Trusts and Taxes

Everything you need to know about the different taxes surrounding trusts

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

What are trusts?

A trust is a way of managing assets (such as money, property, investments and so on) on behalf of someone, maybe a child or someone who is incapable of managing those assets themselves. There are different kinds of trusts and the way they are taxed depends on what type of trust they are.

The people involved in the trust are known as:

  • The ‘settlor’ – that is the person who puts assets into the trust;

  • The ‘trustee’ – that is the person who manages the trust, including sorting out its taxes;

  • The ‘beneficiary’ – that is the person who benefits from the trust, whether now or at some defined point in the future, for example, when a child turns 21.

Why might you set up a trust?

There are a number of reasons why you might set up a trust, including:

  • On behalf of someone who is too young to manage those assets;

  • On behalf of someone who is unable to manage their assets due to incapacity;

  • To control and protect family assets;

  • To pass on your assets when you die (this is known as a ‘will trust’);

  • To pass on assets to your family or others while you are still alive;

  • If someone dies without a will (in England and Wales), a trust will be set up under inheritance rules so that the deceased person’s estate can be managed while it is decided how it will be passed on.

What does a settlor do?

A settlor decides how the assets in a trust should be used and this will be set out in a document known as the ‘trust deed’ – a legal document that sets out how the assets should be dealt with.

A settlor can also benefit from the assets in a trust – it isn’t the case that they must be an uninterested party to the trust. If they do benefit from the assets in the trust, the trust is known as a ‘settlor-interested’ trust and will be subject to special taxation rules – we will go into these rules in a bit more details later.

What does a trustee do?

The trustee or trustees are classed as the legal owners of the trust – they are in charge of the day-to-day running of the trust, including managing its finances and paying any taxes that might be due. They will also deal with the assets in the way set out in the ‘trust deed’ (or will) and decide on how any assets should be used or invested.

Trustees can change without the trust having to be dissolved and restarted, but there always has to be at least one trustee.

What is the role of the beneficiary?

The beneficiary is the person who benefits from the trust. It might be one person or it might be a group of people, such as a family. They might benefit from the trust in a number of ways. Maybe they will only benefit from the income of a trust (for example, from the rental income of a house held in a trust). Or they might only benefit from the capital held in trust (for example, receiving the shares that are held in a trust once they turn 21). Or they could benefit from both the income and the capital held in trust. This will all be set out in the trust deed.

What are the different types of trust?

There are a number of different ways a trust can be set up and each type will be taxed differently. They all need a settlor, a trustee and a beneficiary though.

  • Bare trusts: assets in a bare trust are held in the name of the trustee, not the beneficiary, but the beneficiary is entitled to all the capital and income held in the trust at any time if they are over the age of 18 (16 in Scotland). These are usually used to pass on assets to young people – the trustees look after the assets for that young person until they are old enough to look after the assets themselves.

  • Interest in possession trusts: in these trusts, the trustee has to pass on all trust income to the beneficiary as it arises (after taking off any expenses). An example of this kind of trust would be, creating a trust for all the shares you own with the terms of the trust saying that any income from those shares is to go to your spouse while they are alive and after your spouse dies, the shares will be passed to your children. Your spouse would be an income beneficiary and has an ‘interest in possession’ in the trust but has no right to the actual shares as they are to be passed to your children.

  • Discretionary trusts: in these trusts, the trustee can make certain decisions about how trust income can be used. Sometimes they can also make decisions about the assets of the trust as well. Their actual decision-making power will be set out in the trust deed, but they might be able to decide what gets paid out of the trust (whether income or capital), which beneficiary will receive payment, how often these payments are made or whether any conditions should be imposed on the beneficiaries. A trust like this might be set up for a number of reasons – maybe one child or grandchild is likely to need more financial help than other beneficiaries in the future or maybe the beneficiary isn’t expected to be capable enough (or responsible enough) to deal with that money themselves so the decisions are to be left to the trustees.

  • Accumulation trusts: in this kind of trust, the trustees can keep any earned income within the trust and use it to add to the trust’s assets. Depending on the trust deed, they may also be able to pay it out, much like in a discretionary trust.

  • Mixed trusts: these are a combination of more than one type of trust and each different part of the trust has to be taxed in accordance with the tax rules for that particular type of trust.

  • Settlor-interested trusts: in these trusts, as already mentioned, the settlor (or their husband, wife or civil partner) benefits from the trust. It could be an interest in possession trust, an accumulation trust or a discretionary trust.

