Heritage, charitable or business-related trusts

Apart from UK family trusts there are other types of trust you may want to know about. Here is a list of some of the more common ones with links to where you can get further information about the tax implications.

On this page:

Flat management company trusts or sinking funds
Employee benefit trusts
Heritage maintenance funds
Charitable trusts
Investment trusts and unit trusts
More useful links

Flat management company trusts or sinking funds

Many tenants and owners of flats make contributions into funds to pay for the upkeep and maintenance of the property - and sometimes to accumulate money for future repairs. These funds are known as service charge funds, flat management company trusts or sinking funds. The recipient of the funds acts as a trustee - holding the funds and any income arising from them. The trustee will have to pay tax on any investment income generated by the funds.

You can find out more in the HM Revenue & Customs (HMRC) Trusts, Settlements and Estates Manual for technical guidance on the tax treatment of flat management trusts.

View HMRC technical guidance on flat management trusts

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Employee benefit trusts

Employers can set up schemes for the benefit of their employees. These schemes are often funded through a trust. There are several types. The main ones are:

general employee benefit trusts - in which contributions are used to provide general benefits or bonuses, sick pay or medical expenses, education or training
employer financed retirement benefits schemes (EFRBs) - into which the employer makes contributions and the trustees pay out benefits when a member retires or dies
employee share scheme trusts - where companies set up a share plan via a trust to acquire shares for the benefit of employees

You can find out more in the HMRC Trusts, Settlements and Estates Manual for technical guidance on the tax treatment of employee benefit trusts.

View HMRC technical guidance on employee benefit trusts

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Heritage maintenance funds

These are trusts set up to help maintain historic buildings.

To find out more about Income Tax and Capital Gains Tax on heritage maintenance trusts, contact the Nottingham Trusts Office by following the Trusts Office contact link at the end of this article.

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Charitable trusts

A charitable trust is a type of trust set up for a cause or purpose that will benefit a large group of people or society at large, not specific individuals. Such a trust is considered to be for the benefit of the public and so qualifies for tax reliefs that private trusts don’t get.

Find out more about charities and charitable trusts

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Investment trusts and unit trusts

These are both vehicles for investment - though an investment trust is not a trust, while a unit trust is.

Investment trusts are companies that invest in the shares of other companies. Investors pool money to buy a fixed number of shares that the trust issues when it launches. The shares in the trust are then invested in stocks and shares by a professional fund manager.

Unit trusts are another type of 'pooled investment'. A fund manager buys shares in a range of different companies and pools these in a fund. You then buy 'units' in the fund.

Find out about investment trusts and unit trusts from the Financial Services Authority website

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