Non-resident trusts are trusts whose trustees are not in the UK for taxation purposes. The non-resident trust can also apply to situations where some of the trustees are resident in the UK, and the settlor is not resident or domiciled in the UK upon setting up or in some instances, the settlor is not ordinarily resident in the UK. Individuals can only have one place of domicile at any given time. There are rules and regulations around the tax payment and capital gains tax payment for these types of set up.
a). UK tax liability;
b) Entitlement to allowances and exemptions;
c). Double taxation;
d). Unilateral relief;
e). Remittance base charges;
f). Capital gains tax;
g). Split year treatment for tax purposes;
h). Statutory resident test;
i). Double taxation agreements;
h). Disposal of assets requirements; and
i). Inheritance tax, to name but a few.
Advantages of Non-resident trusts:
a). They are convenient for individuals who work cross-jurisdiction;
b). They allow for fair trading amongst different countries ensuring that individuals pay and meet their taxation requirements;
c). They are not restrictive or stringent;
d). They allow individuals to take advantage of allowances and exemptions that apply in their jurisdiction, and
e). They can allow for responsibility and accountability to be enforced among settlors and trustees, to name but a few.
The contributions of the non-resident trust on the overall trust's market:
The non-resident's trust contributes to the trust market through:
a). Employment creation;
b). Tax payments;
c). Inheritance tax payments;
d). Economic boost through employment creation and tax collection;
e). Regulation and legal changes and updates which contribute towards the legal sector as a whole;
e). Boosting of the non-governmental and charitable sectors, and
f). Allowing settlors to benefit their beneficiaries cross-jurisdiction, resulting in unilateral, international and cross border trade expansion.
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