27 July 2020


The UK Trusts Register was implemented with effect from June 2017 in accordance with the 4th Money Laundering Directive (‘4th MLD’). Three years later, important updates to the UK Trusts Register are being brought into effect as a result of the 5th Money Laundering Directive (‘5th MLD’).

The purposes of the Trusts Register is for HMRC to collect and maintain information on the beneficial ownership and assets held in registrable trusts, to assist with combating money laundering and terrorist financing.

Practitioners and Trustees alike would be forgiven for losing track of the scope of the 5th MLD changes to the Trusts Register, as this has been in a state of flux since HM Treasury released its initial consultation in April 2019. The responses to this 2019 consultation were published in January 2020, along with a technical consultation on the Trusts Register. The responses to the technical consultation were released on 15 July together with draft regulations.

The Consultation response also confirms that HMRC Guidance on the 5th MLD Trusts Register will be released in due course.

This article explores the changes to the UK Trusts Register which will be brought into effect as a result of the 5th MLD.

Who is required to Register?

Under the 4th MLD Trusts Register, registration was required by trustees of:

  1. UK Express Trusts that incurred a liability to any of the relevant UK taxes in relation to the trust income or assets; and
  2. Non-UK Express Trusts that incurred a liability to any of the relevant UK taxes in relation to UK source income or UK assets held at trust level.

Trusts are non-UK if none of the Trustees is UK resident, or at least one trustee is UK resident and the settlor was not UK resident and UK domiciled when the trust was set up or when the settlor added funds[1].

The Relevant UK taxes are income tax, CGT (including non-resident capital gains tax), inheritance tax, stamp duty land tax (or the Scottish or Welsh equivalent) or stamp duty reserve tax.

As a result, UK Trusts Register filings under the 4th MLD Trusts Register were linked solely to a UK tax liability. If the trustees did not incur a UK tax liability then there was no need to register. In addition, the register was only accessible to law enforcement authorities.

The 5th MLD Trusts Register extends the scope of reporting and also extends the list of people who can obtain access to the Trusts Register.

An important point to note is that the 5th MLD Trusts Register changes add to (rather than replace) the 4th MLD Trusts Register, so a Trust which is caught under the above tests will still need to register.

In addition to the above tests, the 5th MLD Trusts Register changes extend the scope of reportable trusts to include:

  1. All UK Express Trusts (regardless of tax liability) except for Excluded Trusts (see below for further information on these);
  2. Non-UK Express Trusts (except for Excluded Trusts) whose trustees (in their capacity as such) acquire an interest in land in the UK; and
  3. Non-UK Express Trusts (except for Excluded Trusts) whose trustees (in their capacity as such) enter into a business relationship ('the business relationship test') with a UK entity required to carry out customer due diligence checks in relation to the trust (e.g. an investment manager, solicitor, estate agent, accountant etc.) but only where

(i)         at least one trustee is UK resident; and

(ii)        the beneficial owner information in relation to the trust is not held on a central register in another EEA country.

Prior to the latest consultation response released in July this year, it was unclear whether the business relationship test would apply to all non-UK Express Trusts or only such trusts which had an extra link to the UK. The scope of this test was a point which the government was taking views on as part of the latest consultation process and fortunately the test decided on requires some extra link to the UK (which is in line with the terms of the 5th MLD). As a result, this test should not provide a disincentive for purely non-UK express trusts to continue to engage UK professionals in business relationships.

Excluded Trusts:

Another point which is clarified in the consultation response and draft regulations is the scope of UK express trusts which do not need to be registered on the Trusts Register.

A lot of ownership concepts in the UK make use of trust structures for the simple reason that trusts are a recognised and useful concept under English common law. Many mainland European countries have the same structures but (as trusts are not recognised under their laws) they are categorised as contractual, rather than trust, relationships. Unless the terms of the 5th MLD Trusts Register were carefully scoped, it was feared that it might require reporting for thousands of trusts which did not pose a terrorist or money laundering risk, and were simply ways of holding assets for the future (i.e. joint ownership of real estate, life insurance and pension trusts, pilot trusts etc.).

