More anti-avoidance legislation on its way for offshore trusts

More anti-avoidance legislation on its way for offshore trusts

Wed 22 Nov 2017

The documentation supporting the Chancellor’s 2017 Autumn Budget included confirmation that the draft anti-avoidance legislation published in September will come into effect from 6 April 2018, with only a few very minor updates.

The purpose of the legislation is to tax payments from an offshore trust that are intended for UK individuals that may otherwise escape tax when they are made via a beneficiary who is resident overseas or who is able to almost choose when (and if) they would be liable to UK tax as a remittance basis user.

The legislation is widely drafted to capture many payments and benefits from an offshore trust including where there is an intention or an actual onward gift to a close family member. A close family member includes spouses, civil partners and minor children as you might expect but it also includes people who are living together as if they are married or in a civil partnership, so widens the potential ability for the relief to apply and brings into question – do we really have independent taxation in modern Britain?

The new rules will apply to direct and indirect onward gifting and gifting to multiple recipients so many offshore trusts could be caught under these new rules. Most non-UK domiciled but resident individuals and settlors and trustees of offshore trusts should already be aware that they must review their existing structures and affairs as a consequence of the new and proposed changes to anti-avoidance legislation (including these rules) and further explanation and guidance is due shortly on other points but the overall message is clear – there are only a few months before opportunities to efficiently plan are further narrowed.

For further information please contact Paul Barham (paul.barham@mazars.co.uk)

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