What are the tax implications?

If I put my money in a trust

You will be putting money in a trust because of the following reasons:

1. You want your hard earned money to be given to your children when you die and you do not want them to use it irresponsibly and therefore retain some control over your wealth.
2. You want to reduce the amount of inheritance tax by reducing the amount of your net estate.
3. You want your children to be benefitted from your wealth but at the same time you do not want to reduce their chances of getting a financial aid (such as student loan etc.)

When you put money in a trust it no longer belongs to you. So for example, if there is an income generating asset in a trust such as shares, the income coming from the shares won't belong to you and therefore you the creator of the trust (the settlor) won't have to pay any income tax.

INCOME TAX

There are different types of trust and each trust have different set of rules.

In case of a discretionary trust, it will be the responsibility of a trustee to pay the income tax. If there are more than one trustee then one trustee can be elected and made responsible for paying taxes. However, in case the trust fails to pay the taxes, all trustee can be held responsible for not paying taxes.

A trustee needs to register themselves with HMRC when they are liable to pay the taxes. All the gains and the income should be reported in the annual Self-Assessment tax return and reported to HMRC. If you think you need an accountant for this you can call us at 020 8127 0728 or drop a message here and we will get back to you.

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IS INHERITANCE TAX PAID ON THE ASSETS IN A TRUST?

For different types of trusts there are different inheritance tax rules. For discretionary trusts inheritance tax will be paid on the following occasions:

1. 20% inheritance tax will be charges on the value of the asset which is in excess of the personal allowance.
2. After every 10 years the assets in a trust needs to be revalued and 6% IHT will need to be paid on the revalued assets after deducting the IHT allowance.
3. If the assets are removed from the trust 6% IHT will need to be paid on the exit.

WHEN A CAPITAL GAINS TAX NEEDS TO BE PAID?

A capital gains tax needs to be paid by the settlor when the assets are transferred in the trust.

When the trustee makes a gain on the disposal of an asset on behalf of the beneficiary. However, no CGT will be paid on the disposals or transfers of assets help in the 'Bare trust' and 'Interest in possession trusts'.

Capital Gains tax will also be paid by the trustee when the beneficiary becomes entitled to the asset. The CGT will be paid based on the market value. The calculations of CGT can be complicated, it might be worth hiring an accountant and we at Taxaccolega can help you explain the tax implications of your disposals and expenses and the reliefs you can use to reduce your CGT bill.

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ID Verification Form For Companies House

From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House.

Companies House will issue a personal code to PSCs.
Taxaccolega (ACSP) can help collect data and assist.
Please answer the questions and upload documents.

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Contact Details

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Role in the Company *

I am a Director I am a Person with Significant Control (PSC)

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1.1 These Terms & Conditions apply to the collection and processing of personal data and identity documents required under the Economic Crime and Corporate Transparency Act 2023 and Companies House identity verification rules effective from 18 November 2025.
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2. Client Responsibilities
2.1 You confirm that all information and documents you provide are true, accurate, complete, and current.
2.2 You accept full responsibility for any false, misleading, or incomplete information supplied, and acknowledge that this may lead to penalties or rejection of your verification by Companies House.
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3.1 We act solely as an intermediary in submitting your information to Companies House.
3.2 We do not guarantee the acceptance, speed, or outcome of any identity verification by Companies House. The final decision rests solely with Companies House.
3.3 We shall not be liable for any loss, delay, penalty, or consequence arising from:
* (a) inaccurate or incomplete information provided by you,
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Tax Implications of Putting Money in a Trust – UK Guide