We explain, in plain English, what is expected of a trustee when reporting trust income and gains. Our aim is to keep things simple and practical so you can act with confidence.
We’ll use a real-life example — a family trust that helps pay grandchildren’s education — so the steps feel practical instead of abstract.
Over the tax year you will need to register the trust, track income and report gains. Missing a filing can bring penalties, even if no tax is due.
We outline the key moving parts: registering the trust, keeping records, meeting deadlines and spotting common slip-ups such as small interest payments or overseas income.
We also clarify what sits with trustees and what sits with beneficiaries, so you can protect the family and avoid unwelcome letters from revenue customs.
For a step-by-step companion, see our short register a trust guide which walks through forms and services you will meet.
Key Takeaways
- Report trust income and gains under Self Assessment when asked.
- Register promptly and keep clear records through the year.
- Watch for small or foreign income that is often missed.
- Meet deadlines to avoid penalties, even if no tax is due.
- Understand trustee responsibilities versus beneficiaries’ obligations.
How UK trusts are taxed and why trustees must report
We start with a clear, everyday definition so you can see how reporting links to real family choices.
A trust is a legal arrangement where a settlor transfers assets to individuals who hold them for others. In plain terms, the holders act as caretakers of the assets and must manage and report income and gains properly. This role includes legal obligations to keep records and to declare amounts to the authorities.
Common trust types affect who pays what. Bare trusts are straightforward: the beneficiary is usually taxed on any income. Interest in possession trusts place income on the life tenant. Discretionary trusts are different. The holders may pay higher rates and must record distributions carefully. Beneficiaries who receive payments might need to report that income themselves and can often claim a credit for tax already paid by the trust.
Discretionary arrangements often create more reporting work. That’s because the holders decide who gets what and when, which triggers complex reporting and possible higher charges. Good practice protects the family. Accurate reporting avoids disputes and unexpected bills later. For a practical outline of responsibilities, see the official guidance on trusts and trustees’ responsibilities.
Registering the trust with HMRC before you file
Getting the trust entered on the register early keeps paperwork simple and reduces later problems.
What the Trust Registration Service (TRS) is
The TRS is an official register where most express trusts must be recorded. The underlying rules are about transparency: authorities need to know who controls and benefits from a trust estate.
Express trusts and who usually needs to register
An express trust is one created deliberately, often in writing. Many family arrangements fall here. Most UK express trusts must register even if no tax is due.
Unique Taxpayer Reference (UTR) and filing
You must obtain a UTR before submitting any formal returns for the trust estate. The UTR links the trust to filings and ongoing obligations.
TRS updates and the 90‑day rule
- Trusts formed on or after 1 Sept 2022 generally register within 90 days.
- Update the TRS within 90 days of changes — for example, changes to trustees, beneficiaries, or contact details.
- Keeping the TRS current supports wider tax obligations and lowers compliance risk.
For a practical walkthrough of registration steps, see our guide on registering a trust as an agent.
Do you need to file a Trust and Estate Tax Return (SA900)?
We’ll keep this practical. The sa900 is the main form used to show a full picture of a trust’s income, gains and any tax liability. It helps the authorities see what happened in the year.
When a filing is expected and the £500 trigger point
You normally complete an estate tax return if HMRC issues a notice to file. Guidance often mentions a £500 trigger point — if income or gains pass this, a formal filing is likely.
Who acts as the single contact
When several trustees act together, one should be the principal acting trustee. This person is the main contact for correspondence and helps avoid missed deadlines.
“Even if no tax appears due, failing to file when asked can bring penalties.”
- Must file can apply even to simple arrangements.
- Typical triggers include interest, dividends, rental income and capital disposals.
- Keep a short checklist and clear records to reduce workload and limit liability.
Getting your records ready for the tax year
A clear, month-by-month record lets you spot income, rental receipts and capital events as they occur.
Income evidence to gather
Collect bank statements, savings interest slips and dividend vouchers as you receive them.
For rental income, keep schedules showing gross receipts and allowable expenses. Save receipts for repairs and invoices for contractors.
Capital transactions and disposal paperwork
Save sale contracts, transfer deeds, share sale confirmations and any valuation notes. These prove dates and values when gains arise.
Practical record-keeping habits
Simple habits help. Use one folder per tax year. Download statements monthly. Keep a running log of decisions about the estate and assets.
“Good records mean the right amounts reach beneficiaries on time.”
| Item | Keep | Why | Example |
|---|---|---|---|
| Interest | Bank slips | Shows income amount | Savings statement |
| Foreign income | Original statement + rate | Convert to GBP at receipt | Bank FX record |
| Capital disposals | Sales contracts | Proves date & value for gains | Property sale completion |
For a practical worksheet on valuations and dates see our linked guidance on record-keeping: records checklist and guidance.
Working out trust income tax and allowances
Before you calculate what’s owed, first separate income types so you apply the correct rate. This makes the math straightforward and reduces errors when you check liability.
Interest in possession rates (2024/25)
Interest in possession arrangements pay 20% on non-dividend income and 8.75% on dividend-type income for 2024/25.
