Commentary

I5.1221 Settlor's income tax liability under the transfer of assets abroad code

IHT, trusts and estates

I5.1221 Settlor's income tax liability under the transfer of assets abroad code

I5.1221 Settlor's income tax liability under the transfer of assets abroad code

Transfer of assets abroad—overview

The transfer of assets abroad provisions (see Division E1.11) target situations where assets have been moved or are situated offshore to avoid UK income tax on the income arising1.

Funds provided to a non-resident settlement constitute a transfer of assets abroad for the purposes of these provisions.

These anti-avoidance provisions, which attribute the trust's income to the settlor in a number of scenarios, received a major overhaul from 6 April 2017 and it is these rules that follow.

The main charges apply where:

  1.  

    (a)     the settlor has power to enjoy income from assets transferred abroad2

  2.  

    (b)     the settlor receives capital sums from assets transferred abroad3

  3.  

    (c)     an individual receives a benefit out of assets that are available as a result of a transfer of assets abroad4

  4.  

    (d)     a benefit is provided out of PFSI to a close family member who is not taxable because they are not UK resident or they are a remittance basis user5

Before 2017/18 the charge in (c) only applied to non-transferors; from this date onwards the charge applies to settlors in certain circumstances (see below).

From 2018/19 a charge may additionally apply to the settlor where an onward

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