Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Trust definition

What does Trust mean? A trust is a legal arrangement in which one or more trustees hold and manage property (the trust property) for the benefit of beneficiaries. It is primarily defined by case law rather than a single statute, though key rules appear in legislation (for example, writing requirements and trustee powers). Trusts arise by express declaration (usually by a settlor), by operation of law (resulting or constructive trusts), or under statute, and are used in private client, commercial, pension and charitable contexts. Core features include: the trustee’s fiduciary duties to act loyally, prudently and in accordance with the trust terms; control...

Offshore trusts: trustee borrowing anti-avoidance under TCGA 1992 Sch 4B-4C: transfers of value, outstanding loans, deemed disposals and Sch 4C matching

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Practice notes

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 removal of the remittance basis of taxation and introduces a residence-based system from 6 April 2025. FA 2025 also makes residence, rather than domicile, the primary criterion for inheritance tax liability.

Other updates include:

Changes to the Rules for assessing excluded property status
Abolition of the protected settlements status for offshore Trusts
Amendments to overseas workday relief

For details on these reforms, 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.

The Trustee borrowing rules, brought in during 2000, targeted a planning device known as a ‘flip-flop’. This mechanism enabled the Settlor of an offshore trust to avoid a tax charge under section 86 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), and permitted beneficiaries to escape a charge on capital payments under TCGA 1992, s 87...

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Dhana Sabanathan

Michelmores

Dhana is a Partner in the Tax, Trusts and Succession team in London, part of the Firm's private wealth group. She joined Michelmores in 2023 from Winckworth Sherwood, where she was a Partner in the Private Business and Wealth team for over five years, and prior to that a Partner at an international law firm. Dhana's experience is in the private client and wealth management sector, where she specialises in working with high net worth and ultra-high net worth individuals, family offices, entrepreneurs, corporates and owner-managed businesses. She advises significant family offices and in addition to UK based clients, acts for clients based in Europe, the US, Asia and the Middle East.'Independently ranked' for Private Wealth Law in the Chambers High Net Worth Guide 2022 and recommended in the Legal 500, Dhana is also recognised in the Citywealth Leaders List as well as Eprivate Client. She is a...

Web page updated on 21/05/2026

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