Offshore Trust Loan to beneficiary


My client is the trustee of an offshore trust. They want to lend money to a beneficiary (UK resident) to purchase a property outside of the UK.

Why is the loan on non commercial terms treated as a taxable benefit? If interest was paid would it no longer be a taxable benefit?

Many thanks

My understanding is that if the loan carries interest at the official rate then it will not be considered to be a benefit. You have to ensure the interest is actually paid.

An interest free loan will be considered an annual benefit equal to the amount of the interest that would have been charged if interest had been charged at the official rate.

Paul Davies
Clarke Willmott