Trusts for agents and advisers: first steps

As a tax agent, adviser or accountant, it's likely that you will have some involvement with trusts. As trusts offer a means of holding or managing money, property or other valuable assets, they can be useful for clients looking to plan for the future. Trusts are also commonly used with wills, to ensure that assets are passed on in the manner the person intends after their death.

Your involvement with trusts will vary according to your client's circumstances and can range from checking accounts and filing returns, advising clients on trust formation and management or acting as a trustee. In some cases, solicitors or specialist trust and estate accountants may also be involved – particularly in setting up trusts.

Trust management and taxation can be a complex area. This guide provides an overview of trusts, the circumstances you may encounter them, how to fulfil basic trust management for clients and where to get more detailed guidance.

On this page:

Understand the different types of trust
Setting up a trust
Authorisation to manage clients' trust affairs
Managing and filing returns for trust clients
Reporting winding up to HMRC
More useful links

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Understand the different types of trust

There are a number of different types of trust. Each has specific advantages and it's essential that you have an understanding of them all in order to give your clients the best advice. What works for one client will not necessarily be the best solution for another.

Each type of trust has a different tax treatment, so you'll need to fully understand the tax implications and responsibilities, including Income Tax, Capital Gains Tax and Inheritance Tax implications. Types of trust and tax implications.

Trusts and estates management and taxation is complex – if you're unsure, it's a very good idea to consult a solicitor or a specialist in the area.

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Setting up a trust

If you don't have specialist knowledge, it's essential that your clients use a solicitor to create the trust. This is usually created by a 'trust deed' that sets out in detail the terms of the trust.

If you expect the trust to be liable to tax on income or gains, you should inform HMRC as soon as it is created, using form 41G (Trust).

Notifying HMRC about a new trust

41G (Trust) – Trust details

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Authorisation to manage clients' trust affairs

Once the trust is set up, if your client wishes you to discuss their trust affairs with HMRC on their behalf, you'll need to be authorised to do so. You can do this either by using the paper form 64-8 or the online agent authorisation service.

Get authorisation to act on a client's behalf

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Managing and filing returns for trust clients

It's most likely that you will be involved in helping trust clients with their record - keeping and filing of returns. In some cases, you may be a trustee too - so trustees' responsibilities may also apply to you.

The records your trust clients will need to keep will depend on the type of trust.

Trust record keeping for tax purposes

Trustees must complete a Trusts and Estates Tax Return (SA900). Usually a return is required for every tax year the trust is in existence, although there are some exceptions where returns are required every few years.

Completing the Trust and Estate Tax Return

If you wish to file your client's return on paper, you must return it by 31 October. If you wish to file the return online, the deadline is longer – 31 January the following year. You can't file the Trust and Estate Return online using HMRC's free software. However, you can file them using commercial packages.

Self Assessment Online – software and online forms

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Reporting winding up to HMRC

If a trust is wound up, the trustees must notify their local HMRC Trust Office and complete a tax return for the period up until the date the trust is wound up. If you are authorised, you can do this on their behalf. Remember that there may be tax due for the period before the winding up and the ending of the trust may mean a liability for Capital Gains Tax.

HMRC Trust Offices