Coverage: United Kingdom Theme: The Economy Released: 18 January 2018 Next Release: September 2018 Frequency of release: Annually Media contact: HMRC Press Office 03000 585 024 Statistical contacts: Andrew Beacom Tel: 03000 593 579 [email protected]David McDonald Tel: 03000 561 367 [email protected]KAI Personal Taxes HM Revenue and Customs 100 Parliament Street London SW1A 2BQ Website: https://www.gov.uk/government/co llections/trusts-statistics HM Revenue and Customs KAI Personal Tax Trusts Statistics Number of trusts and estates making self-assessment returns, total tax paid by trusts and estates, total income by type of trust 2011-12 to 2015-16
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Coverage: United Kingdom Theme: The Economy Released: 18 January 2018 Next Release: September 2018 Frequency of release: Annually Media contact: HMRC Press Office 03000 585 024 Statistical contacts: Andrew Beacom Tel: 03000 593 579 [email protected] David McDonald Tel: 03000 561 367 [email protected] KAI Personal Taxes HM Revenue and Customs 100 Parliament Street London SW1A 2BQ Website: https://www.gov.uk/government/collections/trusts-statistics
HM Revenue and Customs
KAI Personal Tax
Trusts Statistics
Number of trusts and estates making self-assessment returns,
total tax paid by trusts and estates, total income by type of trust
Data quality ......................................................................................................... 25
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Key findings in this release1 The number of trusts and estates which are required to complete a full Self Assessment (SA) return has fallen to 158,500 in 2015-16 from 164,500 in 2014-15. In the years covered by this publication the trend in the total number of trusts and estates has been declining. The decrease in the number of trusts and estates covered by these statistics may be a result of gradual changes in behaviour following an increase in the trust rate in 2004, which could make trusts less attractive. In addition, in 2010-11 the trust rate was increased to 50% (from 40%) and the dividend trust rate to 42.5% (from 32.5%). For 2013-14 onwards, the trust rate and the dividend trust rate fell to 45% and 37.5% respectively. Total income reported by trusts and estates rose by 16% from 2014-15 to £2,865 million in 2015-16. This compares with £2,095 million in 2011-12, when income reported by trusts and estates was at the lowest level for the period covered by this publication. Capital Gains Tax (CGT) liabilities for trusts decreased by £195 million between 2014-15 and 2015-16, to £610 million. Tax payable arising from Capital Gains has been volatile in recent years due to changes in taxation, associated taxpayer behaviour and the economic environment. About these statistics This is a National Statistics publication produced by HM Revenue and Customs showing the number of trusts and estates which make a full Self Assessment return. Their income and tax paid is based on receipts information from HMRC’s administrative systems. Figures are updated annually and were last published in January 2016. Statistics for 2015-16 are included for the first time in the current publication. Figures for previous years have been revised due to availability of further data; see section 1.8 for further information about these revisions. This publication contains two tables: 13.1 and 13.2. In these tables statistics are presented on an annual basis and cover years 2011-12 to 2015-16 and contain: 13.1) Number of trusts and estates which make a full SA return, income of trusts by
type of income and type of trust, and tax from trusts by type of trust and type of tax
13.2) Number of trusts and their income, broken down by income band
1 All numbers presented in this statistical release refer to trusts and estates that are required to complete a full self-
assessment return. Trusts and estates that are not required to complete a full self-assessment are not included in
these figures.
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Questions and feedback
HMRC are committed to providing impartial quality statistics that meet our users’ needs. We encourage our users to contact us so we can improve our statistics and identify gaps in them. If you would like to comment on these statistics or have any queries about the statistics please contact the statistician named at the start of this document.
Alternatively we would welcome any views you have using the link to the feedback form below. We will undertake to review user comments on a quarterly basis and use this information to influence the development of our statistics. We will summarise and publish user comments at regular intervals.
A trust is a legal arrangement which involves someone (the ‘settlor’) transferring their assets (the ‘trust property’) to one or more individuals or companies, or a combination of these (the ‘trustee’) who is made legally responsible for the assets. The trustee holds these assets for the benefit of one or more persons (the ‘beneficiaries’) identified individually or collectively by the settlor. The settlor’s wishes for the trust are usually written in their will or given in a legal document called the ‘trust deed’. A trust can be established during the lifetime of the settlor, upon their death in the terms of their will or through operation of the intestacy laws (where no will has been made).
The assets put (‘settled’) into a trust need not be money, they can also include land, buildings, shares, and other assets. The trust property may produce income such as interest, dividends or rental income, or gains if the assets are sold. The way the income is taxed will depend on the type of trust and type of income.