  • Non-resident trusts: these trusts are set up when the trustees of the trust aren’t UK residents for tax purposes. As you might be able to imagine, the tax rules around these kinds of trusts are very complicated and expert advice could well be needed to help you work out how much tax you need to pay – call our friendly team on 0330 122 9972.

What are parental trusts for children?

A different kind of trust is a parental trust, set up by parents for children under 18 who have never been married or in a civil partnership. They’re not a particular type of trust on their own and will be one of the following kind of trust:

  • a discretionary trust;

  • an accumulation trust;

  • a bare trust;

  • an interest in possession trust.

In these kinds of trust, any Income Tax on income from the trust is paid by the trustees but is the responsibility of the settlor, which means that the trustees pay the Income Tax on the trust income by filling out a ‘Trust and Estate Tax Return’. The trustee then gives the settlor a statement which details all the income of the trust and the rates of tax that have been charged on it. The settlor then informs HMRC of the tax that has been paid on their behalf by the trustee through their Self-Assessment tax return.

What are trusts for vulnerable people?

There are some trusts set up to benefit disabled people or children which are entitled to special tax breaks. They are called ‘trusts for vulnerable beneficiaries’. To qualify as a vulnerable beneficiary, the person either has to be under the age of 18 whose parents have died, or a disabled person who is entitled to claim any of the following benefits (even if they don’t actually claim them – they just need to be eligible to claim them):

  • Personal Independence Allowance;

  • A disablement pension;

  • Armed Forces Independence Payment;

  • Constant Attendance Allowance.

A trust can’t qualify for special Income Tax treatment if the person who has set up the trust will also benefit from the trust, although from the 2008/9 tax year, they would be entitled to special Capital Gains Tax treatment.

Trusts for children who have lost a parent are either set up through the parent’s will or by special inheritance rules if there wasn’t a will. In Scotland, if someone dies without a will, the trust set up in behalf of their children will be treated as a bare trust for tax purposes.

Of course, not all of the beneficiaries of a trust have to be vulnerable people and if this is the case, the assets and income for the vulnerable beneficiary have to be identified and kept separate so that they are only used for that person because only that part of the trust will be eligible for special tax treatment.

To claim this special tax treatment, the trustees need to have filled in a ‘’Vulnerable Person Election’ form – this way they can benefit from the special rules for Income Tax and Capital Gains Tax. If the trust is for more than one vulnerable beneficiary, a form has to be filled in for each vulnerable person. The form must be signed by the trustees and the beneficiary.

If the vulnerable person dies or is no longer considered to be vulnerable, HMRC must be informed and the special tax treatment will no longer apply to the trust.

The special tax rules are worked out in the following way:

  • Income tax: trustees need to work out what the trust Income Tax would be if it wasn’t eligible for these special tax breaks (this will depend on the type of trust it is). Then they work out how much the vulnerable person would’ve paid if the income had been paid directly to them and the trustees then claim the difference between the 2 figures as a deduction from the own Income Tax liability. If this seems too complicated, our tax experts are always on hand to make your taxes simpler so give us a call on 0330 122 9972.

  • Capital Gains Tax: if any of the assets of the trust are sold or disposed of in any way and they have increased in value since being put into the trust, Capital Gains Tax would only be liable if they have increased above the Annual Exempt Amount – this allowance is £12,500 for people with a physical or mental disability, and £6,000 for other trustees. Trustees are responsible for paying any Capital Gains Tax owing but if the trust is for a vulnerable person, the trustee can claim a reduction by claiming the difference between what they would have paid without a reduction and how much the beneficiary would’ve paid if they had received the gains directly. This special treatment doesn’t apply in the tax year in which the beneficiary dies.

There are some circumstances in which trusts for vulnerable people are eligible for special treatment under Inheritance Tax rules. The situations are:

  • For a disabled person whose trust was set up before 8th April 2013, at least half of the payments from the trust must have gone to the disabled person in their lifetime.

  • For a disabled person whose trust was set up after 8th April 2013, all payments must go to the disabled person – except for up to £3,000 per year (or 3% of the assets if that’s lower) which can be used for someone else’s benefit.

  • When someone is suffering from a condition that they expect will make them disabled and they set the trust up for themselves.

  • For a bereaved minor, who must take all assets and income either before or when they turn 18.

