Separating income and capital is vital in trusts

Last month, in the first part of this article, we examined problems for offshore trustees in identifying capital and income receipts, particularly in relation to receipts from an underlying company. In this second part we look at the practical problems in keeping capital and income separate within the trust. For some years, offshore trusts have not been attractive to UK-domiciled beneficiaries. However, for non-UK domiciled beneficiaries, trusts still offer valuable tax advantages such as tax-free remittances of capital gains that would be taxable if made personally. Separation of cap...