The EU’s 5MLD is now in force and the UK has enacted it into UK law. As a result, registration will be required by a significantly greater number of trusts than under the previous 4MLD trust register and information will be more widely publicly available. This note summarises the key points with regards to the 5MLD trust register and the dates from which trusts will either need to be registered for the first time under 5MLD or provide additional information if the trust is already registered under 4MLD.
5MLD requires the following express trusts to register:
All UK trusts, including non-taxable trusts, subject to exemptions. UK trusts are trusts where all the trustees are UK resident or where at least one trustee is UK resident and the settlor was both UK resident and UK domiciled when the trust was set up and/or when the settlor added funds to the trust.
Non-UK trusts that incur a UK tax liability on UK income or UK assets, as under 4MLD.
Non-UK trusts that acquire an interest in UK land after 5 October 2020.
Non-UK trusts with at least one UK resident trustee that, after 5 October 2020, enter into a business relationship with a UK relevant person (such as tax advisers and financial institutions) with an ‘element of duration’. HMRC’s manual states that, as general rule, this will include business relationships that go beyond a one-off short-lived transaction.
Trusts are taxable for 5MLD purposes if the trustees are liable to pay income tax, capital gains tax, inheritance tax, Stamp Duty Land Tax (SDLT), land and buildings transaction tax (Scotland), land transaction tax (Wales) or stamp duty reserve tax.
Non-UK trusts are only required to register due to a UK tax liability if the tax liability arises on UK income or assets. This means that registration is not required for taxation reasons if the trustees’ only liability to UK taxation is inheritance tax on indirectly owned UK residential property (e.g. where UK residential property is owned by an underlying offshore trust company).
Trustees who are individuals are resident for 5MLD purposes if they are resident for the purposes of any of the taxes set out above. This means residence under the statutory residence test for income tax and capital gains tax purposes and/or for SDLT purposes under the SDLT residence test. Corporate trustees are UK resident if they are incorporated in the UK.
Some non-taxable trusts do not need to register with HMRC under 5MLD, either because they are otherwise required to register with HMRC or because they present a low risk of being used for money laundering or terrorist financing. These include:
There are some notable exceptions from the exclusions. Registration is required by trusts that are:
5MLD is an EU-wide directive and all EU Member States and the UK must maintain their own 5MLD compliant trust beneficial ownership registers. 5MLD states that the national registers should have been interconnected via a European Central Platform by 10 March 2021.
UK trusts and non-UK trusts with at least one UK resident trustee will not need to register on the UK register if they are registered on an EEA trust register, provided the trust is not taxable.
Non-UK trusts that do not have any UK resident trustees will need to register if the trustees acquire UK land even if no UK tax is payable. Information about such trusts will be less broadly available than for other types of trust (see below).
HMRC will continue to administer the trust register. Under 4MLD, information held on the register was only accessible to law enforcement agencies and financial intelligence units. Under 5MLD, ‘third-parties’ (i.e. persons other than law enforcement agencies and financial intelligence units such as journalists) will be able to access information in the following circumstances:
We are currently in a transition period as the earliest deadline that requires trusts to register for the first time under 5MLD is 1 September 2022 (which is a deferral from the originally legislated 10 March 2022 deadline – deferral is subject to the approval of the draft Statutory Instrument.) HMRC do however consider that information already provided to them must be updated within a set number of days. The original 30-day deadline is to be deferred to 90 days under the Statutory Instrument that is due to come into force from 9 March 2022.
Until the 5MLD deadlines for unregistered trusts come into effect, unregistered trusts must register with HMRC if the 4MLD trust registration requirements are met. These are that:
Under 4MLD registration is due by the 31 January following the first tax year in which the above requirements are met, though in practice earlier registration may be required in order to comply with other statutory deadlines (e.g. notifying an income tax or capital gains tax liability by the 5 October following the tax year).
Taxable trusts must make annual confirmation that the trust register is up to date. Taxable trusts are trusts where the trustees incur a liability to one of the taxes specified under the ‘UK tax liability’ sub-heading above and where the trust is either a UK trust or a non UK trust that receives UK income and/or owns UK assets.
The online system to enable trustees to submit updates for most reportable changes is now available.
The table below summarises the deadlines by which trusts must register with HMRC and/or update information held by HMRC.
|Within 30 days of a change||· HMRC consider that registered trusts must update HMRC of certain changes within 30 days of the change occurring. This is an ongoing deadline that already applies. The draft Statutory Instrument extends this deadline to 90 days with effect from 9 March 2022.|
|31 January 2022||· Unregistered trusts that incurred a UK tax liability in 2020/21 and are within the 4MLD registration requirements must register with HMRC.|
|From 9 March 2022: within 90 days of a change||· HMRC must be updated of changes to certain information provided to them by a registered trust within 90 days of the change occurring.|
|1 September 2022||
· Unregistered taxable trusts set up after 5 April 2021 where the trustees first become liable to pay UK taxes before 4 June 2022 must register with HMRC.
· Registered taxable trusts where the trustees become/became liable to pay tax before 4 June 2022 must provide additional information to HMRC.
· Non-taxable trusts in existence on or after 6 October 2020 must register by 1 September 2022, unless the 90-day deadline below gives a later registration deadline.
|Within 90 days of a trust first needing to register||
· Taxable trusts that are set up on or after 4 June 2022 must register within 90 days of the trustees become liable to pay UK taxes.
· Non-taxable trusts that are not required to register by 1 September 2022 must register within 90 days of first triggering a registration requirement.
|Every 31 January||· Registered taxable trusts must update HMRC of any previously unreported reportable changes to the trust, or confirm that there are no such changes, as applicable.|
In practice, registration may be required earlier than under the deadlines set out above. For example, by 5 October following the tax year in which an income or capital gains tax liability arises, if the trustees need to notify HMRC of chargeability.
This note reflects the law in force and information available with regards to the 5MLD trust register as at 13 January 2022. The note refers to changes in a draft Statutory Instrument that is not yet in force: changes could be made before enactment.
This note does not cover all aspects of this subject. To find out more about any aspect of the above, please discuss with your usual Deloitte contact. If you do not have a usual contact, please contact Michelle Robinson (email@example.com). For further information visit our website at www.deloitte.co.uk.