There are a number of reasons for setting up trusts, including:
To control and protect family assets
When someone is too young to handle their affairs
When someone cannot handle their affairs because they are incapacitated
To pass on money or property while the settlor is still alive
To pass on money or assets when the settlor dies, under the terms of their will
Under the rules of inheritance that apply when someone dies without leaving a valid will (England and Wales only)
1.2 Types of trust These statistics mainly cover two types of UK resident trusts which make Self Assessment returns, these are:
Interest in possession (IIP) trusts
Discretionary/accumulation trusts They also cover a limited number of overseas trusts with UK tax liability and specific non-family trusts such as unauthorised unit trusts and employee benefit trusts. They do not cover specialist vehicles, such as Venture Capital Trusts or Authorised Unit Trusts, which are treated as companies. For more information about Venture Capital Trusts and Authorised Unit Trusts, refer to the HMRC website:
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http://www.hmrc.gov.uk/manuals/vcmmanual/index.htm http://www.hmrc.gov.uk/cisc/auth_fund-trust.htm For further information about all types of trusts see the gov.uk website Trusts pages: https://www.gov.uk/personal-tax/trusts 1.2.1 Interest in possession trusts An ‘interest in possession’ trust is one where the beneficiary is entitled to trust income as it arises. The trustee must pass on all the income received, less any trustees’ expenses, to the beneficiary. The beneficiary who receives income (the ‘income beneficiary’) often doesn’t have any rights over the capital held in such a trust. The capital will normally pass to a different beneficiary or beneficiaries in the future. Depending on the terms of the trust, the trustees might have the power to pay capital to a beneficiary even though that beneficiary only has a right to receive income.
1.2.2 Discretionary/accumulation trusts A discretionary trust is one where trustees have ‘discretion’ about how to use the income of the trust, and sometimes the capital. Trustees may be able to decide:
How much income or capital is paid out
Which beneficiaries to make payments to
How often the payments are made
Discretionary trusts can be used to provide income or capital for beneficiaries who are not capable or responsible enough to deal with money by themselves, or perhaps to cover a future need that may not yet be known (e.g. when one beneficiary requires more financial assistance than other beneficiaries at a particular point in time). The extent of the trustees’ discretion depends on the terms of the trust deed. Most discretionary trusts will also have a power to accumulate income, that is, instead of paying it out to beneficiaries, the trustees may add it to trust capital. More unusually, a trust may require the trustees to accumulate all income and not pay it out. Such an ‘accumulation’ trust can be used to build capital. Discretionary/accumulation trusts are taxed on income at the special trust rates. 1.2.3 Mixed trusts A mixed trust is one where the income is taxable on more than one basis. This may be because there are distinct different parts to the trust fund so that income is always held in different trusts. Alternatively changes to the trust may occur depending on the beneficiaries’ circumstances. For example, two children benefit from a discretionary/accumulation trust. According to the terms of the trust deed, the beneficiaries are entitled to a share of the trust income when they reach 18. The first
child reaches 18 while the second is still 14. The part of the trust benefiting the first child becomes an interest in possession trust, while the part that benefits the second child remains a discretionary/accumulation trust until they reach 18. In other words, when the first child reaches 18 the trust becomes a mixed trust. 1.3 Income tax payable on income of trusts Trustees are responsible for declaring and paying income tax on income received by the trust. This is declared each year on a Trust and Estate Tax Return, part of the Self Assessment process. The beneficiary of a trust must declare any trust income they receive or are entitled to on their personal tax return, non SA beneficiaries may reclaim tax using form R40. As a beneficiary it's important to understand the type of trust, as the tax rules vary according to the trust type. Guidance for beneficiaries on paying and reclaiming tax on trusts is available on the gov.uk website: https://www.gov.uk/trusts-taxes/beneficiaries-paying-and-reclaiming-tax-on-trusts The income tax payable on trusts is dependent on the type of trust. Tax treatment broadly falls into two categories: the taxation of interest in possession trusts, and taxation of discretionary/accumulation trusts. 1.3.1 Income tax payable on interest in possession trusts: There are different tax rates depending on the type of income. The table below shows applicable tax rates in each year covered in this publication.
