The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
UK resident beneficiaries of non-resident trusts are subject to UK tax on payments or benefits received from the trust. They are liable for income tax on income distributions from the trust and they may also be liable to income tax or capital gains tax on payments of capital from the trust.
In contrast to UK settlors of non-resident trusts, the liability of beneficiaries is determined by the extent of their entitlement or the amounts actually paid to them. They have no UK tax liability in a year in which they have not benefited from the trust. See the Tax on UK resident settlors of non-resident trusts guidance note.
This guidance note provides an overview of the tax treatment of both income distributions and capital payments, and provides links to more detailed material.
In order to establish which tax provision applies, one must first determine whether the payment or entitlement is of income or capital. With a non-resident trust, an income distribution is always subject to income tax in the UK resident beneficiary’s hands. A capital distribution may be subject to income tax or capital gains tax, or not subject to tax at all.
Thegeneral rules, which apply equally to both UK resident and non-resident trusts, are that:
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login