INTM601200 - Transfer of assets abroad: The income charge: Measure of income - offshore income gains

If the person abroad makes investments in offshore funds which are ‘non-reporting funds’, and on disposal of their interest in such funds makes a profit, the offshore income gain is regarded as income.

Although there may not be income tax due from the person abroad in respect of the offshore income gain, it may be regarded as income becoming payable to a person abroad for the purposes of the transfer of assets provisions.

Whether or not the offshore income gains constitute income for the purpose of the transfer of assets provisions is dependent on the offshore funds (tax) regulation 2009 (SI 2009/3001), and in particular regulations 20 and 24. The Investment Funds Manual (IFM) from page IFM13000 onwards provides further information on the amount of offshore income gains to be treated as the income of the person abroad, where the offshore income gains have been attributed to a UK resident individual under the regulations.