Excluded property trust meaning

ARCHIVED: This flowchart has been archived and is not maintained. These flowcharts were produced to help identify whether an asset counts as excluded property for UK inheritance tax (IHT) on or after 6 April 2017. From 6 April 2025, a new framework came into force, replacing domicile as the primary test for an individual’s IHT exposure with the concept of long‑term residence. The reforms also adjusted the criteria for when trust property falls within the scope of excluded property... From 6 April 2025, assets held in trust qualify as excluded property only where: they are non‑UK situs assets, and the settlor is not a long‑term resident of the UK at the point a potential IHT charge arises For more information, see Practice Note: New IHT regime from 6 April 2025—FAQs. The flowcharts consider whether an asset is excluded property by reference to the location (situs) of the property and, where relevant, the domicile of the beneficial owner or settlor...

In this issue Trusts Court of Protection Elderly and vulnerable clients UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Budgets and Finance Bills Contentious trusts and estates Pensions, insurance and tax efficient investments International Question of the week Additional Private Client updates this week Daily and weekly news alerts LexTalk®Private Client: a Lexis+® community New and updated content Dates for your diary Trackers Latest Q&As Useful information Trusts Insufficient credible evidence led to rejection of trustee expense claims (Hubbard v Hubbard) An account in common form concerning a trust holding development land, with trustees reporting to beneficiaries. The court determined the trustees failed to properly substantiate numerous costs, leading to substantial disallowances. Core principles include: trustees bear the onus to prove expenditure charged to the trust; poor or absent records are no excuse; and the court may grant a...

In this issue: Transferring property Property management Residential property Environment, energy and buildings Agricultural property Property in Scotland Property taxes Additional property updates this week Daily and weekly news alerts New and updated content Trackers Transferring property The Law Society’s new draft Code for signing and exchanging property contracts 2024 The Law Society is inviting conveyancers to comment on a fresh draft code covering the signing and exchange of property contracts. We review the proposals in detail. Refer to News Analysis: The Law Society’s new draft Code for signing and exchanging property contracts 2024. Consultation on transparency of ownership of land held on trust The Department for Levelling Up, Housing and Communities, the Department for Business and Trade, HM Treasury, and HMRC have opened a consultation aimed at improving transparency around land ownership where trusts are involved. Targeted feedback is sought on options to expand access to trust information held...

FTT holds that OIGs and AIPs arising in offshore protected trusts are not protected foreign source income (Louwman v Revenue and Customs Commissioners [2025] UKFTT 295 (TC)) What are the practical implications of this case? This outcome is adverse for former non-domiciled and deemed domiciled individuals who held investments via offshore trusts, including mutual funds that generate OIGs on sale and bond investments that produce AIPs when disposed of through such structures. In effect, the decision means that OIGs and AIPs arising within offshore protected trusts (under the rules in place up to 5 April 2025) are chargeable to tax on the arising basis, rather than being sheltered until distributions are made and matched to the trusts’ capital gains or benefits. From a tax policy perspective, these OIGs and AIPs ought to have been treated as ‘protected foreign source income’—not taxed as they arise, but only when paid out of an offshore protected trust and matched to capital gains or benefits arising within the trusts...

STOP PRESS: The Property (Digital Assets etc) Act 2025 received Royal Assent on 2 December 2025 and took effect that same day. Section 1 confirms that an item (including one that is digital or electronic in nature) is not disqualified from being the subject of personal property rights simply because it is neither a thing in possession nor a thing in action. This clarifies that digital holdings including cryptocurrency, non-fungible tokens and carbon credits can now be recognised as personal property. See LNB: 04/12/2025 2. STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, enacts the abolition of the remittance basis of taxation and replaces it with a residence-based regime from 6 April 2025. FA 2025 also removes domicile as the primary determinant of liability to inheritance tax. Further measures include revising the rules for excluded property status, ending the protected settlements status of offshore trusts, and alterations to overseas workday...

The pre-owned asset tax (POAT) is an inheritance tax (IHT) counter-avoidance provision, brought in by Schedule 15 to the Finance Act 2004 (FA 2004), and was intended to penalise users of IHT avoidance arrangements, though its reach goes wider than such planning in practice. POAT operates as a standalone yearly income tax charge on particular individuals, termed ‘chargeable persons’, specifically in respect of advantages they obtain as a former owner of property, or of assets traced from that property. The advantage may, for example, consist of occupying land, using or holding chattels, or having the ability to draw income or capital from a settlor-interested trust that contains intangible property. The statutory wording can be somewhat unclear at points. Nonetheless, as FA 2004, Sch 15 is designed to defeat structures under which a taxpayer enjoys assets that no longer form part of their estate for IHT, any doubtful points ought to be interpreted with that objective in view and context. Background Before 17 March 1986, a...

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime Finance Act 2025 (FA 2025), which received Royal Assent on 20 March 2025, enacts the ending of the remittance basis of taxation and introduces a residence-based system from 6 April 2025. FA 2025 also removes domicile as the principal criterion for determining inheritance tax liability. Further measures include updates to the rules for excluded property, the ending of protected settlements status for offshore trusts, and revisions to overseas workday relief. For detailed guidance, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025. Summary of key reporting obligations This Practice Note reviews a range of tax and regulatory frameworks that require trustees—or, in certain instances, the settlor or adviser—of a non-UK resident trust to disclose information about the trust to a UK public body...

FORTHCOMING CHANGE: Potential changes to Wills Act 1837 The Law Commission’s review of wills culminated in a final report on 16 May 2025. Volume II contains a Draft Bill proposing replacement of the Wills Act 1837. For details of these proposals, including the published draft legislation, see Practice Note: Hot topic—modernising Wills and Modernising wills: Final Report Volume II: Draft Bill for a new Wills Act. STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime The Finance Act 2025 (FA 2025), which received Royal Assent on 20 March 2025, implements the abolition of the remittance basis and introduces a residence-based regime from 6 April 2025. FA 2025 makes residence, rather than domicile, the main determinant of liability to inheritance tax. changes to the rules defining excluded property status; removal of protected settlements status for offshore trusts; and modifications to overseas workday relief. For further information, see Practice Notes: The abolition of the remittance basis of taxation...

FORTHCOMING CHANGE: Potential changes to Wills Act 1837 On 16 May 2025, the Law Commission’s review of Wills published its final report, formally setting out its conclusions, with Volume II containing a draft Bill intended to supersede the Wills Act 1837. For details of these proposals, including the published draft legislation, consult Practice Note: Hot topic—modernising Wills and Modernising wills: Final Report Volume II: draft Bill for a new Wills Act. STOP PRESS: Ending the non-dom regime and moving to a residence-based IHT regime. The Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, enacts legislation for the removal of the remittance basis of taxation and substitutes a residence-based system commencing on 6 April 2025. It also displaces domicile as the principal determinant of inheritance tax (IHT) liability for individuals. Further measures cover revisions to the rules for excluded property status, the removal of protected settlements status for offshore trusts, and alterations to overseas workday relief as applicable. For more on these reforms, see...

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime The Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, enacts the removal of the remittance basis of taxation, replacing it with a residence-based framework from 6 April 2025. FA 2025 likewise substitutes domicile as the primary factor for determining liability to inheritance tax. Further measures include: Revisions to the rules that define excluded property status; The abolition of the protected settlements status of offshore trusts; and Amendments to overseas workday relief. For guidance on these developments, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025. [Your ]Will—[ name of testator ]—[ explanatory note ] This [ explanatory note ] outlines the main provisions of your Will. Please read this [ explanatory note ]...