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What records should Trustees keep?

3 min read 31 Mar 23

It is important that trustees understand which records need kept

  • There are a core number of documents a trustee will need to keep, as well as others if the trust sells, buys or receives additional assets during the year.

  • Trustees should also keep records of important decisions, and income payments made at their discretion to beneficiaries.

  • It would be sensible for trustees to retain documentation for as long as possible (ideally for the entire trust period), so evidence is available in the event of any dispute with beneficiaries.

HMRC suggests trustees should always keep the following documents:

  • bank statements for current and deposit accounts

  • confirmation of interest received

  • National savings bonds or certificates

  • chargeable event certificates issued by insurance companies

  • dividend vouchers from companies, OEICs and unit trusts

  • stockbroker reports and record of dividends

  • details of expenses paid

  • details of all taxes paid by the trust

  • the trustees of a discretionary trust should record income payments to beneficiaries.

If the trust sells or buys assets during the year, the trustees will need:

  • 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.

If the trust has received additional assets, the trustees will need to record:

  • 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.

The trustees should also keep records that show any important decisions, such as:

  • minutes of meetings

  • deeds of appointment

  • 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.

If the self-assessment tax return is submitted on or before 31 January, HMRC states that records should be retained for one more year from 31 January. For example, for a 2021-22 self-assessment tax return filed on or before 31 January 2023, records must be kept until 31 January 2024.

However, the retention period suggested by HMRC seems a little short. It relates to tax requirements only.

It seems sensible that trustees retain documentation for as long as possible (ideally for the entire trust period), so that evidence is available in the event of any dispute with beneficiaries.

The above information will also assist in the preparation of the trustee accounts.

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