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  • Offshore Trusts

    An offshore trust is one where the trustees are resident outside of the UK. Offshore trusts are unlikely to have any benefits for UK resident and UK domiciled individuals. However, offshore trusts can retain tax advantages for non-UK domiciled individuals.

    Non-domiciled individuals

    An offshore trust remains a legitimate and useful tax planning and asset protection tool. Foreign assets comprised within a trust settled while the settlor was non-UK domiciled, remain “excluded property” and are not subject to UK inheritance tax. ETC can provide advice as to the creation of an overseas trust, where appropriate.

    General tax position for UK beneficiaries

    If you are a beneficiary of an offshore trust and resident in the UK, it is important you understand the actions taken by overseas trustees and the UK tax impact on you in order to meet your UK tax obligations. We can provide UK tax advice on the UK tax implications of receiving distributions from an offshore trust.

    Trustees

    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. ETC can provide advice and assistance to trustees to ensure that they meet their UK tax obligations.

    What are the tax advantages of using offshore trusts?

    Despite numerous pieces of anti-tax avoidance legislation, holding assets in an offshore trust can still have tax advantages for a UK resident but non-UK domiciled individual, although the tax implications will depend on a number of factors.

    In certain circumstances, capital gains and foreign sourced income can be rolled up tax free and foreign assets settled into trust whilst the settlor was non-domiciled will remain outside the UK inheritance tax net. 

    If the settlor (or his immediate family) can benefit from the trust or distributions are made to a UK resident beneficiary, then there are further considerations and UK tax may payable, due to the application of the anti-avoidance legislation. 

    In the right circumstances an offshore trust can be an effective and tax efficient asset protection and succession planning vehicle. However, the law concerning trusts and their taxation is complex and planning should not be undertaken without obtaining professional advice.

    I contacted ETC Tax to get some advice relating a family trust and am so glad that I did.  They were extremely knowledgeable and professional, and I would highly recommend their services

    Robert Edwards

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    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

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