UK Tax Changes Will Damage Channel Islands Trusts Business

Stephen Harris

29 February 2008

Proposed changes to the UK non-dom tax regime could have a seriously detrimental effect on the independent trust industry in the Channel Islands according to Rick Denton group head of Marketing and Business Development at Fortis in Guernsey. Many of the smaller trust companies in the islands have not diversified from servicing purely UK clients, a line of business that could be seriously threatened by new rules currently under revision before the UK Budget is revealed on 12 March. Revenue from the UK trust business is at risk due to possible restructure of those cases. “UK trust business is worth around £2 million for Fortis in Guernsey,” Mr Denton told WealthBriefing. “The loss of this business would not be a hammer blow to us as we have a widely-diversified operation. But many of the independents would find it difficult to survive if the draft rules, in their present form, are enacted.” The first wave of consolidation in the industry was after trust regulation was introduced in Guernsey five years ago. Mr Denton believes that the UK’s new non-dom tax regime will force Channel Islands independent trust companies to merge, restructure, relocate or close for business. “Fifty per cent of the smaller or independent trust companies in the Channel Islands are very reliant on UK associated trust business and will find their revenues severely affected," he said. According to Mr Denton, Switzerland could be the beneficiary, as existing trust companies domiciled in the islands choose a new location to offer a wider set of services to an enlarged target client base.