Type of income Tax rate in tax years 2011-12 to 2015-16
Rent, trading, savings
20% (basic rate)
UK dividends (e.g. income from stocks and shares)
10% (dividend ordinary rate)
In some instances special trust rates of tax may apply. See the gov.uk website for further information: https://www.gov.uk/trusts-taxes
1.3.2 Income tax payable on discretionary/accumulation trusts: Income arising to the trustees of discretionary / accumulation trusts is taxed at the special trust rates apart from the first £1,000 of trust income which is known as the ‘standard rate band’. If a settlor has more than one trust the standard rate band is divided by the number of trusts the settlor has. The tables below show applicable tax rates in each year covered in this publication. Trust income up to £1,000 - these rates apply to discretionary / accumulation trusts2 Type of income Tax rate in tax years 2011-12 to 2015-16
Rent, trading, savings
20% (basic rate)
UK dividends (e.g. income from stocks and shares)
10% (dividend ordinary rate)
Trust income over £1,000 - these rates apply to discretionary / accumulation trusts Type of income Tax rate in tax years
2011-12 to 2012-13 Tax rate in tax years 2013-14 to 2015-16
Rent, trading, savings
50% (trust rate) 45% (trust rate)
UK dividends 42.5% (dividend trust rate)
37.5% (dividend trust rate)
In mixed trusts, the income from each part of the trust will be taxed under the rules that apply to that type of trust. Budget 2009 announced the introduction of a new additional higher rate of income tax of 50% and a 42.5% dividend additional rate for income above £1,000 with effect from 2010-11 onwards. As a consequence of this change, from 2010-11 onwards the trust rate of tax was increased to 50% (from 40%) and the dividend trust rate to 42.5% (from 32.5%). For 2013-14, the trust rate and the dividend trust rate fell to 45% and 37.5% respectively. 1.4 Capital gains tax and trusts Capital Gains Tax (CGT) is a tax on the gain in the value of an asset. A trust may have to pay CGT if assets are sold, given away or exchanged and have gone up in value since being put into the trust. The trust will only have to pay the tax if the assets have increased in value above a certain allowance, the ‘annual exempt amount’. For more information about trusts and CGT see the gov.uk website: https://www.gov.uk/trusts-taxes/trusts-and-capital-gains-tax
2 May also apply to IIP trusts if the trustees receive deemed income which is taxable at the special trust rates
There is no difference between tax treatment for interest in possession and other trusts. The trust rate in each year covered by this publication is shown in the table below.
Tax year Capital gains trust tax rate
2008-09 18%
2009-10 18%
2010-11 18%
2010-113 28%
2011-12 28%
2012-13 28%
2013-14 28%
2014-15 28%
2015-16 28%
1.5 What information does this publication cover?
The statistics on the income and capital gains of trusts and estates are drawn from data captured from all those trusts and estates which complete the Trust and Estate Self Assessment tax return (SA900). Trusts and estates which hold only non-income producing assets will not in general be part of the Self Assessment regime and therefore will not be covered by the tables. The statistics are derived from data captured by the start of December 2017 and should cover the majority of returns expected for 2015-16 and previous years. Tables 13.1 and 13.2 identify interest in possession and discretionary/accumulation trusts separately because of differences in tax treatment. Table 13.1 does not provide a detailed analysis of the estates and charities which make Self Assessment returns; although the table does indicate the total number of returns from this group (categorised as ‘other’ trusts and estates). Table 13.1 provides statistics on the numbers of trusts and estates making Self Assessment returns in each year since 2011-12 It also provides statistics on the total income and chargeable gains declared by these trusts and estates, by type of income and type of trust. Finally the table shows the income tax and capital gains tax paid, split by type of trust. Amounts of chargeable gains and amounts of capital gains tax are also published in table 14.2 of the Capital Gains Tax Statistics. There are some differences between figures published in table 13.1 and figures published in table 14.2. Differences in chargeable gains figures relate to coverage. Table 14.2 shows gains for all trusts and estates and table 13.1 only shows chargeable gains for interest in possession and trusts paying tax at the trust rate. Differences in capital gains tax figures relate to the timing of production of statistics, and availability of later data. A link to table 14.2 is provided below: https://www.gov.uk/government/statistics/capital-gains-tax-statistics 3 From June 2010 the capital gains tax rate is increased to 28%. For more information on capital gains
tax rates please see https://www.gov.uk/government/collections/capital-gains-tax-statistics
Table 13.2 shows a breakdown by income band of the numbers of trusts and estates making self assessment returns (where income bands are defined as total income excluding capital gains). The table also shows the distribution of total income across trusts and estates in different income bands. 1.6 Who might be interested in this publication? These tables are likely to be of interest to policy makers in government, academics, think tanks and other research bodies, and journalists. They would be of use to individuals or organisations interested in the number of trusts and estates, income from trusts and estates as well as tax raised from trusts and estates in the latest year for which data is available, and trends over time.