Discretionary trust rates (2024/25)
Discretionary trusts use higher rates: 45% on non-dividend income and 39.35% on dividend-type income.
The £500 allowance and multi-trust splitting
Some trusts get a £500 allowance. If total annual income exceeds £500, all income becomes taxable, not just the excess.
Where one settlor created several discretionary trusts, the allowance is split. Each trust gets at least £100 when divided.
Dividend allowance and practical checks
Important: trustees cannot claim the personal dividend allowance. Do not assume individual reliefs apply to trust income.
“Sort figures, apply the right rate, and sense-check the final liability before you file.”
For wider planning steps, see our guide to secure your family’s future.
Reporting capital gains and reliefs trustees may claim
Calculating gains on disposals needs clear records and a simple subtraction: proceeds minus allowable costs.
How to work out a chargeable gain
Start with the disposal proceeds. Deduct allowable costs and any improvement expenses. Then apply the trust annual exempt amount to the net gain.
Annual exempt amount and vulnerable beneficiary increase
The standard exempt amount for trusts is £1,500. If the trust benefits a vulnerable beneficiary, the allowance rises to £3,000.
CGT rates and the October 2024 change
Non-residential property gains were taxed at 20% until 29 October 2024. From 30 October 2024 those gains attract 24%.
Residential property gains use a flat rate for trusts of 24%. Check the date of disposal to apply the right rate.
Common reliefs and why paperwork matters
Reliefs such as Private Residence Relief or Business Asset Disposal Relief can reduce the taxable gain. They only apply where conditions are met.
Good evidence matters: sale contracts, valuations and invoices for improvements cut the risk of errors and lower overall tax liability.
“Methodical records prevent costly mistakes when reporting capital gains.”
| Step | What to keep | Why it matters |
|---|---|---|
| Calculate proceeds | Sale contract, completion statement | Proves disposal value and date |
| Allowable costs | Legal fees, agent fees, improvement invoices | Reduce the gain figure |
| Apply exemptions | Evidence of vulnerable beneficiary if relevant | Determines whether the £1,500 or £3,000 applies |
| Apply reliefs | Occupation records, business documents | May reduce gains tax due |
For a practical note on a particular relief, see our guide to hold-over relief on property.
Completing and submitting the SA900 to HM Revenue & Customs
Before you send anything, gather the forms and notes so you use the current SA900 for the right tax year. Download the SA900 and guidance notes from GOV.UK to avoid an out-of-date form.
Supplementary pages and where they matter
Use SA901–SA905 when specific income or gains apply. The supplementary pages capture dividends, trusts income, foreign income and capital disposals.
Filing online and by post
You cannot file SA900 through a direct online Self Assessment gateway. File online only via HMRC-approved trust and estate tax return software. Keep the submission receipt.
To file by post, print or complete the form by hand, sign it and send it with any supplementary pages to HM Revenue & Customs, BX9 1EL.
Common pitfalls and a final checklist
- Don’t miss small interest amounts or overseas income — convert to sterling with the correct rate.
- Include gains on disposals and attach the right supplementary pages.
- Final check: reconcile totals to bank statements, dividend vouchers and sale contracts.
“A short checklist makes the SA900 manageable — tackle one section at a time.”
Deadlines, payments and penalties for late or incorrect filing
Knowing when forms and payments are due keeps the estate on track and beneficiaries protected.
Key dates to remember
There are two firm deadlines after the end of the tax year. Paper SA900 must arrive by 31 October. Online submissions are due by 31 January.
When payment is due and how to pay
Once the SA900 is processed, HMRC confirms any tax liability and a payment date. Trustees usually pay by bank transfer, direct debit or cheque. Use the reference shown on the notice so funds are matched correctly.
Penalties and what happens after three months
Missing a deadline triggers an automatic £100 penalty. If the filing remains outstanding after three months, daily penalties can follow and sums grow quickly.
Fixing an error
If you spot a mistake, submit an amended SA900 promptly. Correcting errors quickly reduces queries and further penalties.
| Issue | Deadline | Typical action |
|---|---|---|
| Paper filing | 31 October | Post completed SA900 |
| Online filing | 31 January | Submit via approved software |
| Late penalties | From day 1 | £100 initial; then daily fines after 3 months |
Tip: mark both dates in your calendar and pay the confirmed liability with the correct reference to avoid avoidable penalties.
Conclusion
Good compliance is mostly about routine: log income, note disposals and keep paperwork together.
Follow the simple safe path: register on the TRS if required, obtain a UTR, maintain tidy records and complete SA900 filings accurately and on time.
Remember that different trust rules apply depending on whether the arrangement is bare, interest in possession or discretionary. Check the relevant rules before you calculate any liability.
Keep a few headline numbers handy: the £500 allowance logic, the main income rates for 2024/25 and the trust CGT annual exempt amount. Treat deadlines as non‑negotiable — penalties can arise even when no tax is due.
We aim to help you protect the family and preserve the estate assets. Steady habits now make compliance easier later.