Distributor and Non-distributor status funds post Finance Act 1998

Distributor and Non-distributor status funds post Finance Act 1998

The Finance Act 1998 brought about two changes to the Capital Gains Tax treatment of non resident trusts which particularly affect their investment strategy. The two changes were as follows:

i) The charge on a UK domiciled/resident settlor on gains made by the trustees of a non-resident trust, where the settlor's immediate family or closely controlled companies are beneficiaries, was extended to settlors of trusts made prior to 19 March 1991. Previously the settlor provisions only applied to trusts made, added to or exported on or after 19 March 1991.

ii) The second change was to extend the provisions which charge UK domiciled/resident beneficiaries on the gains made by non-resident trusts where they receive capital payments from such trusts to trusts whose settlor was domiciled outside the UK. Previously the rules only applied to beneficiaries of trusts whose settlor was domiciled and resident on the UK.