1.7 Rounding The amounts shown in the tables have been rounded to the nearest £5 million and numbers have been rounded to the nearest 500 (with the exception of the category of “less than £0” in table 13.2). 1.8 Revisions strategy and revisions made in this publication This publication includes figures for 2015-16 for the first time plus revised figures for earlier years back to 2011-12, reflecting any Self Assessment tax returns for these years received since statistics were last published and changes to the way the data has been extracted from Self Assessment administrative systems. The table below shows changes since last publication. Numbers may not sum due to rounding.
2011-12 2012-13 2013-14 2014-15
Year on year increase
Number of trusts and estates
0 500 500 2,500
Percentage increase 0.0% 0.3% 0.3% 1.5%
Year on year increase (£ million)
Total income tax
0 0 0 5
Percentage increase 0.0% 0.0% 0.0% 0.7%
Year on year increase (£ million)
Total capital gains tax
0 0 5 5
Percentage increase 0.0% 0.0% 0.9% 0.6%
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2. Commentary
2.1 Summary of key statistics
Latest data shows that 158,500 trusts and estates made Self Assessment returns for tax year 2015-16, around 6,000 fewer than in 2014-15.
Income of interest in possession trusts and trusts paying income tax at the special trust rates in 2015-16 totalled £2,680 million, 17% more than in the previous year.
Total income tax payable on income of trusts and estates in 2015-16 was £780 million. Of this, £175 million arose from interest in possession trusts and £570 million from trusts taxable at the special trust rates. The remainder arose from “Other” trusts, such as charities and non-trust structures, namely estates.
For interest in possession trusts, chargeable gains in 2015-16 were £950 million, representing a 49% fall from 2014-15; chargeable gains for trusts paying the special trust rates were £1,255 million in 2015-16, 35% higher than in 2014-15.
CGT payable on gains made by trusts and estates was £610 million in 2015-16, 24% lower than in 2014-15.
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2.2 Overall trends Figure 1: Total number of trusts and estates
Figure 1 shows that the total number of trusts and estates has fallen again in 2015-16 after a small upturn in 2013-14. This continues the long term downward trend. In 2004-05 there were around 220,000 trusts and estates in the UK, which has fallen to around 158,500 in 2015-16 representing a drop of 28% over the past 11 years. There are several reasons why this trend is likely to have occurred, which are listed below. Some of these changes happened prior to the years covered by these statistics but there may have been a gradual change in behaviour which would mean the effects of this change would still be seen in the current statistics.
In 2004 the trust rate was increased from 34% to 40%, and in 2010 it was again increased from 40% to 50%; this may have made trusts less attractive
In 2013 the special tax rate for trusts was decreased to 45% partially reversing the increase to 50% in 2010.
From 6 April 2005 the standard rate band was introduced, the size of the band was £500 for 2005-06 and £1,000 from 2006-07. Those trusts with income consistently below £1,000 no longer needed to complete a Self Assessment tax return every year, if tax had been paid at source e.g bank interest. This policy measure automatically excluded a large number of trusts from the data.
The number of interest in possession trusts have seen a decline likely due to inheritance tax policy which applied an exit charge to new interest in possession trusts, in addition to making them subject to ten year anniversary charges (thus making them less attractive).
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Figure 2: Number of trusts, and income of trusts paying tax at the special trust rates by band of income in 2015-16
Figure 2 shows the number of and income of trusts paying tax at the special trust rates. There were around 91,000 trusts paying income tax at the special trust rates in 2015-16. 39% had income of less than £1,000 which is similar to 2014-15. Only 3,000 trusts had income of more than £100,000 in 2015-16. Total income of trusts paying income tax at the special trust rates was £1,550 million in 2015-16 up by around 15% compared with 2014-15. Trusts with income of more than £100,000 accounted for around 63% of the total income compared with 58% in 2014-15.
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Figure 3: Income in possession trusts and income of these trusts by income band in 2015-16
There were 53,500 interest in possession trusts in 2015-16. Figure 3 shows the distribution of these trusts by band of income. Around 49% of interest in possession trusts had income of less than £1,000, whilst around 2,500 trusts had income of more than £100,000.
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Figure 4: Income of interest in possession trusts by type of income
Figure 4 shows the level of income from interest in possession trusts by type of income. Total income increased year on year to 2013-14 before falling in 2014-15; it returned to growth in 2015-16. The total income trend had been driven by a positive underlying trend in all forms of income with the exception of interest income which fell in 2015-16. The growth rate across the four years from 2011-12 to 2015-16 for total income was around 35% which was primarily driven by the 78% growth rate of dividend income during the same four year period.
