An offshore trust is defined as a trust where the majority of trustees are based in an offshore jurisdiction. Creating an offshore trust can be an efficient way of protecting and transferring wealth, but there are UK tax consequences for the unwary. This can include Income Tax, Capital Gains Tax (CGT) or Inheritance Tax (IHT) and sometimes all three.
If you are a beneficiary living in the UK, it is important that you understand that the actions taken by offshore trustees may have direct UK tax consequences for you. This can simply be because of the type of investment profile which results in adverse tax charges in the UK or because trustees accidentally trigger a CGT charge on a beneficiary. Managing the UK tax consequences of an offshore trust is therefore an important responsibility for the professional trustees based offshore.
We can help UK beneficiaries to understand how their personal UK taxes are affected. We also help offshore trustees and other professional service firms with advice in these complicated areas.
The areas of advice can range from planning a tax efficient distribution of funds to a UK beneficiary to considering the UK tax implications of the trustees owning a UK property within a corporate structure.
How we can help
Mercer & Hole advise many clients on offshore trusts, including many which are non UK domiciled.
Services which we offer include:
- Advice on setting up an offshore trust prior to arrival in the UK.
- Advice as to the creation of offshore trusts where it is appropriate.
- Record keeping and compliance including Annual Tax on Enveloped Dwellings (ATED) returns.
- UK tax advice to beneficiaries of an offshore trust.
- UK tax advice on winding-up an offshore trust.
Legislation surrounding offshore trusts can be complex and it is important to get professional advice.
For more information, please do not hesitate to contact us at Mercer & Hole click here if you wish to submit an email enquiry to one of our Private Client Partners.