Preparing a set of accounts ― accounting conventions and double entry bookkeeping

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

Overview

This guidance note details the basics of double entry bookkeeping and the accounting conventions used to prepare a simple set of trust accounts. It is not targeted at accountants, but at tax advisers who have little or no accounting experience.

Accounting conventions

Accounting date and period

Most trust accounts are prepared annually to each 5 April to match the tax year. This is not set in stone however, and in the unlikely event of a different date suiting the circumstances better, this could be used. Income would still need to be calculated on a tax year basis for the accounts.

Accruals

The extent to which the trustees adopt the accruals basis of accounting will depend on the nature of the assets and income. It obviously makes sense to prepare the accounts on the same basis that is used for tax purposes to avoid time consuming tax adjustments.

Rental income is calculated on an accruals basis. See the Property income guidance note. Remember

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Trusts and Inheritance Tax

Transfer of assets to beneficiaries ― legal, administration and tax issues

Transfer of assets to beneficiaries ― legal, administration and tax issuesThis guidance note outlines how assets are transferred to beneficiaries and the tax consequences that flow from the transfer. Whether a payment is income or capital is discussed in the Payments to trust beneficiaries guidance

14 Jul 2020 13:52 | Produced by Tolley Read more

Owner-Managed Businesses

Class 4 national insurance contributions

Class 4 national insurance contributionsWhat is Class 4 NIC?Class 2 and Class 4 national insurance contributions (NIC) are paid by self-employed individuals and partners in a partnership on their profits arising within the UK. This guidance note considers Class 4 contributions. For Class 2

14 Jul 2020 11:13 | Produced by Tolley Read more

Employment Tax

Loans written off

Loans written offCompanies sometimes provide directors, employees or shareholders with low interest or interest-free loans either as part of the reward package or on special occasions to help the individual meet significant expenditure. The employment income implications of these loans are discussed

14 Jul 2020 12:11 | Produced by Tolley Read more

��Ƶ