HMRC’s response to the consultation, and the draft regulations, provides a balanced approach and the following trusts are to be exempt from registration:

  1. Trusts created by legislation or a court order
  2. Pension scheme trusts
  3. Insurance Policy trusts (for life or retirement policies)
  4. Charitable trusts
  5. Pilot Trusts holding less than £100 (but only those created before the 5th MLD regulations come into force)
  6. Will Trusts (but only for the first two years after death)
  7. Co-ownership trusts (but only where the trustees and beneficiaries are the same persons)
  8. Trusts to assist with financial markets, professional services, holding client money, facilitating capital markets or commercial transactions
  9. Trusts pending the registration of assets (i.e. bare trusts created on the transfer of an asset to another pending transfer of legal title)
  10. Trusts meeting legislative requirements (including trusts for bereaved minors, 18-25 trusts and disabled person trusts)
  11. Public authority trusts

The breadth of the exemptions is reassuring and it appears that the government have taken on board the concerns raised during the consultation process from various representatives from the charities, pensions, insurance and financial markets industries, to name a few. This should help to cut down the compliance burden for trusts which are set up for a specific purpose, and which do not pose a money laundering or terrorist financing risk. It should be noted that, given the dual purpose of the Trusts Register, a trust which has UK tax liabilities will still have to register even if it falls within one of the exempt categories.

However, from a private client/family trust perspective there are probably three key points to note:

  1. The Pilot Trust exemption only applies to trusts funded with less than £100 and which were created before the Regulations come into force, so any new UK Pilot Trusts created after the Regulations are in force will be within scope for registering even though they may only contain a nominal sum.
  2. Will Trusts are exempt only for the first two years from the date of death. This is a concession to acknowledge the fact that earlier reporting would be impractical, and it also means that if the trust is wound up within two years (which may be beneficial from an inheritance tax perspective) no reporting is required.
  3. Bare Trusts are not exempt by themselves. There is only a limited exemption under the ‘Registration of Assets’ exemption where a bare trust is created as a result of a transfer or disposal of beneficial title from one person to another (i.e. where a wife transfers beneficial title of some company shares to her husband but remains as the legal owner of the shares). If a bare trust comes into existence without a transfer or disposal of beneficial title (i.e. an individual transfers legal title of an asset to someone else to hold on bare trust for them) then the bare trust will not be an exempt trust.

Trusts which are already reported on another EEA Trusts Register will not need to report again on the UK Trusts Register.

What needs to be reported?

The scope of what needs to be reported is also amended under the 5th MLD Trusts Register, and the information to be reported varies depending on why the trust needs to be reported.

In general, the information which is maintained on the Trusts Register includes information in relation to the trust, the trustees, the beneficial owners and the trust assets.

If a trust is subject to a UK tax liability (i.e. it already falls to be registered under the 4th MLD Trusts Register tests) then more information will need to be reported than for trusts which do not have a UK tax liability, but are caught by another test (i.e. simply being a UK express Trust which is not exempt).

All registrable trusts are required to report whether they have a controlling interest in a non-EEA entity, except for trusts which are non-UK express trusts where none of the trustees is UK resident, and the trust only falls to be registered as a result of acquiring an interest in UK land (and not because of a UK tax liability).

This is an important carve out as where a trust has a controlling interest in a third country entity there is wider access to the information reported (see below). However, in practice, a non-resident trust that acquires an interest in UK land will ordinarily need to pay a relevant UK tax on purchase[2] and if the acquisition is free of tax (i.e. the interest in the land is transferred to the trustees by way of gift) then relevant UK tax taxes are likely to be triggered in the future: inheritance tax on ten year anniversaries or transfers from the trust and NRCGT on disposal. So in practice, the carve out may have limited effect.

Who can access the information?

The information reported is to be made available more widely than is the case under the 4th MLD Trusts Register

Under the 5th MLD changes, information on beneficial owners will be made available to people who can demonstrate a ‘legitimate interest’ in accessing the information and where there is evidence that access to the information furthers work to counter money laundering or terrorist financing activity.

The intention is that the people requesting access will need to provide information to support their suspicion that the particular trust has been used for money laundering or terrorist financing. An administration fee will be charged for accessing the information in order to cover HMRC’s expenses for maintaining the register.

