Deadline for 'non doms' with offshore assets fast
approaching
The end of January is a key deadline for
trustees of offshore trusts, who need to be considering whether
they should make a crucial 'rebasing' election by 31 January 2010
in respect of non UK trusts, says leading business and financial
advisor, Grant Thornton. The election allows
UK resident but non-UK domiciled individuals to save capital gains
tax.
This all stems from the major changes to the
UK residency rules that came into effect from 6 April 2008 but
which are only just beginning to bite as relevant tax returns now
have to be filed.
The election was introduced to help the
transition from the old residency rules to the new ones. If an
individual had a trust set up before 6 April 2008 then, when that
trust eventually disposes of assets, there may be gains that relate
to those pre-6 April 2008 assets. These can benefit from the
so-called 'rebasing' election which allows a revaluation as at that
date which in many cases will lead to a saving of capital gains
tax.
If the trustees wish to make the election they
need to complete a form (called the RBE1 which can be found on the
HMRC website) and it must be submitted to HMRC on or before the 31
January following the end of the first tax year (beginning with
2008/09) in which one of the following occurs: a capital payment is
made to a UK resident beneficiary or the trustees transfer all or
part of the settled property to another trust. This means 31
January 2010 is an important deadline for many trustees as, if they
miss this date, the opportunity to make an advantageous election
will be missed.
However, not everyone will need to make an
election at this time. For example neither of the conditions
mentioned above may have arisen in 2008/09. Others may opt to give
up the chance of an election to keep their offshore tax affairs
private from the eyes of HMRC.
Chris Mills, Director in the
Private Client team at Grant Thornton, comments, "High net
worth non doms will want to consider carefully the pros and cons of
making an election. Once made, it is irrevocable and applies
to all assets in the trust, most assets in its underlying companies
and those subject to the offshore income gain regime, regardless of
the assets standing at a gain or loss. If there is an element of
doubt as to whether a capital payment has been made then the
trustees should consider whether to make the election to cover off
the risk that the deadline for the election is missed.
"All non-resident settlements with one or more
current or potential non-UK domiciled beneficiaries should seek
advice on the availability of the election and the consequences of
making an election. Trustees should also be made aware of the
relevant time limits for making the election," Mills
concludes.
ENDS
For further information please
contact:
Chris Mills, Grant Thornton,
Grant Thornton Private Client Team, 07989 198 799
Suvra Datta, Grant Thornton,PR Manager, 0207 728 33275 or via
email on suvra.datta@gtuk.com