In this section:
- Trustee tax responsibilities
- Notifying HMRC about a new trust
- Reporting trust changes and events to HMRC
- Trust record keeping for tax purposes
Trust record keeping for tax purposes
If you are a trustee of a trust you must keep records of its income and expenses so that you can accurately complete the trust's Self Assessment tax return and give information to beneficiaries for their tax returns. You will also need to keep these records for any Inheritance Tax charge you need to declare.
On this page:
- Records you must keep
- Statement of income payments to beneficiaries
- How long to keep the records
- If your records are lost or destroyed
- More useful links
Records you must keep
There are several different types of trust and the records you'll need to keep will partly depend on the trust's purposes.
In all cases you should keep the following documents:
- bank statements for current and deposit accounts
- confirmation of interest paid into bank or building society accounts
- national savings bonds or certificates
- certificates issued by life assurance companies
- dividend vouchers from companies and unit trusts
- stockbroker reports and record of dividends
- details of expenses paid by the trustees
- details of all taxes paid by the trust
Take care to keep details of any transactions made using online bank accounts - these may not send out paper statements.
If the trust sells or acquires assets during the year, you'll need:
- completion statements for property transactions
- contract notes relating to stocks or shares
- receipts for sale or purchase expenses (including estate agents and solicitors charges on the sale of property and details of any stamp duty paid)
If the trust owns property to let you'll need the following information:
- receipts for expenses connected with the property (including any mortgage interest)
- annual bills such as business or water rates
- licence or rent agreements showing the rent payable
If the trust has received additional capital you'll need to record the amount, the date it was received and who made the payment.
You should also keep records that reflect any important decisions made by the trustees, such as minutes of meetings, deeds of appointment (where a new trust may be set up), and any decisions that affect the distribution of capital or income.
Statement of income payments to beneficiaries
Trustees may make payments to people who are entitled to or receive funds under the terms of the trust - these are known as beneficiaries.
If a beneficiary is entitled to trust income, or the trustees pay income to a beneficiary at their discretion, the trustees should inform each beneficiary of both:
- how much income they are entitled to, or have received, from the trust in the tax year
- how much tax the trustees have deducted
The trustees may use form R185(Trust Income) for this purpose. The beneficiary then needs to use the information on this form to prepare their own Self Assessment tax return or claim a repayment of tax on R40 Tax Repayment Form.
You should keep copies of all the forms R185(Trust Income) that you give to beneficiaries.
Find the R40 Tax Repayment Form and guidance notes
How long to keep the records
You should keep the records you've used to prepare the Trust and Estate Tax Return for at least one year after the deadline for filing that return. For example, the Trust and Estate Tax Return for the tax year 2008-09 runs to 6 April 2009 and you must submit it by 31 January 2010 if filing online, or by 31 October 2009 if sending in a paper return. You'll have to keep the records you use to complete that return until at least 31 January 2011 if filing online or 31 October 2010 if sending in a paper return. If HM Revenue & Customs (HMRC) asks you questions about that tax return during that period you'll need to keep the records until we've finished our enquiries.
If the trust owns property to let, you must keep the letting records for five years after the final date for submitting the return. For example, if the trust let property in the year to 6 April 2009 you must keep the records relating to that property until 31 January 2015 if filing online, or 31 October 2014 if sending in a paper return.
Similarly, you will need to keep records relating to any business carried on by trustees for five years.
If your records are lost or destroyed
If the records you need to complete the Trust and Estate Tax Return have been lost or destroyed you should try to obtain the missing information in other ways. You can ask a bank to provide interest figures or duplicate bank statements, although they may charge for this.
Don't delay sending in the return while you wait for duplicate records to be produced. Use the information you've managed to get together to complete the return. Where it turns out you can't replace the information you'll need to estimate the missing figures. Just make sure you tell HMRC on the return the status of the figures you include:
- estimated figures - these are figures you want us to accept as final
- provisional figures - you're using these until you can let HMRC have firm figures and you must also let us know when you will supply the right figures
You can write to HMRC and amend the return with corrected figures within one year of the final date for filing it. But if you do make adjustments at a later date and you underpay, then you may have to pay interest and a penalty.
You can find out more about using provisional figures on page 26 of the Trust and Estate Tax Return Guide.
Download the Trust and Estate Tax Return Guide (PDF 849K)
More useful links
Get more help completing your Trust and Estate Tax Return
Get help and advice from HMRC with tax on trusts
