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Where Taxpayers and Advisers Meet

Trust moves abroad?

strawn
Posts: 49
Joined: Fri Jun 01, 2012 10:11 am

Trust moves abroad?

Postby strawn » Tue Sep 10, 2019 11:54 am

A discretionary trust was set up by a will: the trustees and the deceased are/were resident in England. The deceased and one of the trustees are/were domiciled in England; the other trustee is domiciled either in Scotland or England (she's not sure).

The trustees are considering renouncing their posts and appointing as trustees two family members who are domiciled in England but resident abroad (in the same jurisdiction).

What are the UK tax implications of this action? Do they depend on which foreign jurisdiction is involved?

AGoodman
Posts: 827
Joined: Fri May 16, 2014 3:47 pm

Re: Trust moves abroad?

Postby AGoodman » Tue Sep 10, 2019 1:55 pm

You haven't mentioned why?

The immediate effect is a CGT disposal of all the trust assets at market value - i.e. there is CGT to pay on any net gain in the value of the assets.

There may be income tax differences depending on the nature and location of the assets.

The tax position will generally get more complicated. You will also have to consider the tax regime in the country where the new trustees are resident.

If the beneficiaries are in the UK and likely to stay there, there is unlikely to be any advantage (and could be a disadvantage with the additional complications and possibly higher CGT rates).

maths
Posts: 7550
Joined: Wed Aug 06, 2008 3:25 pm

Re: Trust moves abroad?

Postby maths » Wed Sep 11, 2019 11:46 am

Where are the beneficiaries resident and does the trust deed expressly provide for an appointment of non-resident trustees?

strawn
Posts: 49
Joined: Fri Jun 01, 2012 10:11 am

Re: Trust moves abroad?

Postby strawn » Wed Sep 11, 2019 2:11 pm

The immediate effect is a CGT disposal of all the trust assets at market value - i.e. there is CGT to pay on any net gain in the value of the assets.
The assets consist of index-linked savings certificates and interest-free loans to beneficiaries. Would that imply nil CGT liability?
The tax position will generally get more complicated.
It's not a big trust: complications that lead to substantial professional fees being paid would be unattractive.
If the beneficiaries are in the UK and likely to stay there, there is unlikely to be any advantage (and could be a disadvantage ...)
I understand that some of the beneficiaries will be in the UK and some in the foreign jurisdiction. Is the residence of beneficiaries crucial, or only the residence of beneficiaries to whom income, and appointments of capital, are to be paid?

strawn
Posts: 49
Joined: Fri Jun 01, 2012 10:11 am

Re: Trust moves abroad?

Postby strawn » Wed Sep 11, 2019 2:12 pm

... does the trust deed expressly provide for an appointment of non-resident trustees?
Excellent question; thank you. I shall enquire.

strawn
Posts: 49
Joined: Fri Jun 01, 2012 10:11 am

Re: Trust moves abroad?

Postby strawn » Fri Sep 13, 2019 12:31 pm

... does the trust deed expressly provide for an appointment of non-resident trustees?
Yes, it does expressly provide, and also provides for the case where their place of residence has no existing connection to the trust.

Can anyone comment, please, on my speculation above that there might be no CGT liability because the trust in invested only in loans to the beneficiaries and ILSCs?

AGoodman
Posts: 827
Joined: Fri May 16, 2014 3:47 pm

Re: Trust moves abroad?

Postby AGoodman » Mon Sep 16, 2019 3:23 pm

Probably, I understand these saving certificates are free of IT and CGT anyway.


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