Trust Registration Service – Non-Registrable Trusts – Exclusion for certain Insurance policies with a surrender value

Sometime later this summer, the Trust Registration Service will be expanded to accept registrations of certain non-taxable trusts.

While the basic rule is that all UK express trusts (taxable and non-taxable) should be on the register, Schedule 3A to the enabling regulations (The Money Laundering and Terrorist Financing(Amendment) (EU Exit) Regulations 2020/991), sets out a number of exclusions for certain non-taxable trusts. These include:

  • Paragraph 4 (trusts of certain life insurance policies) and
  • Paragraph 8 (trusts holding the proceeds of a policy under Paragraph 4 during the 2 years after the death of life assured).

The following announcement from HMRC on 12 July may assist members who currently are preparing for the new regime.

HMRC has confirmed that “the exclusion in Sch3A(4) can be properly interpreted as including trusts holding policies which have surrender values, and that those trusts would remain excluded until such time as the policy is actually surrendered. It follows from this that pay-outs received from such policies on death would continue to benefit from the exclusion at Sch3A(8). HMRC will include this position in the next iteration of the Trust Registration Service (TRS) manual.”

As it was previously understood that HMRC would only accept as excluded, trusts holding policies which did not have surrender values, this clarification is very helpful.

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