Trustee's guide to reducing your admin headache

Are you a trustee? Are you confused about what records you should keep? Gerry Brown, technical manager at Prudential, provides the answers.

HM Revenue & Customs suggests the following:

Trustees should always keep the following documents:

• Bank statements for current and deposit accounts.
• Confirmation of interest paid into bank or building society accounts.
• National savings bonds or certificates.
• Certificates issued by life assurance 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’ charges on the sale of property and details of any stamp duty paid.

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

• The amount or value of the asset received, ie 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 have 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.