Tax exemptions for UK trusts A UK trust can be fully exempt from income tax if the following conditions are met:
One of the trustees is not a UK resident. All property/estate, shares and all other assets are located outside the UK. The beneficiaries are non-UK residents. The settlers are not based in the UK. In accordance with English/Welsh law, the first trustee must be a UK resident person or company. In most cases the trustee is a professional and licensed UK trustee service provider. In order to benefit from tax exemptions there must be an additional trustee resident outside the UK. This may be an offshore trust service provider or the client's legal representative or law firm.
The main components of a UK trust Settlor The settlor establishes a trust and appoints the trustees. In doing so, he or she transfers full ownership of the assets to the trustees. Trustee(s) The trustees are responsible for administrating the assets in favour of the beneficiaries. They may receive an initial recommendation from the settlor on how to manage the trust (instructions can be indicated in the letter of wishes) and must ensure that the rights of the beneficiaries are protected. They have full control over the trust, but are not entitled to any income that it accumulates.
Trust deed A formal trust deed sets out the arrangement between the settlor and the trustees and the terms of administration. Beneficiaries The beneficiaries are the individuals who benefit from the trust, and may be defined as the settlor’s children or future children. It is common practice to have discretionary beneficiaries, who are not informed in advance of their future and potential interest in the trust. Summary
UK trusts can grant their owners a reliable and reputable onshore location. Structured properly, UK trusts can be very attractive in terms of taxation, security and the confidentiality of assets. English/Welsh law offer the protection of the UK legal system.
This is a great solution for non-UK resident individuals, who own property and generate income outside the UK.