Will a Trust Affect my Self Assessment?

For the self-employed, tax self-assessment is an unpleasant fact of life. The annual rush to get your self-assessment in on time is something with which several million people cope every year. In some instances, however, individuals may be required to complete the process of self-assessment regardless of their employment status. If you are a trustee or personal representative of an estate, you will unfortunately need to carry out self-assessment.

All self-assessment taxpayers receive the same, standard form. However, the nature of your affairs will determine which additional parts you are sent. As a trustee, the extra parts that you receive will vary depending on the nature of the trust. Regardless of whether or not you are already a self-assessment taxpayer you will definitely receive form SA900, entitled the Trust and Estate Tax Return. This is the part of the return that applies to all trustees and personal representatives. Further, if any Capital Gains have arisen, or if the trust includes land or property, you will receive the relevant additional forms.

Completing Your Return

There are a number of ways in which you can complete your self-assessment tax return. Many people find it easiest to fill out the form that they are sent and post it back to the Inland Revenue. Latterly, however, the Trust and Estate Tax Return has been digitised. This means that trustees can now complete their return online. If you choose this option, it should be noted that you will not receive paper copies of the Tax Return Guide or Tax Calculation booklets, although these can still be downloaded from the HMRC website.

It is vital that your return is completed and payment made by the deadline. Payment must be made by 31st January following the end of the tax year to which your last return relates. Late payments may lead to a fine, and will attract interest.

Beneficiaries and Self-Assessment

Trustees are not the only individuals who may have to complete a self-assessment tax return as a result of their involvement with a trust. If you are a beneficiary of a trust and annually receive an income from that trust, you will also be required to make a return. This is because the income that you receive cannot be taxed through the Pay As You Earn (PAYE) system, as is the case with most employment income. The forms that you receive will differ from those received by trustees. However, if you have incurred a Capital Gains charge through your status as a beneficiary, you will receive the same Capital Gains form detailed above.

It is important to note that the responsibility to request and complete a self-assessment return lies with the taxpayer. It is impossible for HMRC to know exactly who requires a form; as such, you have a legal responsibility to complete a return if you think you need to. While the process may seem daunting, there is no reason why it should be hugely time-consuming. Furthermore, it is perfectly acceptable to have a third-party accountant complete and send your return for you, although it should be remembered that this service may be relatively expensive.