IFM13430 - Effect of residence / domicile of beneficiary on offshore income gains arising in non-resident settlement structures that are attributed under section 87 TCGA rules - regulation 20

Beneficiary is UK resident and domiciled

Where attributions are made to a beneficiary who is UK resident or ordinarily resident and is domiciled in the UK, then the full amount of the offshore income gain attributed is liable to tax on the beneficiary as income.

Beneficiary is UK resident but non-UK domiciled

Where attributions are made to a beneficiary who is UK resident or ordinarily resident but non-UK domiciled then, under section 87 TCGA rules, the full amount attributed may not be chargeable to income tax. Special rules may apply where the offshore income gains or capital payment were prior to 6 April 2008 – see the Capital Gains Manual from CG38730.

From 6 April 2017 a person may become deemed domiciled under s835BA ITA 2007. This document gives an introduction to the rules.

The full amount of the offshore income gain attributed to the individual reduces the OIG amount of the non-resident settlement structure that is available to match with future capital payments. That is so even though less than the full amount may be chargeable to income tax on the individual.

Beneficiary is non-UK resident

Offshore income gains can still be attributed to a beneficiary who is not resident or ordinarily resident in the UK using the section 87 TCGA attribution rules. This applies even though they may not be chargeable to tax on such an individual. Any such attribution reduces the OIG amount of the non-resident settlement structure that is available to match with future capital payments. Detail on the rules for matching capital payments can be found in the Capital Gains Manual from CG38700.