9. 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 doesn’t pay.
Registering your trust
You need to register your trust with HM Revenue and Customs (HMRC) if it pays or owes 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 all of the following:
- an ‘organisation’ Government Gateway account - you’ll need to set up a new account for each trust you need to register
- your own National Insurance, passport or driving licence number (you don’t 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 National Insurance number (or passport number) of any individuals in the trust
Registration deadline for new trusts
Register by 5 October in the tax year after the trust starts to pay Income Tax or Capital Gains Tax for the first time.
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 UK tax and it’s either:
- already registered for Self Assessment
- doesn’t need to register for Self Assessment
If you’re registering for the 2016 to 2017 tax year, you have until 5 March 2018 to register.
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
You must tell the beneficiary within 30 days.
You may have to report other things to HMRC. You need to:
- fill in form IHT100 when the trust needs to pay Inheritance Tax
- call HMRC if there are any changes to the trust
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.