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Where Taxpayers and Advisers Meet

Tax re-claim for UK non-resident Trust beneficiary

AliB25
Posts:1
Joined:Thu Jan 17, 2019 3:46 pm
Tax re-claim for UK non-resident Trust beneficiary

Postby AliB25 » Thu Jan 17, 2019 4:30 pm

Hello, I am a UK resident with UK tax queries in respect of my son who is a student in Australia, a will-trust beneficiary, and has been non-UK resident under the SRT for the tax years 2017-18 and 2018-19. He submitted form P85 to HMRC the year he left the UK (2016) to receive a tax refund and hasn’t filed a UK tax return or R43 (to claim his personal allowance) since, as he had no UK income other than a small amount of UK bank interest. The trustees have never issued my son with any information relating to any aspect of the trust tax. They submit tax returns via a tax advisor.

1. Can a UK non-resident beneficiary of a UK-resident discretionary trust fund (the fund is held in equities in a UK-run investment portfolio generating capital and income, income not paid out but re-invested) claim back inheritance tax, CGT, & income tax that the trustees (2 UK solicitors) have paid at the trust rate?
2. Is it possible to reclaim VAT that has been charged and paid on the Trustee and investment managers' professional fees?
3. If the beneficiary can claim back any or all of these taxes (IHT, CGT, IT, VAT), how would they go about it?
Thanks in advance.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Tax re-claim for UK non-resident Trust beneficiary

Postby AGoodman » Tue Jan 22, 2019 11:48 am

I assume it is a UK will trust

1. No - but he may well be able to reclaim income tax if the trust makes an income distribution to him. This will come with a tax credit at 45% and anything in excess of his liability (which may be minimal) can be reclaimed.
2. No
3. No.

If the trustees make an income distribution to him, he would recover the tax by filing a UK return (which would include the fact that he is non-resident).

Bear in mind that any income he receives is likely to be taxable in Australia so the net benefit may be dramatically reduced depending on his marginal rate there.


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