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Trustee tax responsibilities

Trustees are responsible for managing a trust and must make sure that tax owed by the trust is properly declared and paid. If you're a trustee you can get professional help to manage the trust, but the overall responsibility is still yours.

Trustee role and tax responsibilities

The person who sets up a trust (the settlor) sets out their wishes as to how the trust income and assets (money, investments, property etc) should be used for the benefit of others (the beneficiaries). They set out their wishes in a legal document called the 'trust deed' or in their will.

The person who is legally responsible for managing the trust assets and carrying out the settlor’s instructions is the 'trustee'. There may be more than one trustee.

A trustee's responsibilities depend on the type of trust. In some trusts, a trustee is responsible for deciding when to make payments to beneficiaries as well as for paying tax on trust investments. In others, the trustee may have few duties to perform.

The HM Revenue & Customs (HMRC) website has more information about trustee tax responsibilities.

Reporting trust changes and events to HMRC

When a trust is first set up

If you’re the trustee of a new trust you must tell HMRC as soon as possible if you think that the trust will receive income or make profits above the Capital Gains Tax 'threshold' (allowance) for trusts. This might apply if the trust sells property or investments during the tax year (6 April to 5 April).

To find out more, including an explanation of Capital Gains Tax allowances for trusts, read the HMRC guides below.

Changes after a trust is set up

Trusts may go through changes and events, for example the trustee may change the trust assets, the trustees may change or the trust may be closed (wound up).

For tax purposes, HMRC needs to know about these changes. Read the HMRC guide below to find out what trust changes you need to tell HMRC about.

Trust record keeping for tax purposes

If you're a trustee of a trust you must complete the trust's tax return (the Trust and Estate Tax Return) and give information to beneficiaries so that they can complete their personal tax returns.

To help you do this you must keep records of all of the income and expenses of the trust. You will need these records if HMRC asks about the Trust and Estate Tax Return. You may also be asked to provide records when notifying HMRC of transfers into or out of the trust where Inheritance Tax charges apply.

Read the HMRC guide ‘Trust record keeping for tax purposes’ to find out what trust records to keep for tax and how long to keep them.

Completing the Trust and Estate Tax Return

If you're a trustee of a trust that has received income or made profits above the Capital Gains Tax threshold (allowance) for trusts you must let HMRC know so that any tax due can be paid. In order to this you'll need to complete a Trust and Estate Tax Return after the end of the tax year (6 April to 5 April).

You can send your Trust and Estate Tax Return online or on paper. Follow the link below for a step-by-step guide to preparing your return, the forms you'll need and how to avoid making common mistakes.

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