There would be no Inheritance Tax charge if the person who set up the trust survives at least 7 years from the date they set it up, or for transfers made out of a trust to go a vulnerable beneficiary. When the beneficiary dies, any assets held in the trust on their behalf become treated as a part of the estate and may be liable to Inheritance Tax. Most trusts have 10-year Inheritance Tax charges but those with vulnerable beneficiaries are exempt from this.

How does Income Tax work for trusts?

Income Tax rates for trusts depend on the type of trust it is – each type is taxed differently.

The way is works is as follows:

For Accumulation or Discretionary Trusts

Trustees are responsible for paying tax on income received by these trusts and the first £1,000 is taxed at the standard rate. If the settlor is involved in more than one trust, the £1,000 should be divided between the trusts they have – unless the settlor has more than 5, in which case the standard rate band for each trust is set at £200. The tax rates are as follows:

  • For trust income up to £1,000: dividend-type income is taxed at a rate of 7.5% and all other income at 20%.

  • For trust income above £1,000: dividend-type income is taxed at 38.1% and all other income at 45%.

Trustees won’t qualify for the dividend allowance (where they are allowed to earn a certain amount from share dividends before they are taxed) so they will have to pay tax on all dividends depending on the tax band they call in.

For Interest in Possession Trusts

The trustees are responsible for paying Income Tax on dividend-type income at 7.5% and all other income at 20%. If the trustees ‘mandate’ income to the beneficiary (meaning that it goes straight to the beneficiary instead of being passed through the trustee) then the beneficiary will have to declare this on their Self Assessment tax return and they will pay the tax in it instead.

For Bare Trusts

The beneficiaries of a bare trust are responsible for paying the tax on any income from it so they need to register for Self Assessment. If they don’t usually send in a tax return, they will need to register by 5th October following the tax year they received the income.

For Settlor-Interested Trusts

The settlor is responsible for paying any Income Tax for these trusts – even if they don’t receive all the income from the trust – but the trustees pay the Income Tax as they receive the income. This means that the trustees pay Income Tax on the trust income by filling out a ‘Trust and Estate Tax Return’. They then give the settlor a statement of all the income from the trust and how it has been taxed. The settlor then informs HMRC of the tax that the trustees have paid on their behalf via their Self Assessment tax return.

For other types of trust

There are different tax rules for parental trusts for children, trusts for vulnerable people and trusts where the trustees aren’t UK residents – because the rules can be so complicated, expert advice is very often the best route to take. Our friendly team of experts are at hand to take the sting out of your taxes so call us on 0330 122 9972. We can also help if you are the beneficiary and are able to claim some of your tax back. Similarly, if you are the trustee and you’re not sure how to complete your ‘Trust and Estate Tax Return’, we can help.

How does Capital Gains Tax work with trusts?

If an asset in your trust has increased in value and you sell it (or take it out of the trust in some way) or add an asset that has increased in value, you might have to pay tax on that profit – or gain as it is known by HMRC. That tax is called Capital Gains Tax.

If you are putting assets into a trust, Capital Gains Tax might have to be paid by the person who has sold the asset to the trust or is transferring the asset into the trust – usually the ‘settlor’.

If assets are being taken out of the trust, either by selling them or transferring them in some other way, then the trustees are usually liable to pay any Capital Gains Tax on behalf of the beneficiary that might be liable. If the trust is a Bare Trust, you don’t need to pay Capital Gains Tax is the asset is going to the beneficiary.

There might be instances where an asset is transferred to someone else but Capital Gains Tax isn’t payable – this usually happens when someone dies and the ‘interest in possession’ ends.

Sometimes Capital Gains Tax is payable when a beneficiary gets some of all of the assets in a trust, for example, if the beneficiary of a trust has reached a certain age and can now tell the trustees what to do with the assets – this is known as being ‘absolutely entitled’. In this instance, the trustees will pay Capital Gains Tax on the assets but they will base it on the market value of the assets at the time the beneficiary became entitled to them.

The rules surrounding Capital Gains Tax in trusts where the trustees aren’t UK residents can be so complicated that HMRC advise people in that position to seek expert advice. Our tax experts can guide you through this complicated area – call us on 0330 122 9972.

How do you work out your total gains?

To know whether you need to pay Capital Gains Tax, first you need to know what your total profit or ‘gain’ is.

