Trusts and Inheritance Tax

Format for trust accounts

Produced by Tolley
  • 14 Oct 2021 20:02

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Format for trust accounts
  • Synopsis
  • Balance sheet
  • Capital account
  • Income account
  • Beneficiaries' or accumulations account
  • Investment schedule
  • Other schedules and notes
  • Variations in format and layout
  • Accounting conventions
  • More...

Format for trust accounts

There is no mandatory format for trust accounts. The accountant may choose a layout to suit the complexity ofthe trust and the occasion. A major distribution ofcapital, or a revaluation, or a termination ofthe trust will require additional information. This guidance note describes the customary contents and structure ofan annual set oftrust accounts. A simple set ofaccounts is illustrated in Format for trust accounts ― sample template.


It is often useful to prepare a synopsis, depending on the complexity ofthe trust provisions and depending on who the users ofthe accounts are likely to be. A synopsis summarises the objectives and terms ofthe trust. It will name the settlor, trustees and beneficiaries, together with advisers such as solicitors, investment managers and accountants. It is helpful if each annual set ofaccounts repeats relevant dates such as:

  1. date ofcommencement

  2. dates ofentitlement or interest in possession for the beneficiaries

  3. date when accumulations ofincome must end

Balance sheet

The balance sheet shows the financial position ofthe trust at the end ofthe accounting period, but is usually, by convention, included as the first page ofthe accounts. It shows:

  1. the total value ofthe funds held on behalf ofbeneficiaries

    represented by:

  2. total assets less total liabilities

Where beneficiaries have a fixed interest in the trust fund, they are usually named on the 'top half' ofthe balance sheet. With fully discretionary trusts, this section consists ofthe total value for capital and income.

Assets will consist principally ofthe trust's investments, property and bank accounts. The usual liabilities are tax and professional fees.

Capital account

The capital account starts with the value brought forward from the previous year. To this is added:

  1. additions to the trust fund

  2. gains on sales ofassets

The capital account is reduced by:

  1. losses on sales ofassets

  2. capital gains tax and inheritance tax

  3. income tax that is a charge on capital for trust

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