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Trust protections and CGT changes

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HMRC has published guidance about how the deemed domicile changes in Finance (No 2) Act 2017 and removal of the remittance basis from 6 April 2017 will affect trust protections in the settlements legislation, transfer of assets abroad legislation and CGT legislation.

The Finance (No 2) Act 2017 changes include measures to protect, other than in specified circumstances, the income of non-resident trusts settled by individuals not domiciled in the UK at the time they made the settlement.

The guidance looks at the impact of amendments to the legislation on attribution of gains (TCGA 1992, s 86 and 87), the settlements legislation (ITTOIA 2005 Part 5), and the transfer of assets abroad legislation (ITA 2007 Part 13), on non-resident trusts created by non-domiciled and non-deemed domiciled individuals as well as the special rules which will apply in some cases after a settlor becomes deemed domiciled. It does not cover the further measures for offshore trusts included in Finance Bill 2018 (Sch 10).

The guidance also covers:

  • tainting of protected settlements, where property is added that can result in the non-resident trust losing its protected status;
  • legislation introduced to determine how benefits are valued for the purpose of the benefits charges arising under the new proposals;
  • rebasing for CGT purposes; and
  • other CGT changes, including temporary non-residence provisions, foreign loss elections, and carried interest gains.