Trustees are allowed to take off any costs they might have incurred to reduce the ‘gain. These costs include:

  • Property costs, such as administration fees or management fees;

  • Professional fees, such as stockbroker fees or any fees they have had to pay to a solicitor;

  • Any improvement costs they have paid towards the property or land which has increased its value, such as building an extension or adding a conservatory. General repairs and the normal kind of maintenance you might do to a building (such as decorating, or even replacing a bathroom or kitchen on a like-for-like basis) don’t count here and HMRC won’t allow you to deduct these costs.

What about tax relief?

If you are a trustee to a trust, you might be entitled to one of the following tax reliefs to help you reduce the amount of Capital Gains Tax you pay, or delay paying it. The reliefs you might be entitled to include:

  • Private Residence Relief: with this relief, trustees will pay no Capital Gains Tax when they sell a property owned by the trust but it must be the main residence of someone allowed to live there under the rules of the trust, set out in the trust deed.

  • Entrepreneurs’ Relief: with this relief, trustees will only pay 10% Capital Gains Tax on any qualifying gains of they have sold assets used in the beneficiary’s business, if that business has now ended. They might also be entitled to relief when they sell shares in a company where the beneficiary had at least 5% of the shares and voting rights.

  • Hold-Over Relief: with this relief, trustees will pay no tax if they transfer assets to beneficiaries – the recipient of the assets will pay the Capital Gains Tax when they sell or dispose of those assets, unless they are also entitled to claim this relief.

What about the tax-free allowance?

Just like with your income tax, there is a tax-free allowance (also known as the Annual Exempt Amount) and if your total gains are less than that allowance, you don’t need to pay Capital Gains Tax. You will only pay on gains above the allowance amount.

For trusts, the tax-free allowance is £6,000 – unless the beneficiary is classed as vulnerable (a disabled person or a child whose parent has died) in which case it rises to £12,000. If there is more than one beneficiary, you still might be able to claim the higher allowance if one of the beneficiaries is entitled to claim it.

However, the allowance might be reduced if the trust’s settlor has set up more than once trust since 6th June 1978 – you might need to call in expert advice if that is the case. Our tax experts can help you work out what your allowance should be, so call our friendly team on 0330 122 9972.

How do you report any gains?

Gains must be reported to HMRC by the trustee using the ‘Trust and Estate Tax Return’ and if you are the beneficiary of the trust, you need to report and pay any Capital Gains Tax you owe through your Self Assessment tax return.

Because Capital Gains Tax rules can be pretty complex, it can be a good idea to get expert guidance to make sure you’re not paying too much or too little in your capital gains. Our tax preparation specialists can help make your taxes less complicated so give us a call on 0330 122 9972.

What about trusts and Inheritance Tax?

When a person dies, Inheritance Tax might be payable on their estate (that means, the money and possessions they leave behind).

If any part of the estate is above the threshold set by HMRC, Inheritance Tax is payable at 40% although this can be reduced to 36% of the deceased leaves more than 10% of their estate to charity.

However, you might not be aware but Inheritance Tax can sometimes apply while you are still alive – this happens if you transfer some of your estate into a trust.

When might you have to pay Inheritance Tax?

Usually, Inheritance Tax would be payable under the following circumstances:

  • When assets are transferred into a trust;

  • When assets are transferred out of a trust or the trust ends (this would be known as an ‘exit charge’).

  • When a trust reaches its 10th anniversary of being set up (every 10 years, an Inheritance Tax charge is payable).

  • When someone dies and a trust is involved.

What would you pay Inheritance Tax on?

Not everything in an estate is liable for Inheritance Tax. HMRC have a term called ‘relevant property’ to detail what you would have to pay Inheritance Tax on – these are assets such as property, shares, land or cash assets.

Some property is known as ‘excluded property though – and Inheritance Tax wouldn’t be paid on this type of property – examples of excluded property include property outside the UK (if certain circumstances apply) and certain government securities.

However, HMRC acknowledge that the rules around excluded property are very complicated and they recommend expert advice in dealing with them.

Are there any special rules for trusts and Inheritance Tax?

Some types of trust have different Inheritance Tax Rules, as follows:

  • Bare Trusts: as mentioned, in these trusts the assets are held in the name of the trustees but go directly to the beneficiaries (both income and assets). Transfers into a bare trust can be exempt from Inheritance Tax as long as the person making the transfer survives for at least 7 years after making the transfer.

