A personal representative deals with a dead person’s estate until the administration is complete; a trustee holds property under a continuing trust. The same people often fill both roles under one will, but the capacity they are acting in decides the income tax rates, the capital gains tax allowance, the returns and registrations, and the inheritance tax they are liable for.

Who is a personal representative and who is a trustee?

HMRC’s Trusts, Settlements and Estates Manual at TSEM7354 describes two kinds of personal representative: executors, appointed by a will, and administrators, appointed by the court where there is no will or no executor willing to act. TSEM7356 sets out their job: identify and realise the assets, pay the debts, taxes and legacies, and then pay out the residue, which sometimes means setting up a trust.

Trustees are the people who hold property under a trust, whether created by a lifetime deed, by a will or by statute. The Capital Gains Manual at CG31100 notes that wills commonly appoint the same people as executors and trustees, and that on an intestacy the administrators are also the trustees of the statutory trust until others are appointed. Our page on accountants acting as executors and trustees covers the professional side of taking on either role.

How do you tell which capacity someone is acting in?

CG31100 tells HMRC officers to look at whether residue has been ascertained. Acts before that point are treated as done by personal representatives unless there is specific evidence that they assented to the assets vesting in themselves as trustees. Acts after that point are, except in unusual cases, done as trustees, because beneficial ownership has vested in them as legatees. Our page on when an estate becomes a trust explains how that date is fixed.

How do the tax rates and allowances compare?

Point Personal representatives Trustees
Income tax on dividends, 2026 to 2027 10.75% 10.75% for an interest in possession trust; 39.35% for a discretionary trust
Income tax on other income 20% 20% for an interest in possession trust; 45% for a discretionary trust
Tax free income amount £500 a year, all of it taxed if exceeded £500, divided between the settlor’s discretionary trusts, minimum £100
Capital gains tax rate 24% 24%
Annual exempt amount, 2026 to 2027 £3,000, for the tax year of death and the next two years only £1,500, or £3,000 where a beneficiary is vulnerable
Statement to beneficiaries R185 (Estate Income) R185 (Trust Income), or R185 (Settlor)

Personal representatives never pay the higher or additional rates because those apply only to individuals (TSEM7356). Trust management expenses cannot reduce trustees’ taxable income, but in a discretionary trust the income used to pay them is taxed at 20%, or 10.75% for dividends, instead of the special trust rates. The trust tax free amount is reduced where the settlor has more than one discretionary trust. See our pages on estate income and gains and discretionary trusts and income tax.

How does capital gains tax work in each role?

Personal representatives acquire the deceased’s assets at market value at death. When they pass an asset to a legatee, including the trustees of a will trust, no chargeable gain arises (section 62(4) of the Taxation of Chargeable Gains Act 1992; CG30770). Trustees have no equivalent exemption. GOV.UK explains that when a beneficiary becomes absolutely entitled to trust assets, the trustees pay capital gains tax based on market value at that time, unless a relief such as hold over relief applies. So the same asset handed to a child can be tax free from an estate but a disposal from a trust.

Both personal representatives and trustees must report and pay tax on gains on UK residential property within 60 days of completion. Our guide to trustees and capital gains tax covers the trust side.

Which returns and registrations apply?

Estates. GOV.UK allows personal representatives to settle tax by letter, under informal arrangements, if the estate was worth less than £2.5 million at death, the total income tax and capital gains tax due is less than £10,000, and assets sold in any single tax year were worth no more than £500,000. Otherwise they register the estate online by 5 October after the tax year concerned and file trust and estate returns. TRSM27010 confirms that only these complex estates use the Trust Registration Service, purely to obtain a tax reference; estates are not registered under the money laundering rules.

Trusts. Express trusts must register on the Trust Registration Service unless excluded, and a will trust still running two years after death usually has to register (TRSM23021). Trustees file a trust and estate return after each tax year, by 31 October on paper or 31 January online. Both estates and trusts use the SA900; see our guide to the SA900.

Who is liable for inheritance tax?

Section 200(1) of the Inheritance Tax Act 1984 makes the personal representatives liable for tax on the death estate so far as it is attributable to property that was not settled, and the trustees liable for tax attributable to property that was in a settlement immediately before the death, such as a pre existing life interest trust. Section 201 makes trustees liable for the ten year and exit charges on their own trust. Personal representatives report the estate on the IHT400; trustees use the IHT100 and its event forms.

Section 204 limits the liability. A personal representative is liable only to the extent of the assets they received, or might have received but for their own neglect or default. A trustee is liable only to the extent of the trust property they received or disposed of, or that is available to them for paying the tax. Our page on executors’ liability for inheritance tax goes further.

How far does personal liability go?

GOV.UK advises personal representatives to place a notice in The Gazette giving creditors two months to claim, and not to distribute before then; if they distribute and the estate cannot then pay a debt, they may have to pay it themselves. Trustees must nominate a principal acting trustee where there are two or more, but GOV.UK makes clear the others remain accountable and can be charged tax and interest if the trust does not pay.

How might this work in practice?

Illustration only. Priya and Tom are executors and trustees of their aunt’s will, which leaves £200,000 on discretionary trust for her grandchildren and the rest to her son. In the first year they sell shares that have risen £8,000 since death. As personal representatives they set the £3,000 annual exempt amount against the gain and pay 24% on £5,000. After the inheritance tax clearance they settle the estate accounts and hold the £200,000 as trustees. Two years later they sell more shares with a £8,000 gain: as trustees they have £1,500 to set against it. Income retained in the trust is now taxed at 45% instead of 20%, and they give the grandchildren R185 (Trust Income) statements instead of estate forms.

What mistakes come up most often?

  • Claiming the personal representatives’ £3,000 allowance for a sale made after residue was ascertained.
  • Reporting trust income on the estate’s reference instead of registering the trust separately.
  • Giving beneficiaries the wrong R185 form, so the tax credit is claimed at the wrong rate.
  • Distributing the estate before the creditor notice period has expired.
  • Assuming a transfer from a trust to a beneficiary is tax free because it would have been from an estate.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.