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Posted Sat, 04 Nov 2023 18:47:41 GMT by
Hi, I'm endeavouring to ascertain the UK tax position/implications of a UK resident friend as they have recently received a questionnaire from HMRC regarding 'sums received from abroad'. They received a payment under the discretionary trust of a Californian domiciled resident of the USA (which discretionary trust ceased to be discretionary on the death of the settlor), together with an additional payment from a pension life policy under the terms of the will which was outside the settlors/testators estate. 30% withholding tax was deducted from the pension life policy in the USA and the balance then paid out to my friend. Having read several threads I am concluding that no tax is due as the estate fell within Californian tax laws and was fully declared and cleared with relevant USA tax authorities. So, if anyone can confirm this or advise on any considerations that I've not picked up on that would be appreciated. Additionally, the HMRC form gives 4 declaration options; these being 1. I need to bring my tax affairs up to date, 2. I believe I have declared all my overseas income/gains, 3. have not declared overseas income/gains as they are covered by personal allowances and 4. I have not declared my overseas income/gains as they are not liable to UK tax. I believe that '4.'is the correct declaration - but any advice on this would be appreciated. I would mention that the HMRC letter gives a contact phone number, but on making contact all they said was ' see a professional' - and my friend doesn't actually have a lot of money; hence, I'm tying to help them out.
Posted Thu, 09 Nov 2023 09:31:33 GMT by HMRC Admin 25
Hi pleasemaketaxreturnseasy,
We cannot advise which option is the appropriate option.
The tax rules for non-resident trusts is very complicated and cannot be discusses in this forum.
Have a look here:
Non-resident trusts
Please  contact the trust helpline on 0300 123 1072.
No tax is due on the estate as the estate is not in the UK.
The payments from the pension is taxable in the UK.
Your friend should have received a certificate from the pension policy providers declaring the amount paid and the gain.
Where the gain is over £10000.00, a Self Assessment tax return (SA100) is required.
The gain can be reported on supplementary page SA101.
All boxes on a Self Assessment tax return should be in pounds sterling.
Please have a look at helpsheet HS321 for more information.
Gains on foreign life insurance policies (Self Assessment helpsheet HS321)
Thank you. 


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