GLOSSARY
ˈtrænsfə(ː)r ɒv ˈæsɛts əˈbrɔːd
Produced by a Tolley Personal Tax expert
What does Transfer of assets abroad mean?
Transfer of assets abroad in a nutshell
If there were nothing in tax law to prevent them doing so, it would be relatively easy for individuals to avoid income tax by transferring assets abroad in such a way that they could still have the benefit of income produced by the asset. This result might be achieved by a transfer to an offshore trust, overseas company or other offshore entity. Not surprisingly, there is long-standing anti-avoidance legislation (the ‘transfer of assets abroad rules’) to deter such action, or at least nullify the tax advantage, by imposing a charge to income tax.
When does a tax charge potentially arise?
For the transfer of assets abroad rules to come into play:
• there has to be a transfer of assets
• there must be a tax avoidance motive present, and
• income must be payable to a person abroad as a result either of that transfer or of associated operations (as defined) or of the transfer together with associated operations
A 'person abroad' means a person who is non-UK
View the related Tax Guidance about Transfer of assets abroad
Transfer of assets abroad code
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Inbound migration
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Non-domiciled and deemed domiciled beneficiaries
Non-domiciled and deemed domiciled beneficiariesIntroductionThe current tax position of non-domiciled and deemed domiciled beneficiaries of...
Tax on UK resident beneficiaries of non-resident trusts ― overview
Tax on UK resident beneficiaries of non-resident trusts ― overviewIntroductionUK resident beneficiaries of non-resident trusts are subject to UK tax...
Notional income and anti-avoidance for tax credits
Notional income and anti-avoidance for tax creditsThis guidance note considers special tax credit rules which can treat someone as having income they...
Entity classification
Entity classificationImplications of entity classificationIf a subsidiary is established, it is important to determine how it will be treated for UK...
Domicile
DomicileIntroductionDomicile is one of the key factors to consider when deciding whether, or to what extent, an individual is liable to tax in the UK....
Shareholder issues ― international corporate structures
Shareholder issues ― international corporate structuresThis guidance note outlines how an international corporate structure can affect the tax...
Foreign self-employment
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Non-domiciled and deemed domiciled settlors
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Discover our 26 Tax Guidance on Transfer of assets abroad
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As a seasoned tax professional with a comprehensive understanding of the subject matter, let's delve into the key concepts highlighted in the provided article on the "Transfer of assets abroad." This glossary will aid in demystifying the intricate tax implications associated with such transfers.
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Transfer of Assets Abroad:
- Definition: The act of moving assets outside the jurisdiction in an attempt to potentially avoid income tax by retaining the benefits of income generated by those assets.
- Significance: The subject of long-standing anti-avoidance legislation, known as the "transfer of assets abroad rules," aimed at preventing such tax avoidance schemes.
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Transfer of Assets Abroad Rules:
- Definition: Anti-avoidance legislation designed to deter individuals from transferring assets abroad to circumvent income tax. It imposes charges to income tax when certain conditions are met.
- Conditions: The rules apply when there is an actual transfer of assets, a tax avoidance motive is present, and income becomes payable to a person abroad due to the transfer or associated operations.
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Person Abroad:
- Definition: A person who is non-UK.
- Significance: In the context of the rules, income must be payable to a person abroad for the transfer of assets abroad rules to be triggered.
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Inbound Migration:
- Definition: The scenario in which a company changes its tax residence.
- Significance: Relevant to understanding the reasons and implications when a company migrates for tax purposes.
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Non-Domiciled and Deemed Domiciled Beneficiaries:
- Definition: Individuals with specific tax statuses in the UK.
- Significance: Understanding the tax position of non-domiciled and deemed domiciled beneficiaries is crucial in the context of the broader tax landscape.
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Tax on UK Resident Beneficiaries of Non-Resident Trusts:
- Definition: Overview of the tax implications for UK resident beneficiaries of trusts located outside the UK.
- Significance: Provides a broad understanding of the tax obligations for individuals benefiting from non-resident trusts.
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Notional Income and Anti-Avoidance for Tax Credits:
- Definition: Special tax credit rules attributing notional income to individuals.
- Significance: Relevant for understanding how tax credits can be affected by notional income and anti-avoidance measures.
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Entity Classification:
- Definition: Determining the treatment of a subsidiary for UK tax purposes.
- Significance: Essential in assessing the tax implications of establishing a subsidiary within the UK.
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Domicile:
- Definition: One of the key factors determining an individual's liability to tax in the UK.
- Significance: Understanding domicile is crucial when evaluating an individual's tax liability.
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Shareholder Issues – International Corporate Structures:
- Definition: Examination of how international corporate structures impact tax.
- Significance: Provides insights into the tax implications of operating within international corporate frameworks.
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Foreign Self-Employment:
- Definition: Trading in another jurisdiction and the associated tax considerations.
- Significance: Emphasizes the importance of seeking advice when engaged in self-employment in foreign jurisdictions.
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Non-Domiciled and Deemed Domiciled Settlors:
- Definition: The significance of domicile for non-resident trusts.
- Significance: Explores the extent of a trust's liability to UK income tax based on the domicile of the settlors.
This glossary provides a foundational understanding of the terms and concepts related to the transfer of assets abroad and its associated tax implications. It underscores the importance of staying informed in a dynamic tax landscape, as evidenced by the continuous evolution of tax legislation highlighted in the article.
