Trusts are often seen as complex, esoteric structures used by the wealthy. However, trusts have many uses in ordinary family situations. The tax implications often drive the choice of type of trust to use. We are here to advise you on what is right for you. We provide both compliance and advisory support to UK resident trusts and support to offshore trusts that have UK tax liabilities or that give rise to UK tax consequences for the settlor or beneficiaries.
UK tax compliance
Simple or complex – we will assist trustees who are required to file a Self-Assessment Tax Return. We will first determine whether a return is needed of if there are grounds for having the Notice to File withdrawn. We will provide a tax certificate for any beneficiary of the trust who has taxable trust income to report on their own return.
We also prepare Inheritance Tax Returns, when required, such as on transfers into Trust, or on Trust 10-year anniversaries, when capital is distributed from a Trust (known as ‘exit charges’), or a Trust is wound up. We can calculate the tax liabilities arising, deal with the compliance reporting, and advise Trustees on the administration required.
Anti-Money Laundering Regulations require trusts to be included on the Government Trust Register. We guide trustees through the registration process and help maintain the register annually.
Tax advisory
The nature of a trust is such that it does not remain constant. The terms to which trust property is subject may change by deliberate act or because it is specified in the trust deed. These changes can give rise to taxable events, involving multiple taxes. We can help trustees to understand the implications of events and help them plan for these, as well as advising on any reliefs available to reduce tax liabilities.
Trusts can still be a significant tool when estate planning. The key is to understand what you want to achieve with your estate planning, and the extent to which a trust could help or hinder your overall strategy. We can work with you to develop a plan and ensure you understand the implications of any trusts that you choose to include.
When a trust has served the purpose for which it was created, we can advise on how best to wind it up and help you through the process.
Commercial and charitable trusts
While trusts are often seen as private entities, they are also used for commercial or charitable purposes. Whatever the type of trust, we can help. Commercial trusts include employee benefits trusts, share ownership trusts and pension funds. A trust can be introduced as a member of a Limited Liability Partnership.
Our Not for Profit team can help with all aspects of a charitable trust.
Non-UK entities
Sometimes foreign entities, such as Anstalts, Stiftungs, Usufructs, Establishments and US revocable trusts, touch the UK tax net or have beneficiaries that are subject to UK tax. These entities do not fit neatly into the UK tax system. For some tax purposes they may be taxed as trusts but as companies for others. In some instances, they may be looked through completely, and taxed as if the trust did not exist.
Advising on the strict tax treatment of such an entity and its beneficiaries involves a detailed review of its constitution. However, HMRC applies some standard treatments that may provide a convenient solution. We can help you understand the complexities and UK tax risks that arise with these entities.
Tax is a complex area and the above Q & As are given as a simple guide only. You should always obtain specific advice that is relevant to your circumstances, before acting.
