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Where Taxpayers and Advisers Meet

Beneficiary of offshore trust, self assessment reporting ?

aglet
Posts: 2
Joined: Thu Jul 12, 2018 8:48 am

Beneficiary of offshore trust, self assessment reporting ?

Postby aglet » Thu Jul 12, 2018 8:56 am

I discovered a few years ago that I was a beneficiary of a family discretionary trust administered by trustees in the Isle of Man.
In the 2017/18 tax year, I requested a relatively small cash payment from the trust and I'm wondering how I need to report it on my HMRC self assessment.
Is it income or capital gains ? Do the trustees need to provide me with any documentation on the trust income ?

Many thanks !

Anicetry
Posts: 28
Joined: Wed Aug 06, 2008 4:00 pm

Re: Beneficiary of offshore trust, self assessment reporting ?

Postby Anicetry » Thu Jul 12, 2018 2:37 pm

As the Isle of Man is outside the UK, any trust based there is classed as non-resident, hence any payment from the trust will be regarded as foreign income for UK tax purposes, and hence taxable. As your payment was 'relatively small' the chances are it was actually a distribution of income in which case it will go in box 41 on page F6 of the Self-Assessment Foreign Pages SA106. If it was a capital distribution you might be liable to capital gains tax but that's rather more complicated so you would need to ascertain first from the trustees exactly which is was – income or capital. (I am not a tax expert, but if it was me and in the absence to any evidence to the contrary, I would assume it was income and put it in box 41 – to save a lot of hassle!)

maths
Posts: 7405
Joined: Wed Aug 06, 2008 3:25 pm

Re: Beneficiary of offshore trust, self assessment reporting ?

Postby maths » Thu Jul 12, 2018 6:20 pm

The taxation of UK resident trusts is not straight forward and that of offshore trusts even more complex.

The payment to you as a discretionary beneficiary may be that of income or capital. Whether and how you are taxed (if at all) depends upon a variety of factors.

Is the trust resident outside the UK?
What is the residence and domicile status of the settlor.
Who falls in the class of beneficiaries.
Is the settlor alive.

aglet
Posts: 2
Joined: Thu Jul 12, 2018 8:48 am

Re: Beneficiary of offshore trust, self assessment reporting ?

Postby aglet » Thu Jul 12, 2018 6:53 pm

Thanks for your replies.

The settlor is literally a long lost, now deceased, uncle so I have very little information on their tax residency. As I understand it, beneficiaries of the trust were his extended family and their descendants as he died with no children.

The trustees have offered no information on the type of the disbursement and weren’t forthcoming when i enquired although they did say the trust was now depleted so I assume it was mostly capital.

Are the trustees obliged to tell me the tax status of the payment ?


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