Tax credit (in relation to dividends) definition

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Offshore trusts—taxation of underlying companies

Offshore trusts—taxation of underlying companies This Practice Note briefly summarises the advantages and disadvantage of trustees using a company to hold investment assets, rather than directly, and covers the position of both UK resident and domiciled individuals and UK resident, non-domiciled individuals. Non-tax reasons for using a holding company While trusts can hold assets directly, it is common for trustees to establish an underlying holding company for this purpose. There are various non-tax reasons why a holding company is preferable to direct ownership, such as: • liability protection • pooling of specific types of investment, and • exit strategies for disposal However, as noted below, it is possible for double taxation to arise on the same income or gain. Annual Tax on Enveloped Dwellings Using an underlying company to hold UK residential property with a value of more than £500,000 could also be unattractive due to additional tax charges imposed on foreign companies purchasing and holding such properties following the introduction of the Annual Tax on Enveloped Dwellings (ATED) and the capital gains tax (CGT) charge on ATED-related gains. See Practice Notes: UK home ownership structures for non-UK domiciliaries—outline and Capital gains tax charge on ATED-related gains [Archived]. With effect from 6 April 2019, the ATED-related CGT charge is abolished. From this date, most companies, whether UK or foreign, pay corporation tax on chargeable gains arising from immovable property. For more detail on this and