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

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