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19 November 2019
Encashed offshore bond as funds to pay inheritance tax.
My client died in September 2018. She was UK resident and was the settlor and beneficiary of a discretionary trust. A vulnerable person’s election was in place.
In March 2019 the trustees cashed in an offshore bond because funds were required to pay an inheritance tax liability. A six figure chargeable event gain arose on encashment.
My questions to readers are as follows:
- Who is liable to pay the tax?
- Should the gain be reported in the trust tax return the personal return to date of death or the administration return from date of death to 5 April 2019?
I am aware that the position is rather more complicated when an encashment applies after death but before the end of the tax year. Unfortunately I have no practical experience...
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