Income Tax (Trading and Other Income) Act 2005 section 632

Offshore income gains

Section 632 deals with the tax treatment of offshore income gains arising from assets held in trust for a minor child of the settlor, ensuring such gains are treated as income paid to the child for the purposes of the settlor-interested trust rules.

• Applies where a trustee disposes of assets held for a minor who would otherwise be absolutely entitled to those assets but for being under 18
• Any offshore income gain on the disposal is treated as income paid to the minor for the purposes of the settlements legislation (sections 629 and 631)
• This means the gain may be taxed on the settlor parent rather than the child, in line with the anti-avoidance rules for parental settlements
• The term "offshore income gain" takes its meaning from Chapter 5 of Part 2 of the Offshore Funds (Tax) Regulations 2009