Trust Administration

Setting up a trust is only the beginning. Trusts have real, ongoing legal and tax obligations, and trustees are personally responsible for meeting them. Squiggle provides personalised trust administration support so your trust stays compliant and does what it was designed to do.

A trust is, in simple terms, a legal arrangement where one person (the "settlor", the person who puts the assets in) hands ownership of an asset to one or more "trustees" (the people who hold and manage it), for the benefit of named or identified "beneficiaries" (the people who benefit from it). Once created, a trust is a continuing legal entity. It does not run itself.

This factsheet explains each of the main administration responsibilities trustees face, what can go wrong if they are neglected, and how Squiggle supports trustees at every stage.

Trust registration (TRS)

Almost all UK express trusts must be registered with HMRC's Trust Registration Service (TRS), whether or not they pay any tax. This requirement was extended significantly in recent years and now captures many trusts that previously flew under the radar.

Key points:

• Almost all UK express trusts must register, whether or not they pay any tax.
• New trusts must be registered within 90 days of being created, or of becoming registrable.
• Changes to trustees, beneficiaries or their details must be reported within 90 days of the change.
• A Will trust that takes assets from the estate and is wound up within two years of the death is excluded and does not need to register, unless it becomes liable to tax.
• Other exclusions include co-ownership trusts where two or more people hold property as tenants in common, and trusts holding life policies that pay out only on death, illness or disability.
• HMRC does not issue automatic penalties for late registration. It normally writes to you first. A penalty of up to £5,000 may be charged where trustees keep failing to register after a warning.

Registration requires details of the trust's settlor, trustees and beneficiaries. The process differs depending on the type of trust and the assets it holds: a discretionary trust (where trustees have broad powers to decide how and when to use assets for beneficiaries) has different requirements from a bare trust (the simplest form, where the beneficiary's entitlement is fixed and immediate). We guide trustees through registration and all subsequent updates so nothing is missed.

What trustees need to provide

To register, trustees will typically need to gather:

• The name of the trust and the date it was created.
• Whether it is an express trust, and whether it holds UK land or property.
• For the lead trustee: name, date of birth, National Insurance number, address, telephone number, country of residence and nationality.
• For every other trustee, the settlor and any protector: name, date of birth, country of residence and nationality.
• Details of every named beneficiary, and a description of any class of beneficiaries.
• For taxable trusts: the type of trust, its Unique Taxpayer Reference if it has one, and the value of the assets it holds.

If any of this information changes after registration, for example, a new trustee is appointed, a beneficiary is added or their address changes, the register must be updated within 90 days. Keeping a record of all such changes as they happen makes this much easier.

Trust bank accounts

A trust needs somewhere to hold its money. This sounds simple, but in practice it has become significantly harder over recent years: many high-street banks have quietly withdrawn from trust banking, and those that remain often impose lengthy delays and complex requirements.

Opening a trust account is not like opening a personal one. Not every high street bank offers them, and some that do will only take a trust on in limited circumstances, so you may need to approach several before one says yes. Expect more paperwork, more identity checks and a longer wait than you would get on a personal account.

It is worth comparing what is on offer before you apply. Look at whether the account is a current account or a deposit account, how many trustees can be named and how they authorise payments, what charges apply, what interest is paid, and how the bank handles a change of trustee later on. Opening an account is always at the bank's discretion.

We prepare the documentation the bank asks for, make sure the account is set up correctly and check that the right people have access. We are happy to talk through the practical points to look for, but the choice of provider is yours and we do not recommend particular banks.

Why a dedicated trust account matters

Mixing trust money with personal money is one of the most common, and most serious, mistakes trustees make. Trustees hold assets on behalf of beneficiaries, not for themselves, and keeping the money clearly separate is a basic requirement of trust law. A dedicated trust bank account:

• keeps a clean line between trust money and personal money, which is a basic trustee duty
• gives you one statement trail for the trust's accounts and any tax return
• makes it obvious to a bank, a council or HMRC whose money is whose
• protects trustees personally if the trust's affairs are ever questioned
• makes life far easier for whoever takes over as trustee later

Trust amendments

Life changes, and so does the law. From time to time a trust may need to be updated to reflect new circumstances. Common reasons for amendments include:

• appointing a new trustee, or a trustee retiring
• adding or removing beneficiaries as the family changes
• a beneficiary marrying, divorcing, becoming vulnerable or dying
• assets being sold, replaced or added to the trust
• a change in the tax rules that makes the existing terms inefficient
• correcting an error or an ambiguity in the original deed

Trust law is technical and amendments must be done properly to be effective. An informal agreement between family members, or a letter of wishes that tries to override the trust deed, is not the same as a properly executed amendment. Our team helps trustees and settlors make informed decisions and handles the paperwork correctly.

