New Trust Registration rules

24 May 2022

As the deadline to register Trusts with HMRC by September causes real headaches across the industry, trust specialist, Ben Mason, CEO Kinherit, examines the impact of this legislation – and what to do about it.

As Covid 19 began to sweep the country back in March 2020, the fifth instalment of the Anti-Money Laundering Directive was quietly setting new trust legislation in motion, triggering far-reaching implications for IFAs across the UK.

It stated that most unregistered trusts needed to register with HMRC’s Trust Registration Service by 1 September 2022, a deadline which is now looming large. With an estimated 1.5-2 million trusts caught by the legislation (and steep penalties for breaching money laundering regulations in place), IFAs have been desperately trying to establish their legal obligations to their clients.

Finance professionals have often advised on hundreds of trusts in their careers. With FCA and MIFID rules stating that ‘complete advice’ should be applied where annual fees are charged, many IFAs are feeling the pressure of the administrational mountain they’re expected to climb. Notifying clients is one challenge but supporting them through a complicated registration process is a different ball game altogether.

It’s also difficult to identify just how many clients may be affected. “Even if an adviser is only dealing with a portion of a client’s wealth, it’s arguable they’d still need to consider their whole position. We’ve seen hundreds of firms engage with their existing clients, but also contacting past clients that might be described as more ‘transactional’ – just to make sure they cover themselves.

So, where do you start? We’ve had a look at what some larger firms are doing and have delved a little deeper into what trust registration actually involves in practice.

What does best practice look like?

The firms we know who are generally ahead of the curve, are going all out and developing comprehensive firm-wide strategies that deal with all clients, past and present. There are a few key things we can learn from their approach.

1)         Communicate early

2)         Explain the regulations and obligations as clearly as possible

3)         Ask clients to contact you if they have any unregistered trusts not under management.

4)         Do a product sweep with providers, to identify assets under management in unregistered trusts

5)         Ask clients to confirm if they (i) are self-registering, (ii) are using their accountant, or (iii) wish to be introduced to a registration Agent (typical prices £350).

The key here is to communicate the messages to as many clients as possible and give them clear options on what to do next. It’s also important to explain this is new legislation, and therefore supersedes advice they may have been given in the past.

Administrative nightmare

The biggest practical challenge is that the process itself is laborious. First the trustee needs to apply for a tax code (per trust), and then work through 100-150 individual pages on the HMRC website, covering some questions which may be quite technical. And with 28-days to complete the process, if a tricky question causes delay, there’s a risk they may have to restart the whole thing. It’s therefore not surprising that many clients aren’t able to do this – or want to.

Tax considerations

There could be potential tax implications too. Registration itself doesn’t lead to taxation, but it does make trusts ‘known’ to HMRC, so if a trust should have been paying taxes, it could trigger a much more complicated problem that would urgently require more qualified advice.

The options – DIY or use an agent

HMRC recognise the challenges facing ordinary trustees, which is why they’ve baked into the framework the ability to appoint and use an Agent to do it instead. Most agents are law firms or accountants.

Kinherit is registered as an Agent and has launched TruReg ( to help IFAs and their clients with their trust registration. We have a free CPD session on trust registration at (select ‘Trust Registration’).

Sign up to a free CPD session on trust registration at (select ‘Trust Registration’)

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