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Trusts that are registered as a charity in the UK are excluded from registration as express trusts (Sch3A(5) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017).

Further, any charitable trusts not required to register in England and Wales by virtue of section 30(2) of the Charities Act 2011 are also excluded from registration as express trusts. This means that the charity is not required to register on the Trust Registration Service (TRS) if it is:

• an exempt charity, or
• an excepted charity, or
• its income is less that £5,000 a year.

1)  Exempt charities

Exempt charities are generally exempted by specific legislation such that they cannot register with the Charity Commission but have another principal regulator. »Ê¹ÚÌåÓýappy include:

• educational charities such as schools and universities;
• certain museums, galleries and other institutions of national importance; and
• charitable registered societies, including social housing providers

More details on exempt charities can be found at GOV.UK: Exempt charities (CC23)

2)  Excepted charities

Excepted charities are

• churches and chapels belonging to some Christian denominations
• charities that provide premises for some types of schools
• Scout and Guide groups
• charitable service funds of the armed forces; and
• student unions

which have income of less than £100,000 a year.

More details on excepted charities can be found at GOV.UK: Excepted Charities

3)  Charity income less than £5,000 a year

Section 30(2) of the Charities Act 2011 doesn’t require a charity to register in England and Wales where its income is less than £5,000 a year. Charitable trusts falling within this are not required to register on TRS.

More details on the definition of a charity can be found at GOV.UK: What makes a charity (CC4)

Practicalities of charity registration

In practice, it can take time for a charity registration to be approved in the UK. To avoid unnecessary registrations on TRS, HMRC don’t require trusts pending approval of registration as a UK charity to register on TRS in the interim, so long as the trustees have a genuine expectation that the trust will be accepted for registration as a charity.

Example

A charitable trust is set up in Wales to provide new household items for those struggling financially in the local area. For the first two years the income of the charity remains below £5,000. »Ê¹ÚÌåÓýapp charity is therefore not required to register with the Charities Commission in England and Wales. It is not required to register on TRS either.

In its third year the work of the charity expands considerably and its gross income is £50,000. »Ê¹ÚÌåÓýapp charity therefore applies for registration with the Charities Commission in England and Wales which the trustees have a genuine expectation will be accepted.

»Ê¹ÚÌåÓýapp application takes several months to be processed and accepted. »Ê¹ÚÌåÓýapp trust is not required to register on TRS, neither during the period when waiting for the request to be processed nor going forward.

Funds held on trust by registered charities

Funds are often held on trust by or on behalf of a registered charity for the purposes of that charity. »Ê¹ÚÌåÓýappse trusts are referred to as ‘special trustsâ€� at section 287 of the Charities Act 2011.

Such trusts are not required to register separately on TRS, provided that they are accounted for as part of the accounts and annual reports of a charity that is a registered charity or excluded from registration under section 30(2) of the Charities Act 2011.

Example

»Ê¹ÚÌåÓýapp John Smith Foundation is a corporate charity registered as a charity with the Charities Commission in England and Wales. »Ê¹ÚÌåÓýapp foundation holds funds on three separate trusts, each holding funds used to meet the charitable activities in different geographical areas. As the trusts are held by the John Smith Foundation and are included within the reports and accounts that are submitted to the Charities Commission, there is no requirement for these trusts to register with TRS.

Unincorporated Associations and Community Amateur Sports Clubs (CASCs)

Community clubs and associations are often structured as unincorporated associations, meaning that the association itself has no legal capacity.

Unincorporated associations can be structured in a number of different ways and often the property of the association is held on trust by some or all of the members for the benefit of the wider membership. This may be evidenced by the existence of a document known as a trust deed or declaration of trust.

A trust holding assets or property of an unincorporated association  is not required to register if the association is registered as a charity in the UK (or excluded from registration under section 30(2) of the Charities Act 2011). This exclusion from TRS registration does not apply if an association is not registered as a charity but is instead registered with HMRC as a community amateur sports club (CASC).

Example

»Ê¹ÚÌåÓýapp Readstone Tennis Club is a community club with approximately 100 members. »Ê¹ÚÌåÓýapp club is structured as an unincorporated association and the club property is held by four members of the management committee, who hold the property on trust for the benefit of the wider membership. »Ê¹ÚÌåÓýapp club is not a registered charity but is registered as a Community Amateur Sports Club with HMRC.

As the club property is held on trust and no exclusions from registration apply, the trust is required to register on TRS as a registrable express trust.

»Ê¹ÚÌåÓýapp club was set up ten years ago by a local businessperson who gifted some land for the use of the club. As this is the individual who set up the trust by transferring assets to the trust, this individual should be recorded as the settlor of the trust.

»Ê¹ÚÌåÓýapp trustees are the persons who currently hold the legal title to the club property. In this case these are the four members of the management committee.

»Ê¹ÚÌåÓýapp beneficiaries are the members of the club. As there are a large number of members and the membership frequently changes, this can be recorded on TRS as a class of beneficiaries with a single description ‘»Ê¹ÚÌåÓýapp members of the Readstone Tennis Clubâ€�, rather than being recorded individually on the record. This description would not need to be changed as the individual members change over time.