Offshore trusts

If you are a trustee of an offshore trust structure, or a UK resident beneficiary receiving benefits/distributions from an offshore trust, you will need specialist advice in order to understand and meet your highly complex UK tax obligations.

Trustees of an offshore trust structure can be liable to various taxes in the UK. These include income tax on UK source income or capital gains tax on the sale of UK residential property. Inheritance tax can also apply on UK situs assets which are distributed from the trust or held at the 10th anniversary of the trust’s creation. RSM is able to advise you on the UK tax implications for your trust and its beneficiaries, including how to plan tax efficiently.

Our specialist team will help you to ensure your offshore trust is managed effectively. Through our experience, we have identified many areas where issues can arise, including: 

  • income tax – UK resident settlors may become liable to income tax arising in the trust;
  • capital disposals – UK resident and domiciled settlors will also be subject to capital gains tax on all capital disposals by the trust;
  • capital distribution – UK resident beneficiaries of an offshore trust can be subject to UK income tax or capital gains tax on the receipt of a capital distribution (or if they receive a benefit from the trust such as an interest-free loan or rent-free occupation of a trust property); and
  • record keeping – tax consequences for UK resident beneficiaries are known to arise many years after they have received a benefit/distribution. It is therefore important to keep trust records up to date.

UK residents, non-UK domiciled settlors and beneficiaries have a more flexible UK tax position, with more chances to make tax-efficient plans. We can help you to maximise any opportunity.

Meeting your obligations

RSM can provide guidance and assistance to trustees to meet their UK tax obligations and prepare:

  • UK self-assessment tax returns;
  • inheritance tax forms; and
  • annual tax on enveloped dwellings (ATED) returns.

We can also provide advice to settlors/beneficiaries and prepare the calculations required for their UK tax returns, to help ensure you retain accurate records.   

If you are considering setting up an offshore trust, there can be some potential pitfalls. At RSM we would be pleased to talk to you about alternative structures to protect your wealth, so please do not hesitate to get in touch with us for a discussion.

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