  • Interest in possession trusts: in these trusts, the beneficiary is entitled to the income from the trust as it is produced. No Inheritance Tax is payable on assets transferred into this kind of trust before 22nd March 2006. For assets transferred after this date, the 10-yearly Inheritance Tax charge might be due. During the life of the trust, no Inheritance Tax will have to be paid as long as the assets remains in the trust and remains the ‘interest’ of the beneficiary. If you inherit an interest in possession trust, you don’t have to pay the 10-yearly charge but 40% tax will be due when you die. Between 22nd March 2006 and 5th October 2008, beneficiaries could pass on their interest in possession onto others, like their children – known as making a ‘transactional serial interest’ and no Inheritance Tax would be payable, but from 5th October 2008, this stopped being possible.

  • Trusts set up through a will: this is where someone asks that some or all of their assets are put into a trust, called a ‘will trust’. In these trusts, a personal representative of the deceased is expected to make sure that the trust is set up properly and all taxes are paid and then the trustees make sure that any Inheritance Tax is paid on any future charges. If the deceased transferred the assets before they died, the person valuing the estate needs to find out whether they made any transfers within the previous 7 years – if so and they only paid 20% Inheritance Tax, an extra 20% will need to be paid from the estate. It will still need to be added to the value of the estate when valuing for Inheritance Tax purposes, even if no extra tax is due on the transfer.

  • Trusts for bereaved minors: a bereaved minor is classed as a child under 18 who has lost at least one parent or step-parent. If a trust is set up for a bereaved minor, there are no Inheritance Tax charges payable if the trust’s assets are set aside just for the bereaved minor and no one else, and if the bereaved minor becomes fully entitled to the assets when they turn 18. A trust can also be set up for a bereaved young person (aged between 18 and 25) and again, the 10-yearly charges won’t apply – but the beneficiary must become fully entitled to the assets when they turn 25 and when the beneficiary is between 18 and 25, exit charges may apply.

  • Trusts for disabled beneficiaries: as long as the asset remains in the trust as the ‘interest’ of the beneficiary, no 10-yearly or exit charges will be due. You also won’t have to pay Inheritance Tax on the transfer of assets into this kind of trust as long as the person making the transfer survives for at least 7 years after making the transfer.

How do you pay Inheritance Tax?

To pay any Inheritance Tax to HMRC, you need to use form IHT100. If you are responsible for valuing the estate of someone who has died, you may have to take into account all of their assets to see if Inheritance Tax is due – not just the value of the trust.

HMRC recommend that you seek expert advice if you are unsure about any aspect of trusts and taxes and our tax experts are always on hand to help. Call us on 0330 122 9972 and let us take the hard work out of your taxes.

What about taxes for beneficiaries of trusts?

The type of trust you are a beneficiary of determines the tax rules you might be subject to. These rules will determine whether you have to pay taxes through self-assessment or whether you might be able to claim a tax refund.

If you don’t usually need to send a Self Assessment tax return and discover that you need to, make sure you register for Self Assessment by 5th October in the tax year following the year in which you have received the taxable income – so, if you have received the income in this tax year, you will need to have registered for Self Assessment by 5th October in the following tax year.

If you aren’t sure what kind of trust you are the beneficiary of, the trustees of your trust will be able to tell you – you will need to know which type it is because there are different taxation rules for each one.

Taxes for beneficiaries of each type of trust are as follows:

  • For beneficiaries of bare trusts: you are responsible for declaring and paying tax on your trust income through a Self Assessment tax return.

  • For beneficiaries of interest in possession trusts: you are entitled to the income in these trusts as it arises (after any expenses have been paid) and the trustees will pay the tax on it before passing the income to you. If you request a statement from the trustees, they have to be able to tell you what the different sources of the income are, how much income you have received and how much tax has been paid on that income. If you are a basic rate taxpayer, that will be the end of it and you won’t owe any more tax and you will only need to fill in a tax return if the income you receive takes you above the basic rate tax threshold. If you don’t pay tax at all, you can claim that tax back. If you are a higher rate taxpayer, you will need to pay the extra tax on top of what the trustees have paid on your behalf through your Self Assessment return. If the trustees don’t pay the tax on any income before they pass it to you for some reason, you will need to pay that tax through a Self Assessment tax return.

  • For beneficiaries of accumulation or discretionary trusts: all income received from these trusts is treated as though it has already been taxed at 45% so if you are an additional rate taxpayer, there is no extra tax for you to pay. If you pay tax at 20% or 40% you can claim back the difference and if you aren’t a taxpayer, you can reclaim all of the tax that has been paid on your behalf. Our tax preparation specialists can help you claim your refund, so call our friendly team on 0330 122 9972.

