Offshore trusts watch for Labour action on tax

People with assets in offshore trusts in the Channel Islands may end up paying more tax under the new Labour-run UK Government, a finance expert believes.

There had been speculation that Labour, which won a decisive majority in the UK General Election, could take a stricter approach to tax on such assets.

Andy Shaw, a tax director at Grant Thornton in Jersey, said trustees would be watching "very closely" what happens.

"We need to meet a wait and see what the Labour Budget brings later in the year," he said.

Mr Shaw said those who structure asset ownership in trusts through the islands may do so "not just for tax but also for asset protection, family wealth, succession planning, etc".

Labour had indicated that there would be "potentially fairly major changes", he said.

"This is one of the bigger shake-ups for quite some time.

"So, as an industry, we have to become resilient, agile to change.

"And there are some opportunities also that will present from this."

So-called non-doms, those who live in the UK, but whose permanent home is outside the UK and who pay no tax in the UK from offshore earnings, could be affected, he said.

Former Conservative chancellor Jeremy Hunt announced in April that non-dom status would be scrapped.

"The Labour Party largely agreed to that approach," said Mr Shaw although the party said they would have gone further.

Labour had also said existing inheritance tax protection for trusts would go, he said.

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