Migration of UK trust with 50% UK domiciled trustees

Hi Everyone, I have a 1990 UK law trust with one trustee resident in the UK and the other outside the UK. The trustees being individuals, wish to transfer the trusteeship to a Guernsey corporate trustee where the assets have been for the past 3 years with a Guernsey investment manager. Prior to that, the assets originated outside the UK and were always held and maintained outside the UK. The client insists that because the trust was set up as a “golden trust”, with its “nominal” address, the settlor and assets and the majority of the original trustees, originating outside the UK, that the trust is currently not tax resident in the UK and that its migration and change to Guernsey trustees will not attract any exit taxes.
Contrary to the clients opinion, I thought that a trusts residency and tax residency is decided on where the Trustees are resident and where its controlled from. However, will it in the above circumstances when the new corporate trustees are resident in Guernsey, not be liable for any “exit” type tax?
Any comments would be appreciated!

So far as I know, you just apply s.69 as it currently stands. I’m not aware of any transitionary provisions.

It sounds as though there would be a deemed disposal on exit unless the UK trustee is a professional (so benefitting from s.69(2)).

For CGT a trust’s residence is determined by TCGA 1992 s69.
In short, mixed residence trusts (ie at least one UK resident trustee and at least one non-resident trustee) are UK resident.

However, if settlor was neither resident nor domiciled on date settlement is made then trust will be non-resident.

Migration of UK resident trust precipitates a CGT charge under TCGA 1992 s80.

The place of administration of the trust is irrelevant and the exemption for professional trustees has been abolished.

Malcolm Finney

Quite right. The dangers of using legislation.gov.uk rather than the incredibly expensive subscriptions…

A mistake I have made many times!

My Tolleys Yellow Tax Handbook is dated tax year 2021/22 with pencil scribbles all over it. Thus I only advise on pre 6.4.22 matters !!

Malcolm Finney

Good afternoon Andrew and Malcolm, thank you very much for your replies, this gives me a solid starting point! This was my first post on the Forum- very happy that I joined!
Jannie Labuschagne.