Trustees - tax responsibilities

As the trustee, you’re responsible for reporting and paying tax on behalf of the trust.

If there are 2 or more trustees, nominate one as the ‘principal acting trustee’ to manage its tax. The other trustees are still accountable, and can be charged tax and interest if the trust does not pay.

Registering your trust

You need to register your trust with HM Revenue and Customs (HMRC) if it pays or owes any of the following:

  • Capital Gains tax
  • Income Tax
  • Inheritance Tax

You can only register one trust at a time.

There’s a different process if you need to register an estate of someone who’s died.

Before you start, you’ll need a Government Gateway user ID and password for your trust.

If you do not have a user ID, you can create one when you register your trust. You’ll need to set up a new user ID for each trust you need to register.

You’ll also need all of the following:

  • your own National Insurance, passport or driving licence number - you do not need these if you’re an agent
  • details of assets put into the trust, including the date they were put in
  • the name, address, date of birth and either National Insurance or passport number of any individuals in the trust

Registration deadlines

Register your new or existing trust by the registration deadline.

If you do not register by the deadline, you may have to pay a fine of up to £300 or 5% of your tax bill.

Registration deadline for new trusts

Register by 5 October in the tax year after the trust starts to pay any of the following for the first time:

  • Capital Gains Tax
  • Capital Gains Tax with Inheritance Tax
  • Income Tax

Example Your trust pays Income Tax or Capital Gains Tax for the first time in the 2018 to 2019 tax year. You need to register by 5 October in the 2019 to 2020 tax year.

You’ll get a Unique Taxpayer Reference (UTR) in the post within 15 working days (21 if you’re abroad) - you’ll need it to send a tax return.

Registration deadline for existing trusts

Register by 31 January for the previous tax year if your trust paid either:

  • Capital Gains Tax
  • Income Tax

Sending tax returns

You must report the trust’s income and gains in a trust and estate Self Assessment tax return after the end of each tax year. You can either:

  • buy software to send it electronically by 31 January
  • fill in paper form SA900 and post it to HMRC by 31 October (3 months earlier)

You can also get help, for example from HMRC or by getting an accountant to do your return for you.

After you’ve sent your return, HMRC will tell you how much you owe. You’ll need to pay your Self Assessment bill by the deadline.

You’ll need to collect and keep records (for example bank statements) to complete your tax return.

Telling beneficiaries about tax and income

You must give the beneficiary a statement with the amount of income and tax paid by the trust, if they ask. You can use form R185 (trust) to do this. There’s a different form if you need to provide a statement to a settlor who retains an interest.

If there’s more than one beneficiary, you must give each of them this information relative to the amount they receive.

Death benefit payments from a pension scheme

You must give the beneficiary extra information if both the following apply:

  • you make a payment funded by a taxable lump sum from a pension scheme
  • the pension holder has died

Use form R185 (LSDB) if you’re a trustee. There’s a different form if you’re a pension administrator.

You must tell the beneficiary within 30 days.

Other responsibilities

If the lead trustee’s name or address changes, write to HMRC to tell them before the registration deadline for existing trusts.

If you do not tell HMRC by the deadline, you may have to pay a fine of up to £300 or 5% of your tax bill.

You may have to report other things to HMRC. You need to:

Your other responsibilities as a trustee depend on the type of trust and any instructions from the person who set up the trust in the trust deed.