Offshore trusts—rebasing elections
Produced in partnership with Suzanna Harvey of Burges Salmon
Offshore trusts—rebasing elections

The following Private Client guidance note Produced in partnership with Suzanna Harvey of Burges Salmon provides comprehensive and up to date legal information covering:

  • Offshore trusts—rebasing elections
  • Background
  • Rebasing
  • Qualifying conditions for rebasing to apply
  • How and when to make the election
  • Advantages and disadvantages of making the election
  • TCGA 1992, s 3 and attribution of gains of underlying companies
  • Application of TCGA 1992, s 43 (assets derived from other assets)
  • Transfers between trusts
  • Remittance and rebasing


Prior to 6 April 2008, individuals who were UK resident and non-UK domiciled (RND) could benefit from offshore trusts without incurring any liability to UK capital gains tax (CGT). This was the case even if the benefit was received in or enjoyed in the UK.

The Finance Act 2008 (FA 2008) implemented significant changes which provided that as of 6 April 2008 any UK resident beneficiary (including any settlor if they are also a beneficiary) who receives a capital payment from an offshore trust may be liable to CGT.

The potential tax liability is ascertained by applying the CGT matching rules in section 87 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), which operate as follows:

  1. any gains realised by the trustees at any time during the trust's existence will be pooled for trust accounting purposes

  2. when a beneficiary receives a capital payment from the trust, the value of the capital payment will be matched with any pooled gains

  3. the rules operate on a last in first out (LIFO) basis so present year gains are matched first with the capital payment. If the value of the capital payment is greater than the present year gains, the excess will be matched with the previous year's gains and so on until the capital payment or the pooled gains are exhausted.