by Peter Pexton
Until 1991 offshore trusts provided a ready made route for residents of the United Kingdom to defer capital gains tax.
However, for trusts made after 19 March 1991 the tax regime has been become altogether harsher. The current situation is that where the UK settlor, spouse or their children of any age are capable of benefiting from the trust, then gains made by the offshore trustees will be taxable on the UK resident and domiciled settlor.
Trusts which start resident in the United Kingdom, and are then "exported" by appointing non-resident trustees, are subject to a capital gains tax charge on migration, effectively taxing any unrealised capital gains within the settlement. The exported trust is then taxable under the more onerous post 1991 regime, even if the trust were in fact created before 19 March 1991.
