Offshore trusts
If you are a UK resident and domiciled beneficiary of an offshore trust, you will be subject to a number of complex anti tax avoidance provisions. These are aimed at matching the trust's income and gains (that will not be subject to tax in the trustees' hands) with benefits that you receive in the UK. In certain circumstances you can end up paying an effective rate of 64% tax on distributions from offshore trusts so it is important to take advice because there are certain ways in which this can be mitigated.
If you are non-UK domiciled and you have assets abroad, an offshore trust is a good way of protecting overseas income and gains from taxation in the UK. In some circumstances you can use an offshore trust to fund your UK living expenses without having to pay any tax in the UK, which can make the UK a very attractive place to live. An offshore trust can also help to protect assets from UK Inheritance Tax.
Key contact: Robert Brodrick