Beneficiary of a non-resident trust
snason01
Posts: 2 Newbie
in Cutting tax
My grandmother was a US citizen and resident in the US. When she passed away a trust was set up a trust in the US and I am the beneficiary. The trustees are US citizens and resident in the US and the trust assets are invested in the US..
I understand the trustees have registered the trust with the US tax authorities and have paid the appropriate US tax.
In the future if I receive distributions from the trust how will that be treated for UK tax purposes?
Will I have to pay income tax at 40% on any distributions received? Would a distribution even be treated as income or would it be a capital transfer? If distributions are to be treated as income then are there any tax reliefs that can be claimed on the basis that US tax has already been paid?
I understand the trustees have registered the trust with the US tax authorities and have paid the appropriate US tax.
In the future if I receive distributions from the trust how will that be treated for UK tax purposes?
Will I have to pay income tax at 40% on any distributions received? Would a distribution even be treated as income or would it be a capital transfer? If distributions are to be treated as income then are there any tax reliefs that can be claimed on the basis that US tax has already been paid?
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Comments
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https://www.gov.uk/guidance/non-resident-trusts
Guidance for beneficiaries
If you’re a UK resident beneficiary of a non-resident trust you may have to complete a Self Assessment tax return and the SA107 supplementary pages. The guidance notes for these pages give details as to how you should complete them.
If you’re a UK resident and get income from a non-resident discretionary trust, you can get some tax relief if the trustees have already paid tax on the income. This relief is given by Extra Statutory Concession, ESC B18 - go to page 11 of Income Tax and Capital Gains Tax for non-resident trusts (PDF, 370KB, 21 pages) for further guidance.0 -
You report income and offshore income gains on the relevant pages of your tax return. Are you entitled to capital payments?0
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Yes entitled to the capital when I reach a certain age. So I would only pay tax on the income generated by the investments in the trust rather than the original capital that was transferred into the trust?0
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Someone will need to calculate the gains within the trust for UK purposes using UK tax rules back to the day the trust was created. Will the trustees pay for UK legal and accounting advice for you? If not, you will need to pay for professional assistance yourself.Yes entitled to the capital when I reach a certain age. So I would only pay tax on the income generated by the investments in the trust rather than the original capital that was transferred into the trust?0
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