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HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
Updated
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Non-resident trusts: residence rules: trust residence for Capital Gains Tax purposes - periods to 5 April 2007

TCGA92/S69

The Taxation of Chargeable Gains Act treated the trustees as a single and continuing body of persons. That body was resident in the United Kingdom for Capital Gains Tax unless:

  • all, or a majority, of the trustees were regarded as not resident in the UK and
  • the general administration of the trust was ordinarily carried on outside the UK.

If there were an equal number of resident and non-resident trustees, the trust was resident for Capital Gains Tax purposes.

Normally it is a matter of fact where a trust is administered - there is guidance at CG33380-CG33385. External users can find this guidance at http://www.hmrc.gov.uk/manuals/cgmanual/CG33380.htm If trustees as a body were regarded as resident for any part of a year, they were potentially taxable on any gains made for the full year. Trustees were not taxed on a ‘split year’ basis for Capital Gains tax purposes.

Professional trustee resident in the UK

It was possible for a UK resident professional trustee to be regarded as non-resident for Capital Gains Tax purposes.

The trustee must:

  • have been carrying on a business that includes the management of trusts and
  • acted as trustee in the course of that business. This would usually have been an accountant, solicitor or bank. The trustee must not have been acting as an employee or in a personal, rather than a professional, capacity.

Whenever funds were settled, the settlor must have been:

  • not resident in the UK and
  • not ordinarily resident in the UK and
  • not domiciled in the UK

If the trust arose under a will or intestacy, the deceased must have been:

  • not resident in the UK and
  • not ordinarily resident in the UK and
  • not domiciled in the UK

at the date of death.

In such a case, where all, or a majority, of trustees were regarded as not resident in the UK, the general administration of the trust would be treated as ordinarily administered outside the UK.