The UK Trust Register will be expanded in line with the Fifth Money Laundering Directive – as was set out before Parliament last week. Many key points have been raised as to which information will be publicly available and how non-UK resident trustees will be handled.
Why is the Fifth Money Laundering Directive got implications for trusts in the UK? Predominantly because up until now, if a trust did not incur a UK tax it did not need to be registered. Now, apart from trusts for minors/vulnerable beneficiaries, co ownership trusts and will trusts that are dissolved 2 years after the settlor’s death – all other types of trusts will need to be registered in the UK.
UK Trust Types
What types of trusts are outlined that must be registered even though they incur no UK tax:
A Type A trust is a UK trust which has a UK resident trustee or at least one UK resident trustee plus a settlor that is domiciled in and resident in the UK when the trust funds are added to the trust.
A Type B trust is a non-UK trust is not an EEA trust and the trustee has a business relationship with a UK service provider or it has UK land assets/interests. There is a fleeting window of opportunity now as up until the 6 October 2020, non-UK resident trustees who want to engage UK service providers can do so without falling under the new rules.
Similarly, the trust can acquire interests in UK land prior to this cut-off date to avoid being caught under the net as a Trust Type B. It is important to note that if Stamp Duty Tax is incurred then the trust would be subject to UK tax hence need to be registered in any case.
A Type C trust is a non-UK trust which may have no UK resident trustee which acquires UK land interests directly or for a long-term lease of more than seven years).
Read more: 4 Reasons to Set-Up an Offshore Trust
What information will be disclosed on the UK Trust Register?
The regulations are still unclear as to whether a trust which is not subject to UK tax need to disclose its name. The key information though on Trust types A to C that must be disclosed includes:
- Beneficial owners
- Trustees
- Settlors
- Protectors
- Beneficiaries
If any beneficial owners are corporate bodies, their full name, registered office, and relationship to the trust must be stated. Similarly if the trustees have more than 50% interest in a non-EEA entity (shares/voting rights) that third party interest must also be disclosed.
Deadlines and Disclosures
Nontaxable trusts must register the pertinent information between 9 February 2022 to 10 March 2022. Information supplied by Type A and Type B trusts will be accessible to third parties on request, but Type C trusts information will not be publicly reached. Several penalties have been discussed for non-compliance, the largest of these being GBP 100 which may be payable after a second subsequent offense.
