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 for tax

You need to register a trust with HM Revenue and Customs (HMRC) to pay Income Tax and Capital Gains Tax it owes.

Register by 5 October of the tax year after either:

  • the trust has been set up
  • when it starts to make income or chargeable gains, if this is later

The tax year is from 6 April to 5 April the following year.

If you set up a trust between 6 April 2016 and 5 April 2017, you have until 5 January 2018 to register it with HMRC.

Register your trust

You can register your trust online. 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

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.

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)

If you use software, you must enrol the trust for an online account when you do for this for the first time. Allow 10 working days as HMRC posts you a 12-digit activation code.

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

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.