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HMRC internal manual

Self Assessment Manual

HM Revenue & Customs
, see all updates

Records: set up taxpayer record: when to set up a trust SA record

This subject covers the circumstances in which you will need to set up a trust SA record type. See also the subject ‘When To Set Up An Individual SA Record’ (SAM100310).

A trust record is appropriate for each of the following

  • Trust
  • Pension scheme, where liability arises on the trustee
  • Period of administration not followed by a trust

More detail is available in subject ‘Set Up Trust Record’ (SAM100260) and the related Action Guide (SAM100261).

It is also appropriate in the following situations.

Registered pension schemes

SA applies to exempt registered pension schemes from 6 April 1996, but only in respect of trustee’s liability. This is a different person to the administrator, whose liability falls outside SA. In practice, the one person may act in both capacities, which is as trustee and administrator, but you require an SA record only if liability arises to the trustee.

Points to note in these cases

  • They have their own return type, ‘Tax Return for Trustees of Registered Pension Schemes’
  • The Manual Return signal should be set on the SA record using function AMEND TAXPAYER SIGNALS. An SA return may be required

Approved self administered trusts

Automatic issue of a trust return is appropriate.

Bare trusts

A bare trust is a one where the beneficial owner of the trust property is absolutely entitled to both the capital and income from that property. The trustees of bare trusts are not required to complete SA returns or to make payments on account.

However, bare trustees are entitled under Section 59 ICTA 1988 to make a return of trust income, but not trust capital gains and losses, and to account for the income tax due.

Exceptionally, the trustees will want to make a return. In this event, you should set up an SA trust record.

New trusts with no income and no income bearing assets

You may be asked whether formal notification is required of a trust which has no income and is unlikely to receive any income. The usual situation would be a trust whose only asset is a life policy.

You can advise the trustees that HMRC does not need to know of the trust where it is clear that no liability will arise unless there is either

  • A change in the assets held by the trust


  • A change in tax legislation

Advise the trustees that if in future any liability to income tax or capital gains tax does arise, the onus is on the trustees to notify HMRC of chargeability by 5 October in the year following the tax year in which liability arose.

Property / flat management companies: assets held in trust

A property / flat management company may also be liable to income tax at the rate applicable to trusts where investment income arises on residential service charges (known as sinking funds) held in a designated account. This is a requirement of S42 of the Landlords & Tenant Act 1987.

Service charges received by an occupier controlled property / flat management company will, under S42 LTA 1987, be received as capital in the company’s capacity of trustee and not landlord. All investment income arising on sinking funds held in a designated account is chargeable on the trustee at the rate applicable to trusts. This is because S42 LTA 1987 contains an implied power allowing the trustee to accumulate capital.

If there is evidence of a sinking fund (or assets held in trust) on which investment income arises, the office responsible for Corporation Tax of the company will

  • Advise the agent / trustee of the correct position


  • Contact the appropriate Trust Office to arrange for

    • An SA trust record to be set up


    • Returns to be issued for years after the year of review

Unsolicited returns

Unsolicited returns are returns received from taxpayers (or their agents) who have not been required, by the official issue of a return containing a Section 8 / 8A notice, to file a return.

Where you receive an unsolicited return, in all cases refer to the instructions at TSEM7407 and TSEM7407(a).