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Private Client Section

Non-dom reforms: Offshore trustees survey

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We invite off-shore trustees to complete a brief survey to help identify potential issues with proposed changes to offshore trusts.

Recently published proposals regarding offshore trusts appear to conflict with a previous policy commitment made by the government in 2015, which professional advisers and clients have relied on to structure their affairs.

In the Summer Budget 2015, the government proposed a series of changes to the regime for taxing foreign domiciliaries. Long-term resident foreign domiciliaries were to be taxed as deemed UK domiciliaries. Special trust protections were promised, however, stating that: ‘Non doms who have set up an offshore trust before they become deemed domiciled here under the 15-year rule will not be taxed on trust income and gains that are retained in the trust …’.

However, a change to regulation 19 of the Offshore Funds (Tax) Regulations 2009 is needed to protect gains realised on non-reporting funds held within otherwise protected trusts. If the change is not made – contrary to the government’s policy intent – long-term resident foreign domiciliaries will be taxed on offshore income gains, even though such gains are retained in the trust.

The Chartered Institute of Taxation is therefore asking offshore trustees to complete their short survey. This will help to indicate approximately how many protected trusts with investment portfolios hold non-reporting funds.

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