  • For beneficiaries of settlor-interested discretionary trusts: the income paid to a settlor’s husband, wife or civil partner is treated as though it has been taxed at 45% so no additional tax is payable but unlike other trusts, this tax credit can’t be reclaimed in any way, if the beneficiary usually pays less tax.

  • For beneficiaries of non-resident trusts: HMRC acknowledge that the tax rules for this kind of trust are very complicated and they recommend that you seek expert advice if their detailed guidance is no help.

  • If a pension scheme pays into a trust: if a pension scheme pays a taxable lump sum into a trust after the pension holder dies, this payment is taxed at 45%. If you are a beneficiary and receive a payment which has been funded by this lump sum, you will also be taxed. You can claim back the tax paid on the original lump sum through your Self Assessment form or through the tax refund process. The trust will tell you how much you need to report – this amount will normally be higher than the amount you actually receive.

What are the tax responsibilities of the trustees?

If you are the trustee of a trust, it is your responsibility to report and pay tax on behalf of the trust. If the trust has more than one trustee, one of you must be nominated to be the ‘principal acting trustee’ who is responsible for managing the tax affairs of the trust. However, the other trustees are just as accountable for making sure the tax is paid and will be charged tax and interest if the trust doesn’t pay its tax bills.

Trusts need to be registered with HMRC for Income Tax and Capital Gains Tax purposes. This needs to be done by 5th October in the tax year following the setting up of the trust (or after it starts to make income or chargeable gains, if this is later). You can register online, unless you are an agent or a company trying to register a trust – if this is the case, you will have to contact HMRC’s Trusts and Estates department to register the trust.

You will need the following information to register a trust with HMRC:

  • Your own personal details such as National Insurance number and passport or driving licence number.

  • Details of the assets put into the trust, including the dates they were added to the trust.

  • The details of any individuals in the trust – such as their name, address, date of birth, NI number and passport or driving licence number.

Once you have registered the trust, you will receive a UTR (Unique Taxpayer Reference) from HMRC which you will need for your tax return.

How do trustees manage tax returns?

You will have to report the trust’s income and gains to HMRC using a Trust and Estate Self Assessment tax return. You can buy software to enable you to send the return electronically, in which case the tax return is due by 31st January, or you can send in a paper SA900 return by post which is due 3 months earlier than an electronic return (so, by the previous 31st October). Make sure you are keeping good financial records (bank statements and so on) to help you fill in your tax return.

If you are using software to send your return, you must enrol the trust for an online account with HMRC – make sure you allow enough time for HMRC to send you a 12-digit activation code. You can also get help with filling in and sending your trust’s tax return from an accountant or tax preparation specialist.

Once HMRC have received your tax return, they will calculate how much tax you owe – make sure you pay your tax bill by the deadline or you will be adding fines and penalties to the money owing.

How do trustees inform beneficiaries of tax and income details?

As a trustee, it will be your responsibility to inform the beneficiary of how much income they have received and how much tax has been paid by the trust on that income. You will do this by giving them a trust statement – HMRC form R185(trust) can help you do this, although you will need to use a different form to provide a statement to a settlor who also retains an interest in the trust (HMRC form R185(settlor)).

If there is more than one beneficiary, each beneficiary must be given a statement about their income and tax paid by the trust.

If a beneficiary has received a payment which has been funded by a taxable lump sum received from a pension scheme, where the pension holder has died, you will need to provide extra information to that beneficiary within 30 days of making that payment. You can use HMRC form R185(LSDB) if you are a trustee.

Other responsibilities of a trustee include:

  • Reporting any Inheritance Tax issues to HMRC – you can use HMRC form IHT100 to do this.

  • Informing HMRC of any changes to the trust.

  • Any other responsibilities that might arise depending on the kind of trust you are managing.

How can DSR Tax Claims help?

We know that managing a trust can be a complicated affair, even with our helpful guide to tell you everything you might need to know. It’s all very well reading about it and knowing what HMRC’s take on it is – but how do you apply that to your own circumstances? Although HMRC do offer their own Trusts helpline, it can still seem like an absolute minefield. Expert help is always available and you don’t need to battle through this alone. Our team of experts at DSR Tax Claims are always on hand to help our client and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

This page was last updated on 09/04/2019.

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