UK Foreign inheritance tax

Hi there

I'm in the uk, rest of the family is in the states.

We had a family trust that is being disburse to us kids. We are putting it into an LLC in the states and reinvesting it into property. The money wont leave the US.

Does any one know if I would owe anything on this or what the rules are?

Any or pointing in the right direction is appreciated.

The actions described sound fairly unsuitable as described given that you are UK resident. The lawyers in the US who are dealing with the trust should instruct an English solicitor familiar with foreign trusts to advise the trustees on the extremely complex and costly consequences for you. You will doubtless require a specialist UK accountant who can deal with all of the UK reporting related to distributions from foreign trusts.

I would like to add some comments to Guya’s observations on Basic’s situation.

The starting point to any consideration should be an understanding of the key background information-
•   Basics is presumably a UK resident US citizen. The number of years of past residence is important is assessing the cost via the Remittance Basis Charge of using the remittance basis. How many years of future years of residence in the UK can Basics foresee?
•   The status of the trust that is making the distributions. Was the settlor non domiciled and non resident in the UK.

The understanding of the position will depend on the above key information. For instance, it might be that the distributions lead to a capital gains tax charge on Basics. The UK has a substantial body of rules that deal with distributions from non-resident trusts, including those that have had no previous UK connection.

Further Basics should understand the implications of an investment in a US LLC. For instance, HMRC regards a US LLC as being tax opaque. This might affect the longer term tax position. The UK also has rules relating to income and gains on non-resident close companies, which could be relevant as the LLC would be regarded as being opaque.

Guya is correct in concluding that Basics should take detailed advice if he wishes to properly understand the UK tax implications of his proposed plan.