Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Trust definition

What does Trust mean? A trust is a legal arrangement in which one or more trustees hold and manage property (the trust property) for the benefit of beneficiaries. It is primarily defined by case law rather than a single statute, though key rules appear in legislation (for example, writing requirements and trustee powers). Trusts arise by express declaration (usually by a settlor), by operation of law (resulting or constructive trusts), or under statute, and are used in private client, commercial, pension and charitable contexts. Core features include: the trustee’s fiduciary duties to act loyally, prudently and in accordance with the trust terms; control...

UK trustees: paying income tax and CGT—payments on account, reductions, 60-day property CGT returns, balancing payments, and HMRC trust registration

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Practice notes

This Practice Note sets out how trustees should make payments of income tax or capital gains tax (CGT) once it is confirmed that they are responsible for those amounts. Tax is collected in several ways:

deduction at source throughout the year
payments on account of income tax calculated by reference to the liability for the preceding tax year
balancing payments for the year (overall tax due less amounts already deducted at source or paid on account)

For guidance on the income tax payable by trustees, see Practice Notes: Interest in possession trusts—income tax and Discretionary trusts—income tax. For guidance on CGT payable by trustees, see Practice Note: CGT—basic principles for trusts.

Income tax—payments on account

Payments on account of income tax will be needed where the trustees’ liability is not largely satisfied by tax deducted at source. This arises where the trust receives untaxed income, such as gross interest or rental income. In addition, discretionary trusts will face an extra trust rate liability even if all of their income has been taxed at source at basic rates...

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Web page updated on 27/05/2026

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