CGT on Shares invested in trusts

[Expat1]

Hi,

I’m thinking of setting up a trust with shares and I’d like to know if I set it up on trust then would I be liable for CGT on any profits outwith the £12k annual allowance? If so is there any tax efficient ways to buy and sell shares?
Thanks

[bd6759]

What type of trust, and for what purpose?

[Expat1]

Hi, I’m not sure the type of trust yet. Purpose is to hold the shares and and gain released out. Trust would eventually go down the generations.

[maths]

A discretionary trust offers flexibility and depending upon numbers, IHT charges thereon may be mitigated.

Settlement of shares you currently hold will give rise to possible capital gains subject to the annual exempt amount. Hold-over relief is also available.

Need to also consider whether capital growth or income is desired which may affect type of trust used.

[Expat1]

Interested to know more for growth and income. I’d like to take money yearly if possible in a tax efficient way.

[maths]

Just noticed you designate as "Expat".

1. Are you UK domiciled.

2. UK resident

3.Why do you want to set up a trust

[Expat1]

Hi,

Away to be Uk resident in the coming tax year.

Uk resident in the next tax year

I’d like to setup the trust to be tax efficient for me income wise and also to leave some inheritance to some loved ones when I pass on….hopefully a while away.

[AGoodman]

Trusts are not magic. The income tax will be the same or worse than you receiving it directly. If you can benefit from the trust there won't be an inheritance tax benefit. CGT will be basically the same.

Essentially, you should get some advice as to whether there are any benefits to you to establishing a trust. The likelihood is not if you still want to benefit from the assets you put in it.

[iwmtaxadvisor]

Hello expat, I think you're saying you are not UK resident and are going to become so 2022/23.
I agree with all the comments here that there is no immediate answer and that you need specialist advice and that is not a cabal of advisers saying this just to have a chance of charging fees it is simply that we all agree it's so complex there are no well trodden paths.
What we can do is give you some guidelines on the alternatives.
If you want a tax free zone to house your family money while you are in the UK, then here are the alternatives:

a) if you are not UK domiciled then if you plan it right you can [b]simply leave your assets outside the UK [/b]and suffer tax only if you remit to the UK the proceeds of your investments... for some years... and that does need a tax planner on tap for the family become tax traps abound
b) you could indeed [b]house your money in a trust[/b], which could be located outside the UK, but there is anti avoidance in spades which means you need a tax planner on speed dial and my guess is that you'd need 5mn + to make it worthwhile
c) you could [b]house your money in an offshore company[/b], probably a little easier to manage tax wise, but you do have to watch the anti avoidance especially on control and management, and disguised remuneration
d) you could come back to the UK and put something like 1mn into [b]a UK self invested pension [/b]in the knowledge that when you return to a country outside the UK you may be able to take the proceeds tax free or tax advantaged. I say self invest because you can still manage your shares through pretty much whatever private bank you want (acting as broker).
e) if you have a [b]trading company already established not in the UK[/b], you might be able to use that to invest your shares through... but there are extensive tax and family implications
f) Use the UK's tax favoured [b]self select ISA [/b]to place 20k p.a. (x 2 if married) into and that can trade without gains tax on the dealing. Again, choose your own broker/private bank to execute.
g) Maybe there's a [b]local tax favoured account[/b] you could use and still operate here in the UK - as USA citizens do for example - without any awful tax consequences because of your double tax treaty (we don't know which one applies)

I think that's about it. One hopes you have not been resident in the UK any time in the last five years which will complicate things