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Figure 5: Income of trusts taxable at the special tax rates by type of income
Figure 5 shows the level of income for trusts paying income tax at the special rates. In 2015-16 the total income of trusts taxable at the special trust rates by type of income increased by around 15% from the previous year and by around 39% from 2011-12. This trend was mainly driven by sharp growth in dividend income which increased by around 75% during the same four year period. Between 2010-11 and 2012-13 there was the introduction of the new additional higher rate of income tax of 50% (up from 40%) and a 42.5% dividend additional rate (up from 32.5%) for income above £1,000. In 2013-14 the income tax rate was reduced back to 45% and the dividend additional rate was reduced back to 37.5%.
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Figure 6: Tax payable on income of trusts
Figure 6 shows tax payable on income of trusts, split between different types of trust. Total income tax continues to increase, reaching £780 million in 2015-16, an increase of 21% compared with 2011-12. This increase was largely driven by trusts paying income tax at the special trust rates.
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Figure 7: Number of interest in possession trusts by income band
Figure 7 shows the number of interest in possession trusts in each income band. Formerly, the majority of these trusts had income of less than £1,000, but this has changed in recent years; an upturn in 2013-14 is likely to be due to the increase in numbers required to make a full Self Assessment return. The number of trusts with income over £100,000 fell sharply between 2009-10 and 2011-12, but has since followed an upward trend rising to around 2,500 in 2015-16.
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Figure 8: Number of trusts taxable at special trust rates of income tax by income band
Figure 8 shows the number of trusts paying income tax at the special trust rates by income band. There has been an overall decline in the number of trusts with income of less than £1,000 across the 5 year period to 2015-16. In general, there has been a fall in numbers across the 5 years to 2015-16 for bands below £10,000 and an increase in numbers for bands above this level across the same period, although the overall trend remains downward.
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TrustsTrusts and Estates which make a full Self Assessment return
Numbers and Income 2011-12 to 2015-16 1 2 3
Numbers: actual 3 ; Amounts: £ million 3
Band of total income (£) 2011-12 2012-13 2013-14 2014-15 2015-16 2011-12 2012-13 2013-14 2014-15 2015-16
Interest in possession trusts
less than 0 <500 <500 <500 <500 <500 -35 -15 -15 -30 -15
up to 1,000 30,500 27,500 29,500 27,000 26,000 5 5 5 5 5
1. Because some returns are filed late, statistics for the most recent year will be marginally less complete than for earlier years.
2. This table includes all trusts and estates making a Self Assessment return. Trusts which do not make a Self Assessment return are not captured in the table.
3. Numbers are given to the nearest 500 and amounts are given to the nearest £5 million, which may cause small discrepancies in to tals.
4. The standard rate band was introduced from 6 April 2005. Those trusts with income consistently below this level and where tax has been deducted at source no longer
need to complete a Self Assessment tax return every year. The size of the band was £500 for 2005/06 and £1,000 for 2006/07.
13.2
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Annex A: Data sources, methodology and data quality
Data sources
Statistics are compiled using information on Self Assessment tax returns. This information is contained on HMRC’s departmental administrative system CESA (Computerised Environment for Self Assessment). This is an administrative data source; no sampling of data is required in order to produce these statistics. A data mart is created each month containing all information on CESA at that time. The data mart created at the start of December 2017 has been used to produce these statistics. The date for submitting Self Assessment returns to HMRC depends on the way in which returns are sent. Returns completed on paper are due for return on 31 October following the end of the relevant tax year, and returns completed online are due on 31 January following the end of the tax year. Information from the tax return is not included within the trusts statistics until the year after returns are due. This means that the bulk of tax returns are available for all years for which statistics are published. However, returns continue to be received or updated after the return due dates so figures in all years are liable to change when statistics are updated. Trusts that do not require completion of a Self Assessment return are not captured within these statistics. Methodology The trust statistics are compiled using aggregated information collected in the trust and estates pages of the Self Assessment return. The 2015-16 return is available on line here: https://www.gov.uk/government/publications/self-assessment-trust-and-estate-tax-return-sa900 The count of trusts is based on the number of completed tax returns on the CESA data mart. Income figures are collated from information supplied on tax returns. The tax calculation is applied to information on tax returns and tax figures are derived by selecting stages from the calculation. The 2015-16 tax calculation guide is available online here: https://www.gov.uk/government/publications/self-assessment-trust-and-estate-tax-return-sa900 The tax return and tax calculation will vary from year to year.
Data quality The quality of these statistics is assessed against the six European Statistical Service dimensions of quality developed by Eurostat to ensure they are appropriate for publication. A summary of adherence with each dimension is published here: https://www.gov.uk/government/statistics/quality-report-trusts
