What records should trustees keep?

• completion statements for property transactions
  
  
• contract notes for stocks or shares
  
  
• receipts for sale or purchase expenses, including estate agents’ and solicitors’ fees on the sale of property and details of any stamp duty land tax paid.

• the amount or value of the asset received, i.e. the market value on the date of transfer into the trust
  
  
• the date when the additional money or asset was received
  
  
• details of who made the payment or who put the asset into trust.

• minutes of meetings
  
  
• deeds of appointment and assignment
  
  
• any decisions that affect the distribution of capital or income.

Trustees need to keep records of any income payments made at their discretion to beneficiaries. This information is required as part of the Trust and Estate Tax Return for discretionary trusts.

Beneficiaries who receive income may ask the trustees to provide a statement showing how much income they've received and how much tax the trustees have deducted. The trustees may use form R185 (Trust Income) to do this. The beneficiary can then use the information on this form to prepare his or her own self-assessment tax return or claim a repayment of tax.

If the beneficiary is also the settlor and he/she – or his/her spouse or civil partner – has retained an interest in the trust, form R185 (Settlor) can be used instead.

Trustees may find it helpful to keep copies of all the forms R185 (Trust Income) that they give to beneficiaries.

As well as records for tax purposes it is important that the trust document is kept safe, and also that where the trust is required to be registered with the Trust Registration Service, a copy of the trust’s registration is retained.  Further information on the TRS is available in our Trust Registration Service article.