Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss the following:

Government amendments 60 and 61.

Schedule 12.

Clause 43 and schedule 12 make changes to ensure that the foreign income and gains arising within settlor-interested trust structures will no longer be protected from tax for non-domiciled and deemed-domiciled individuals who do not qualify for the four-year foreign income and gains regime, which we have been discussing in relation to earlier groups of clauses.

As we have established in previous debates in Committee, the Government are removing the outdated concept of domicile status from the tax system and replacing it with a new internationally competitive residence-based regime from April of this year. Currently, where a non-UK-domiciled individual settles an offshore trust, foreign income and gains arising within that trust are protected from UK tax, which remains the case even if the individual is later deemed domicile.

The changes made by clause 43 and schedule 12 will mean that from 6 April 2025, foreign income and gains arising in settlor-interested trusts will be taxed on the same basis as UK-domiciled settlors, unless the settlor is eligible for and claims the new four-year regime, regardless of when the trust was established. In addition, the trust protections will not apply to the legislation on the transfer of assets abroad. This will mean that all income arising in a settlor-interested trust or an underlying company can be taxed on a UK settlor as it arises if the transferor has the power to enjoy the income or receives capital sums from the trust or company.

Government amendments 60 and 61 ensure that the onward gifting provisions continue to operate effectively, as under the existing regime. These provisions ensure that taxpayers cannot avoid a liability to tax by diverting benefits to other persons not liable to that charge. The Government are committed to making the tax system fairer so that everyone who is a long-term resident in the UK pays their taxes here. The new regime ensures this while also being more attractive than the current approach, as individuals will be able to bring income and gains into the UK without attracting an additional tax charge. As we have debated already, this will encourage them to spend and invest these funds here in the UK. Therefore, I commend these provisions to the Committee.

Clause 43 and schedule 12 mirror the proposals that we set out in March 2024. The Minister will therefore be very pleased to hear that I have not picked up any significant murmurings of discontent on this clause, and I have no further comments.

I thank the shadow Minister and encourage him to respond in similar terms in future.

Question put and agreed to.

Clause 43 accordingly ordered to stand part of the Bill.