In this section:
- Trusts: the basics
- Notifying HMRC about a new trust
- What trust advice HMRC can and can’t help with
- Contacting HMRC for help with tax on trusts
Notifying HMRC about a new trust
Trustees of a trust are subject to tax. HM Revenue & Customs (HMRC) needs to be notified about a trust if you expect it to receive income or make chargeable capital gains, so that the correct amount of tax can be calculated and paid. In some cases Inheritance Tax may also be payable.
- When you need to tell HMRC about a trust
- Whose responsibility is it to notify HMRC?
- Appointing an agent
- How to notify HMRC
- Information you’ll receive after notifying HMRC
- Notifying HMRC Inheritance Tax about your trust
- When the trustees are resident overseas
When you need to tell HMRC about a trust
If you expect a new trust to receive income or make chargeable capital gains (profits) from the sale of assets such as shares, property or possessions within the next tax year, you should tell HMRC as soon as the trust is created.
If an existing trust starts receiving income or making chargeable gains, HMRC needs to be notified by 5 October following the end of the tax year (5 April).
There is no need to tell HMRC if a trust is not going to receive any income or make any chargeable gains.
If you notify HMRC about a trust they will send you a tax return - the Trust and Estate Tax Return - soon after the end of the tax year (5 April).
Whose responsibility is it to notify HMRC?
The trustees are responsible for notifying HMRC if a trust has been set up that may receive income or make chargeable gains.
The only exception to this is a bare trust, where the beneficiary has the right to income and capital of the trust. In the case of bare trusts, the beneficiaries of the trust must declare any income or capital gains on their own personal tax returns.
Find out more about bare trusts
Appointing an agent
It can be a good idea to appoint a professional adviser - such as a solicitor or accountant - to deal with HMRC on your behalf, especially in the case of complicated trusts. The professional adviser must be formally authorised by you to deal with the trust’s tax affairs.
If a professional adviser is appointed, the trustees are still responsible for ensuring that all tax obligations are carried out satisfactorily.
Read about authorising an accountant to deal with HMRC for you
How to notify HMRC
There are two ways of notifying HMRC.
You can tell them that a trust has been set up by completing form 41G(Trust) and sending it to the HMRC Trusts Office that deals with your trust.
Alternatively you can send them a letter. This must contain all of the information that would have been included on form 41G(Trust), including:
- the name of the trust
- the names and addresses of all of the trustees
- the contact details of any professional agent, or a trustee’s telephone number if there is no professional agent
- whether the trust is governed by UK law, Scots law, or another country’s law
- whether the trust is employment related
- whether the trust is for a vulnerable beneficiary
For all trusts, you should also give details of all of the assets in the trust. For land or buildings, these details should include the full address. For shares, you should include the number and class of shares, and the company’s registration number.
Don’t send copies of trust deeds to the HMRC Trusts Office unless they ask you to do so.
Find out which Trusts Office you should contact in our guide below.
Contacting HMRC for help with tax on trusts
Find
form 41G (Trust) on the HMRC website
Information you’ll receive after notifying HMRC
Once you have notified HMRC, you will receive a Unique Taxpayer Reference (UTR) for the trust. This is a reference allocated when registering to pay tax under Self Assessment. You will need this reference number each time you contact HMRC.
A tax return (the Trust and Estate Return) will be issued for the first tax year when income has been received or gains have been made by the trust. Unless you tell HMRC otherwise, the Trust and Estate Return will continue to be issued each year even if the trust didn’t receive any income or make any chargeable gains.
If you receive a tax return as a trustee you are legally obliged to complete it and return it to the HMRC Trusts Office on time, even if no tax is due.
Find out more about completing the Trust and Estate Tax Return
Notifying HMRC Inheritance Tax about your trust
The HMRC business area that deals with Inheritance Tax - HMRC Inheritance Tax - does not need to know when a new trust is set up, but they do need to know when a trust incurs an Inheritance Tax charge. This may be when:
- assets are put into a trust (either initially or subsequently)
- assets leave a trust
- a trust passes a ten-year anniversary
Find out more about trusts and Inheritance
Tax
When the trustees are resident overseas
A trust that has trustees overseas may be considered a ‘non-resident’ trust, in which case it is not dealt with by HMRC Trusts, but by another business area - HMRC Residency.
