IFM13440 - Offshore Funds: participants in offshore funds: the charge to tax on disposal of an interest in a non-reporting fund: transfer of assets abroad
Regulation 21 of SI 2009/3001
Effect of transfer of assets abroad rules on an offshore income gain.
When an offshore income gain (OIG) arises to a person resident or domiciled outside the United Kingdom, then legislation relating to the transfer of assets abroad may apply in relation to that OIG as if the amount were income becoming payable to that person. The relevant legislation is at Chapter 2 Part 13 ITA 2007 – see INTM600000 for more details.
This regulation is subject to two exceptions, the first of which has since been repealed with effect from 6 April 2025 – see IFM13420.
Exception 1 - non-resident settlements (regulation 21(4) and (5))
Until 6 April 2025 this rule did not apply to an OIG (or a part of an OIG) that arose to the trustees of a non-resident settlement and which was consequently treated as arising to an individual resident or ordinarily resident in the United Kingdom. Instead the rule relating to OIGs arising to non-resident settlements took precedence (see IFM13420). From 6 April 2025, a charge to income tax in respect of offshore income gains arising to non-resident settlements can only arise for UK resident individuals under the Transfer of Assets Abroad provisions – see INTM600000 for more details. The effect of regulation 21 (4) and (5) is preserved in respect of OIGs matched under the non-resident settlement rules prior to 6 April 2025 by virtue of s53 (2) Finance Act 2026.
Exception 2- OIG treated as arising to person resident in the UK (regulation 21(3))
This rule does not apply to an OIG that arises to an offshore company and is, as a result of the rule described at IFM13442, treated as arising to a person resident in the UK as a result of the gain.