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Posted Fri, 22 Mar 2024 16:47:16 GMT by tax2024
I am a UK resident, NZ domicile. If I recieve an interest free loan from either a NZ trust or NZ resident individual, are there any tax consequences.
Posted Mon, 25 Mar 2024 08:54:32 GMT by tax2024
Would be grateful if anyone would let me know
Posted Tue, 26 Mar 2024 13:45:09 GMT by HMRC Admin 19 Response
Hi,

There are tax consequences to consider whether an interest free loan is received from a NZ trust or from a NZ resident individual. The transfer of assets abroad legislation applies when a 'relevant transfer' arises. Under these rules, an individual who makes the transfer, or who benefits from it, becomes subject to Income Tax.  

A relevant transfer is one which is a transfer of assets, and, as a result of the transfer, income becomes payable to a person abroad. You can see guidance here:

INTM600220 - Transfer of assets abroad: General conditions: Relevant transfer

INTM603640 - Transfer of assets abroad: Non-domiciled and deemed domiciled settlors from 6 April 2017: Valuation of benefits - payment by way of loan

As you will note, a person abroad may, in this context be an individual as well as trustees of non-UK trusts. You can see the guidance here: 

INTM600360 - Transfer of assets abroad: General conditions: Person abroad

The following guidanceINTM603640 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm603640) is potentially relevant if the loan is made by a NZ trust.  

INTM603640 - Transfer of assets abroad: Non-domiciled and deemed domiciled settlors from 6 April 2017: Valuation of benefits - payment by way of loan

You may also wish to review the following guidance for the general rules for determining a benefit under the provisions of s742B-s742E ITA 2007.

INTM601560 - Transfer of assets abroad: The benefits charge: Receives a benefit

You should also be aware of the exemptions from charge rules outlined here: 

INTM602620 - Transfer of assets abroad: Exemptions from charge: Introduction

Thank you.

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