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bigduckontax
bigduckontax, Accountant
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I have a trust fund under my name overseas I've met

Customer Question

I have a trust fund under my name overseas for which I've met the requirements to claim the balance. The trust fund is a non-EU country. What are the tax requirements to bring this money to the UK? Once in the UK, what sort of tax will I be liable for?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to be able to assist you with your question. The Financial Times gives the following cautionary advice: 'when the money is repatriated back to the UK by the beneficiary, a higher level of tax is payable, based on the beneficiary’s own income tax position.' In a nutshell the moneys distributed will be liable to Income Tax at your marginal rate. The Trustees should deduct UK tax before distribution, but, of course, may not which could land you with an unexpected tax bill which. for a repatriation in the current tax year. would have to be paid by 31 January 2017. It would also need to be declared on your self assessment tax return. Remember Benjamin Franklin's oft quoted dictum that in life there are but two certainties, death and taxes. I am so sorry to have to rain on your parade.
Customer: replied 1 year ago.

Hi Keith, thanks for your answer.

I should have mentioned the fact that this trust fund was set up by a non-resident, non-domiciled UK person (his only contact with the UK was as a visitor), and I have only been a UK resident myself since late last year, so I am not UK domiciled (I am originally from Argentina same as the person who set up the trust fund). Looking at the article you quote, it would seem as though if this applied for trust funds which are set up by UK domiciled persons for the benefit of other UK domiciled persons. Does this change the scenario?

Thanks

Expert:  bigduckontax replied 1 year ago.

Well, not really; here is the UK Gov guidance for beneficiaries of trusts:

'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'

There is a Double Taxation Treaty between the UK and Argentina which precludes moneys from the same source being taxed in both jurisdictions. This is achieved by means of tax credits, tax deducted in one country being allowed against the liability in another. The Treaty does not protect you from differences in rates of tax.

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Customer: replied 1 year ago.

Thank you. The guidance document you reference states in page 16 "the legislation restricts the liability of a non-domiciled individual in relation to any income and benefits received outside the UK". How would that affect my case given that I'm not UK domiciled?

Expert:  bigduckontax replied 1 year ago.
The Chancellor of the Exchequer announced the removal of the concept of non domicile in his Summer Budget. There has been a general opinion within the UK that those with non domicile status were simply getting away with tax avoidance on a grand scale whilst substantially enjoying residence within the UK. The satirical magazine Private Eye has been exposing individuals for some years now.
Customer: replied 1 year ago.

This is not accurate I'm afraid. The explanation under https://www.gov.uk/government/publications/technical-briefing-on-foreign-domiciled-persons-changes-announced-at-summer-budget-2015/technical-briefing-on-foreign-domiciled-persons-changes-announced-at-summer-budget-2015

refers to people resident in the UK for over 15 years (not my case), and at any rate is a proposal. All of my income would be for 2015/2016. So, I'd like to please insist on my question as to what the limitation in liability is for non-domiciled residents.

Expert:  bigduckontax replied 1 year ago.

You may not be aware, but proposals contained in UK Budget Statemments are applied immediately and, should the final legislation be modified, adjusted at a later date.

Rosebank UK Ltd have the following summary regarding resident non domniciled individuals:

'The United Kingdom offers an attractive tax regime for those individuals who are resident in the UK but do not have UK domicile, such individuals are often referred to as ‘resident non-doms’.

An individual who fulfils the criteria, and who has foreign income and/or foreign capital gains, can elect to be taxed in the UK on the advantageous remittance basis of taxation. Under this scheme the individual can elect to pay a fixed annual charge, currently £30,000 or £50,000, known as the remittance basis charge.'

To reduce taxation as a resident non dom you would have to pay the remittance annual charge of at least 30K and, furthermore, not have any of the trust fund moneys available for you in the UK.

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