Paid post by Canada Life

What assets can be put into an Excluded Property Trust?

It doesn’t matter if the trustees or beneficiaries are resident in the UK or not, depending on the value of the assets in the trust, IHT may therefore be due when:

  • assets are put into the trust
  • the trust reaches a ten-year anniversary
  • assets are taken out of the trust or the trust ceases

In these circumstances, these complications could be avoided by simply having a new UK resident trustee appointed before all existing trustees change residency.

2. When considering a chargeable gain on an international bond can you explain the effect of a settlor/trustees/ beneficiaries being  non-UK resident?

Any potential tax liability is payable in the following order:

  1. Where a policy is owned by an individual or held in a relevant property trust created by that individual, then that individual is liable to any income tax. If the policy is held under a bare trust the beneficiary is liable to any income tax, as the beneficial owner of the bond, unless the donor is a parent of the beneficiary and the chargeable event occurs while the beneficiary is an unmarried minor.
  2. If that individual is non-resident or has died in a previous tax year and the policy is held in a relevant property trust created by that individual, then the trustees are liable for the tax if they are UK resident. In this instance the first £1,000 is taxed at the basic rate of income tax and anything over this at 45%. 
  3. If the trustees are all non-UK resident, the beneficiaries of the trust resident in the UK, to the extent that they receive benefit, are liable for the tax.

 

Francesca Gandolfi

Francesca Gandolfi has over 20 years experience in the industry, having previously worked as a financial adviser focusing on wealth management, IHT planning, retirement planning, and later life advice.

 

This is a Canada Life Paid Post. The news and editorial staff of the Financial Times had no role in its preparation