Offshore trustees and non-doms: Key UK tax strategies for summer 2024

7th June 2024

Hot on the heels of our suggested strategies for non-doms, this article is specifically for non-doms and in particular the trustees of related non-UK resident trust structures. With the upcoming UK General Election on 4 July, and with less than nine months away from the anticipated UK tax changes, this moment serves as a crucial time for offshore trustees and non-doms to consider strategic actions over the summer.

Our main concern is that the nine-month window is very tight, especially for non-UK resident trustees. Restructuring potentially affected trusts to mitigate the full effects of the changes could carry significant risks that must be managed carefully and fully understood. This is particularly true for settlors who are UK resident but not UK domiciled (even if they are ‘deemed UK domiciled’ for UK tax purposes), and who have not decided to leave the UK before 6 April 2025, as they will face the consequences of the changes.

We recommend that trustees, the settlor and beneficiaries focus on the following aspects as soon as possible:

  • The settlor should review their common law ‘domicile’ status to ensure there remains a strong argument that they have retained a non-UK domicile status. This is going to be essential before any restructuring work can be carried out.
  • The trustees should also confirm the structure has not been ‘tainted’;
  • Subject to (1) and (2), the trustees should consider triggering unrealised capital gains to rebase assets and, where possible, bring forward non-UK source income before 6 April 2025 while the trust still qualifies for Protected Trust status; and
  • Look at the options of investing through tax wrappers that may defer UK tax (e.g., offshore investment bonds).

In some cases, there will also be the need to consider the ‘motive defences’ under both the Income Tax and Capital Gains Tax provisions, but one step at a time…

If trustees and settlors wait until the legislation is drafted, likely in autumn 2024, it will leave very little time to carry out the required review and implement any proposed plans. There may also be new legislation that prevents any restructuring.

Our Private Client & Trusts team have a wealth of experience and knowledge on the UK tax regimes for non-doms and offshore trust structures and will stay on top of important updates. For further advice, please get in touch.

Katharine Arthur

Partner, Head of Private Client
+44 20 7969 5610
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