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Non-Doms and Tax Effective Gifts to Adult Children – But for How Much Longer?

With changes to the taxation of non-doms (ie UK tax resident non-UK domiciliaries) seemingly inevitable whatever the outcome of the General Election, it is worth revisiting this opportunity for a non-dom (whether or not the non-dom is still electing to be taxed on the remittance basis) to give untaxed funds to an adult child offshore and for that adult child to bring the funds to the UK tax-free, because it may be short-lived.

The basic requirements are simple:-

  • the gift must be made offshore (ideally the funds are transferred into an offshore account belonging to the adult child); and
  • neither the parent who makes the gift, nor other close family members other than adult children, benefit from the gift (whether directly or indirectly).

In practice, there are a number of steps which should be taken to ensure that any such offshore gift achieves its purpose, including:-

  • the mechanics of the gift and the bank accounts which are used;
  • documenting the gift for future evidential purposes;
  • the timing of the bringing of the gifted funds to the UK (generally the sooner the better);
  • reporting to HMRC; and
  • the use to which the funds are put once the funds have been brought to the UK.

If this opportunity is of interest to you, please speak to your usual Saffron adviser or to Nicholas Hughes.