IHT & Estate Planning
Last Updated: 6 Apr 24 3 min read
HMRC suggests trustees should always keep the following documents:
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.
The length of time trustees must keep written records after the trust has made the final payment to beneficiaries depends on whether the trust has any business income. If none then the trustees must keep the records for one year after the filing deadline of 31 January. For example, for a 2022-23 self-assessment tax return filed on or before 31 January 2024, records must be kept until 31 January 2025.
This 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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