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Often much maligned by politicians as a tax avoidance vehicle, used legitimately trusts are a useful weapon in reducing tax costs and preserving wealth.
Trust are created by separating legal ownership from beneficial ownership in a manner which rings bells with the statement possession is nine-tenths of the law. Their use is widespread and commonly created by wills and where minors own property. Trusts are not always outside the scope of tax. There are periodic tax charges and in many cases income is taxed as usual in advance of being distributed to beneficiaries. Tax solutions using trusts typically avoid a tax charge (eg death or capital gains on exit) and in effect defer tax (possibly indefinitely) rather than avoid it.
The political scepticism surrounding the use of trusts and the values associated with trusts has resulted in a complex tax legislation and frequently an aggressive approach by HM Revenue and Customs to collect perceived lost tax. It is essential that professional advice is sought in the creation of a trust to prevent the tax authorities determining that the whole process was a tax driven sham or to prevent crystallising unforeseen chargeable events.
Johnsons administers and advises on a wide range of trusts from tax driven structures to control and governance mechanisms. Johnsons is familiar with UK and offshore trust matters.
If you would like more information or would like to speak to us direct then call us on 020 8567 3451. Or if you would prefer, ask us a question online.