Where the trustees of a trust have a controlling interest in a non-EEA entity, there is no ‘legitimate interest’ hurdle to overcome and any person can, on making a written request, access the information. However, as set out above, this does not apply if the only reason for registering the Trust is a purchase of UK land by a non-UK express trust with no UK resident trustees. In addition, it is anticipated that this information will still only be made available where the purpose of the request is connected to investigating money laundering or terrorist financing. In other words, it is not anticipated that this information will be freely available in the same way as information is available on Companies House for instance. However, detail around exactly how access to the register will be monitored is yet to be provided and this will be set out in the government guidance which will be published in due course (this is also expected to include examples).

There will be safeguards in place to prevent disclosure where HMRC believe that making the information available would expose a beneficial owner to a risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation or where a beneficial owner is under the age of 18 or vulnerable through lack of capacity.

By when must reporting take place?

The current reporting deadlines which already apply for taxable trusts will continue for the time being for all trusts set up before 6 April 2021. This means that any trust which has its first liability to a relevant UK tax should register by 31 January following the first tax year they became liable to a relevant UK tax.

In addition, under the 5th MLD changes:

  • Taxable trusts which were set up and incurred a UK tax liability before 9 February 2022 should report the extra information required under 5th MLD on or before 10 March 2022.
  • Trusts which are newly caught need to register on or before 10 March 2022 where the event giving rise to their registration happened before 9 February 2022.
  • From 9 February 2022 trustees will have 30 days to register from the event triggering registration. Depending on the circumstances, this triggering event could be (a) the trust being settled, (b) the trust incurring a UK tax liability, (c) the expiration of 2 years from the date of death of the settlor (for will trusts), (d) the trust acquiring an interest in UK land, or (e) the trust entering into a business relationship with a UK professional.
  • In a big change from the previous positions, from 9 February 2022 trustees also need to update the register within 30 days of the trustee becoming aware of any changes in the information reported.

What are the penalties?

As the 5th MLD changes expand the reporting criteria for the Trusts Register beyond there being a taxable event, the penalty regime for failure to notify will also be moved away from the 4th MLD regime which was based on the self-assessment tax penalty regime.

The regime which will apply under 5th MLD Trusts Register reporting is:

  • Failure to register. A nudge letter will be sent to trustees setting out their responsibilities if they fail to report the information to HMRC within the time limits set out under 5th MLD (generally speaking this will be 30 days)
  • Failure to update details within 30 days. A nudge letter will be sent to trustees reminding them of their responsibilities.
  • For a second and each subsequent offence of a failure to update details within the time limit. There would be a proposed set penalty of £100 per offence.

This will be a simpler and fairer regime than the current self-assessment regime and recognises the fact that non-compliance, at least initially, is likely to be quite prevalent as a result of a general lack of awareness of the rules and their impact for historic (and potentially relatively dormant) trusts.


The technical consultation response and draft regulations provide some welcome clarity on how the 5th MLD Trusts Register will apply in practice and it is pleasing to see that the government has listened to many of the concerns raised during the consultation process. The end product looks like it will be targeted appropriately to trusts which have a sufficient link to the UK and a number of trust structures which could not feasibly play a role in money laundering or terrorist financing have also been excluded from scope.

As with most things, the devil will be in the detail and the HMRC guidance will provide more of an insight into how non law enforcement authorities will be able to access the Register. It also remains to be seen what the new Trusts Register filing portal will look like and its ease of use will depend on the system which HMRC decides to release. However, given the increased scope of trusts which need to be reported and the increased frequency of reporting it can only be hoped that the system chosen is fit for purpose.

In addition, the transition from an end of tax year to a 30-day reporting deadline (from 9 February 2022) can be difficult to comprehend and there is likely to be some confusion while the two reporting deadlines effectively work alongside each other. However, this will only be a temporary issue.

How can Burges Salmon help?

We have extensive experience of advising UK and overseas trustees with their UK Trusts Register position and assisting with UK Trusts Register filings.

If you would like advice on the impact of the new changes or to discuss their reach then please contact Catherine de Maid, Ronnie Myers or your usual contact within the team.

This article was written by Ronnie Myers.


[1] This differs from the trust residency test which applies for income tax and capital gains tax purposes.

[2] Stamp Duty Land Tax (or the Scottish or Welsh equivalent)

Key contact


Catherine de Maid Partner

  • International tax and trusts
  • Head of Philanthropy
  • Succession Planning and Wills

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