The view offshore

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...