire partnership.
• If the partnership agreement or a separate declaration of trust explicitly creates an express trust over the assets, then this arrangement will likely need to be registered on the TRS, unless a specific exemption applies. This is because the trust is “expressly” declared. For example, farmland registered in the names of partners A and B, but a written partnership agreement states it is held on trust for the partnership of A, B, C, and D. This is a registrable trust.

• Specific exemptions for partnerships (for example, public bodies): HMRC guidance has clarified some specific exclusions, particularly relevant for certain professional partnerships.

Key information required for registration

When registering a trust, trustees (or their appointed agent) will need to provide a significant amount of information, including:

• Details of the trust: name, date of creation, and whether it is an express trust.
• Details of the settlor(s): full name, date of birth, country of residence and nationality.
• Details of all trustees: full name, date of birth, contact details, nationality, country of residence, and national insurance number (if UK citizen). One trustee must be designated as the ‘lead trustee’.
• Details of all beneficiaries: full name, date of birth, country of residence and nationality. If beneficiaries are a class (for example, “children of X”) a description of the class is required.
• Details of any individuals with control over the trust (e.g., protectors).
• Details of the trust’s assets: for taxable trusts, additional information about the assets and their approximate value may be required.

Deadlines and penalties for non-compliance

The deadlines for registration have passed for many trusts already. Generally:

• Non-taxable trusts in existence on or after 06 October 2020 should have been registered by 01 September 2022.
• New non-taxable trusts created after 04 June 2022 must register within 90 days of creation.
• Taxable trusts must generally register within 90 days of becoming liable to tax, or by 31 January in the tax year after the one in which the tax liability arises (whichever is earlier).
• Any changes to the trust’s details (for example, change of trustee or beneficiary) must be updated on the TRS within 90 days of the change.
• For taxable trusts, an annual declaration is required by 31 January each year to confirm the details held on the register are up to date, even if no changes have occurred.

HMRC has indicated a pragmatic approach to penalties for unintentional non-compliance. However, failure to register a trust (unless exempt) or to keep the information updated can result in a fixed penalty of £5,000. HMRC is now actively tracking and may issue warning letters, with fines following if the trust is not registered or updated within a specified timeframe. Deliberate non-compliance can lead to higher penalties.