A trust is a legal arrangement where assets such as money, property or investments are held by trustees on behalf of beneficiaries. The trustees manage the assets according to the terms of the trust for the benefit of those beneficiaries.

Why would I set up a trust?

Trusts are commonly used to protect assets, provide for family members, manage inheritance tax planning, and ensure assets are distributed in a controlled and structured way. They are often used in estate planning to safeguard wealth for future generations.

What types of trusts are there?

There are several types of trusts including bare trusts, life interest trusts, and discretionary trusts. Each type has different rules regarding control, access to assets, and tax treatment depending on the purpose of the trust.

Are trusts subject to tax?

Yes, trusts can be subject to various taxes including income tax, capital gains tax, and inheritance tax depending on the type of trust and how it is structured. Trustees are responsible for ensuring tax obligations are met.

What are trustees responsible for?

Trustees are responsible for managing the trust in accordance with its terms, keeping accurate records, filing tax returns if required, and acting in the best interests of the beneficiaries at all times.

Can trusts help with inheritance tax planning?

Yes, trusts are often used as part of inheritance tax planning to help manage how assets are passed on and potentially reduce tax exposure, depending on how the trust is structured and individual circumstances.

Can I change or close a trust?

In some cases, trusts can be amended or brought to an end, but this depends on the type of trust and its terms. Legal advice is usually required to determine whether changes are possible.

Trusts & Tax

Clear, practical advice on trusts and inheritance tax planning

Trusts and tax planning play an important role in protecting family wealth, providing for loved ones and managing future Inheritance Tax exposure.

Our experienced trust solicitors provide clear, practical guidance on trusts and inheritance tax planning, helping you make informed decisions with confidence. Whether you are planning ahead, dealing with an existing trust or navigating tax obligations, we are here to support you with straightforward advice tailored to your circumstances.

Speak to us for clear guidance on trusts, Inheritance Tax and long-term planning.

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About Trusts and Tax

Trusts and Inheritance Tax explained

Trusts are legal arrangements that allow assets to be held and managed for the benefit of others. They are commonly used as part of Inheritance Tax planning, asset protection and long-term family planning.

Trusts are often created alongside a Will to ensure assets are distributed and managed in line with your wishes. Our Wills and estate planning team works closely with our trust professionals to ensure your arrangements are aligned.

Depending on the type of trust and how it is structured, different tax rules may apply. These can include Inheritance Tax on trusts, Capital Gains Tax on trusts, and Ongoing trust reporting and compliance.

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How we can help with Trusts and Tax Planning

Our trusts and inheritance tax planning services are flexible and tailored to your needs, whether you are planning for the future or managing existing arrangements.

Trust creation and advice

We advise on the most appropriate trust structures based on your goals, including:

Protecting assets for future generations
Providing for vulnerable beneficiaries
Supporting estate and succession planning
Managing exposure to Inheritance Tax

Where trusts are created as part of wider estate planning, we ensure they integrate seamlessly with probate and future administration.

Inheritance Tax planning trusts

Trusts can play a key role in Inheritance Tax planning, but the rules are complex and can change over time.

We provide clear advice on:

Inheritance Tax thresholds and reliefs
The tax implications of placing assets into trust
Periodic and exit charges
How trusts interact with Wills and estate administration

If you are currently administering an estate or expect probate to be required in the future, early planning can reduce complexity later.

Capital Gains Tax on trusts

Capital Gains Tax can arise when assets held in trust are sold, transferred or distributed.

We advise trustees and beneficiaries on:

Capital Gains Tax liabilities on trusts
Available reliefs and exemptions
Reporting obligations
Practical strategies to manage tax exposure

Clear advice at the right time can help avoid unexpected liabilities and protect the value of trust assets.

Additional Guidance

Additional guidance on trusts and tax planning

Types of trusts – discretionary, life interest and bare trusts
Trust registration with HMRC – when registration is required
Trust accounts and tax returns – trustee responsibilities
Trusts and estate planning – working alongside Wills and probate
Trusts and care home fee planning – lawful, compliant advice

Clear, practical advice

We explain trusts and tax matters in plain English, helping you understand your options.

Experienced trust solicitors

Our team regularly advises on trusts, Inheritance Tax and Capital Gains Tax planning.

Joined-up legal support

We work across trusts, Wills, probate and Court of Protection to ensure consistency and clarity.

Ongoing guidance

We support you as circumstances change, helping ensure trusts remain effective and compliant.

Your Questions Asked

FAQs

What is a trust?

A trust is a legal arrangement where assets are held and managed by trustees for the benefit of others. Trusts are commonly used for estate planning, asset protection and Inheritance Tax planning.

Do trusts help reduce Inheritance Tax?

Trusts can form part of an Inheritance Tax planning strategy, but their effectiveness depends on the type of trust, the assets involved and when the trust is created. Professional advice is essential to ensure trusts are used appropriately and lawfully.

Do trusts pay Capital Gains Tax?

Yes. Trusts can be subject to Capital Gains Tax when assets are sold, transferred or distributed. Different allowances and reliefs apply compared to individuals.

Do trusts need to be registered with HMRC?

Many trusts must be registered with HMRC through the Trust Registration Service. Whether registration is required depends on the type of trust and when it was created. Failure to register when required can lead to penalties.

Are trusts only suitable for high-value estates?

No. Trusts can be useful in a wide range of situations, including protecting assets for children, supporting vulnerable beneficiaries and managing family wealth responsibly.

How do trusts work with Wills and probate?

Trusts are often used alongside a Will as part of wider estate planning. When structured correctly, they can help ensure assets are managed and distributed in line with your wishes during probate and beyond.

Can trusts be used for care home fee planning?

Trusts are sometimes discussed in relation to care home fee planning, but this is a complex area. Any planning must be lawful and avoid issues such as deprivation of assets. Specialist advice is strongly recommended.

When should I speak to a trust solicitor?

It is best to seek advice as early as possible, whether you are planning ahead, setting up a trust, or managing an existing trust with tax obligations.