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A practical look at the tax treatment of gains by offshore trusts
KEY POINTS
- Offshore trusts and identifying offshore income gains.
- Interaction with the use of the remittance basis.
- The primary and secondary matching rules.
- Comparisons for domiciled and non-domiciled settlors.
- Four scenarios and worked calculations.
Offshore income gains (OIGs) form a significant part of the investment portfolios of many offshore trusts.
However an offshore trust and its settlor and beneficiaries are taxed differently from a UK resident trust and this further contributes to the complexity of the taxation of OIGs accruing to an offshore trust.
A strong understanding of how offshore trusts are taxed is assumed for the technical points raised in this article; but very broadly such trusts are not liable to UK income tax unless they hold assets that generate UK-sourced income.
Further non-UK resident trustees...
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