A note on trustees living abroad

If a trustee moves overseas, this can complicate the tax status of the trust. A trust can become non-resident for tax purposes if all the trustees are non-UK resident, and with a mixture of UK and overseas trustees the position depends on the settlor's status. Even one trustee moving abroad can change the trust's tax residence, so always take advice first. If any trustee is thinking of living abroad, even temporarily, it is worth speaking to us before they go.

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Ongoing tax compliance

Trustees of discretionary and similar "relevant property" trusts (where the trust assets are not immediately and unconditionally owned by a beneficiary) need to be aware of a set of charges that can arise over the life of the trust.

• Entry charge. 20% Inheritance Tax on the value put into the trust above your available nil rate band (£325,000, frozen to 5 April 2031). Nothing to pay if you stay within the allowance.
• Ten-year anniversary charge. Up to 6% of the value above the trust's available nil rate band, calculated on each tenth anniversary.
• Exit charge. A proportionate charge when capital leaves the trust, based on the rate at the last anniversary and the number of complete quarters since then.
• Income Tax. Discretionary and accumulation trusts pay 45% on most income and 39.35% on dividends, with a tax-free amount of normally £500 (divided if the settlor has more than one such trust, with a floor of £100 where there are five or more). Interest in possession trusts pay 20% on most income and 10.75% on dividends for 2026 to 2027.
• Capital Gains Tax. Trustees have an annual exempt amount of £1,500 for 2026 to 2027, or £3,000 where a beneficiary is vulnerable. Gains on UK residential property must be reported and paid within 60 days of completion.
• Trust and Estate Tax Return (SA900) where a return is required, filed by 31 January after the end of the tax year if filed online.

We help trustees understand which of these apply to their particular trust and when, and we work with tax specialists where returns need to be completed or specialist advice is needed.

Step-by-step: the first year of a new trust

To make this more concrete, here is what the first twelve months of running a new trust typically involves:

1. Months 1 to 2. Sign and date the deed. List exactly what the trust holds. Agree who the lead trustee is and how decisions will be made.
2. Within 90 days. Register with HMRC's Trust Registration Service and download the proof of registration. Keep it: banks and councils ask for it.
3. Months 2 to 4. Open the trust bank account and move the money into it. Nothing should sit in a personal account, even briefly.
4. Months 3 to 6. Formally transfer any property, shares or investments into the trustees' names. Until this is done the trust holds nothing.
5. Ongoing. Minute every trustee decision, especially anything paid out to a beneficiary. A short signed note at the time beats a long explanation later.
6. Months 10 to 12. Gather the income and gains figures, decide whether a return is due, and file it. Then diarise two dates: the annual review, and the first ten-year anniversary.

Common mistakes trustees make

Not registering on time. The 90-day deadline catches many trustees by surprise. Will trusts are a particular trap in both directions: one that takes assets from the estate and is wound up within two years of the death does not need registering at all, while one that runs on past that point does, and by then nobody is watching the calendar.

Using a personal account. Putting trust money into a personal bank account, even temporarily, is a breach of trustee duty and creates accounting headaches that are difficult to unwind.

Ignoring ten-year anniversary charges. Some trustees are unaware that these charges exist until an anniversary is approaching. By then, it may be too late to put sensible planning in place. The first ten-year anniversary should go in the diary from the day the trust is created.

Failing to keep minutes of trustee decisions. Trustees should document significant decisions, particularly any distributions to beneficiaries, in writing. If the trust is ever challenged, a clear paper trail is invaluable.

Not telling HMRC about changes. Changes to trustees or beneficiaries need to be reported on the TRS within 90 days. Many trustees do not realise this. HMRC does not issue automatic penalties, but where trustees keep failing to register or update after a warning letter, a penalty of up to £5,000 may be charged.

Appointing a trustee who then moves abroad. This can change the tax residence of the whole trust without anyone noticing. Always take advice before any trustee becomes non-UK resident.

A hypothetical example

Imagine Janet sets up a discretionary trust in July 2024, naming her two adult children as beneficiaries and appointing her brother David as co-trustee alongside herself. The trust holds a sum of money she has saved over many years.

Within 90 days, Janet and David register the trust on the TRS and open a trust bank account, with guidance from Squiggle. During the 2025 to 2026 tax year the trust receives just over £900 of interest, which is above the £500 tax-free amount, so a Trust and Estate Tax Return is needed and Squiggle helps them file it. In a year where the interest stays under £500, no return is due and we tell them so rather than charging for one. In 2026, David's daughter is born and Janet wants to add her as a beneficiary; Squiggle drafts a deed of appointment adding her, and the TRS is updated within the required 90 days. Janet notes in her diary that the first ten-year anniversary falls in July 2034 and flags it as a date to review the trust's position with Squiggle well in advance.

The trust is not complicated to run, but it takes attention to detail and awareness of the deadlines. That is exactly what Squiggle's ongoing administration support provides.

This is a hypothetical example for illustration only.

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Trust planning should always follow personal advice.

This factsheet is general information for England and Wales, not legal, tax or financial advice. Last reviewed: August 2026.