“Golden Trusts” – Your Last Chance

There is a looming change in the UK deemed domicile rules which means many may become UK domicile from 5th April 2017. As a result, those affected by the change could have greater exposure to the UK net for income tax, capital gains and inheritance tax (“IHT”).

There is a looming change in the UK deemed domicile rules which means many may become UK domicile from 5th April 2017. As a result, those affected by the change could have greater exposure to the UK net for income tax, capital gains and inheritance tax (“IHT”).

From 6th April 2017 individuals who have been resident in the UK for 15 out of the last 20 tax years (instead of 17 as in previous years) will now be deemed domicile. In addition to this, individuals with a domicile of origin who have since left the UK and become domiciled elsewhere may pick up a UK deemed domicile status if they return to the UK to take up residence.

Up to 5th April 2017, many UK non-domiciled individuals are able to only be taxed only on income and gains remitted to the UK and suffer IHT on UK situs assets.

From 6th April 2017, the chances of being UK domiciled are increased and the result may be that some individuals who are now deemed domiciled are subject to income tax, capital gains tax and IHT on their worldwide income and assets.

The response to the changes has led to the term “Golden Trusts”. A Golden Trust is no different in substance to any other offshore trust and the phrase has come about due to it being a last opportunity to remove assets from the widening UK tax net.

Establishing an offshore trust prior to 6th April 2017 will give individuals an opportunity to place assets with trustees, thereby making them “protected assets” for UK tax purposes.

The result of this is that UK domiciled individuals may now only be taxed on gains and benefits taken from trust assets, rather than on an arising basis, as would be the case if they held the assets personally.

Peregrine has a long history of establishing and administering Isle of Man Trusts and, since the announcement, Peregrine has been working with several UK tax specialists to help clients structure their affairs in the most tax efficient manner possible for the foreseeable future. If you would like to discuss the matter in more detail or would like us to put you in touch with a UK tax advisor, please don’t hesitate to contact our offices.

For more information, please contact Nick Kelly at nkelly@burleigh.co.im or call: +44 (0)1624 626586.

Peregrine Corporate Services Limited is licensed by the Isle of Man Financial Services Authority.

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