WHAT IS THE UMBRELLA REMUNERATION TRUST?
Umbrella Remuneration Trusts have been used over the past two decades by individuals, businesses, sole proprietors, and partners to successfully store funds in tax-free, trust-based accounts where finances and assets can be protected. One of the greatest advantages of the Umbrella Remuneration Trust is that there is no liability for income tax, corporate tax, national insurance, or capital gains tax on contributions or growth of the fund.
How do Remuneration Trusts Work?
To create a remuneration trust an individual, sole proprietor, partner, or company needs to set up an account with the assistance of a legally sanctioned and knowledgeable specialty tax consultant. Once the trust is established, the account holder will decide how many funds to the trust; this amount can be committed on either a regular or irregular basis depending on your personal preference or the guidance of your company’s expert advisers.
In association with the Trust, a UK Personal Management Company (PMC) must be established for the client, for the process to be successful. This Personal Management Company will essentially be a UK Ltd company, registered in your name, with a bank account listing you as the Director and shareholder in the UK. Once the PMC is established, the Remuneration Trust can authorise the UK PMC to manage all offshore funds through a Fiduciary service agreement. Thanks to this agreement and structure, the PMC will now have total legal control of the funds, and the PMC will be privy to the following stipulations and benefits:
- The PMC does not own anything in itself
- The PMC controls all assets in the Remuneration Trust from a legal UK bank account
- The funds are not subject to tax
- Complete privacy
- The PMC owner cannot be sued for the funds in the Remuneration Trust
With this structure in place, company owners can claim fund transfers to the Remuneration Trust as ‘Administration Expenses’ and can be recorded on the company’s books as ‘Contributions to the Company’s Cash Remuneration Trust’. Ensuring that the transaction is completely transparent (for example, by also disclosing it in the company’s account notes) will uphold all legal obligations.
Funds that are stored in the Offshore Remuneration Trust are tax-free and can be liquidated at the trustee‘s discretion or the discretion of any authorised fiduciaries. These funds can be invested, loaned, spent or otherwise managed by the account holder or authorised fiduciary representatives without incurring tax liability, and only a small management fee will be incurred.
This asset protection and tax mitigation strategy are ideal for the following entities:
- Company Directors
- Ltd Companies
- Moderate to high earned self-employed individuals, sole-proprietors, or partners
- Medical professionals or dentists
- Overseas clients with the UK company ties
These are just a few of the categories. Individuals who qualify for this type of financial structure can retain up to 90% of their earnings due to the tax exemptions. There are currently over 21,000 active trusts linked to UK account holders, with Remuneration Trusts being one of the most common choices.
Though there are complicated laws, regulations, and requirements that make this trust structure possible, Remuneration Trusts are extremely user-friendly to manage. UK owners can simply transfer funds into their Remuneration trust as they would with any bank transaction, and they can manage and access their investments through a regular UK banking account.
In the event of an enquiry from the HMRC, tax lawyers and expert consultants can provide you with guidance to help defend your case; but in the past 20 years, there have been no cases where the HMRC has successfully challenged a Remuneration Trust. This is especially significant when you consider that there have been over 20,000 active Remuneration Trusts in operation. As long as you follow the legal guidance offered by your speciality tax consultant and you maintain full transparency, you should not encounter any problems as you are acting within the law.
Some of the features of the Umbrella Remuneration Trust include:
- Proven track record of being legally sound and financially effective
- Does not involve ‘tax avoidance.’
- Full transparency and disclosure to the HMRC
- DOTAS reference not required
- Contribution of funds to the Remuneration Trust are tax deductible on income/corporation tax
- Do not fall under GAAR (General Anti-Abuse Rule)
- Expert legal advice and guidance for any enquired by the HMRC related to the ongoing benefits of the Umbrella Remuneration Trust
The Umbrella Remuneration Trust also offers several benefits:
- Immediate tax savings
- Future tax savings on all funds stored in the Remuneration Trust account
- Asset protection from any personal or corporate litigation, divorce or creditors.
- Your assets and investments can grow and be sold tax-free
- You have complete control of your assets from a UK bank account
If this anything is unfamiliar to your accountant, it is likely because this structure is based on trust law—a field of study which accountants do not typically work with. In fact, trust law is mostly studied by lawyers, and it is they who developed this form of trust planning. However, just because your accountant may be unfamiliar with this type of fund management, does not mean that it is legitimate. In fact, this structure has been proven through years of application, and its elite designed was developed by the most studied barristers and lawyers.
In essence, what makes this structure so financially effective is that it:
- Allows you to retain your income and wealth
- Establishes a tax-free environment that is conducive to future growth
- Allows you to protect your assets
With an Umbrella Remuneration Trust, you can achieve all of these great benefits while being 100% transparent and following all UK laws and HMRC regulations. With a URT, you receive the best aspects, conveniences and familiarities of onshore banking with the outstanding benefits of an offshore fund.
Over 20,000 Offshore Trust funds have already been activated by well-informed UK residents who have been using advanced and elite tax planning and asset protection strategies over the past two decades.