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...

UK taxation of offshore trusts for non-domiciled and deemed domiciled settlors: settlements code, transfer of assets abroad, CGT ss 86–87, and PFSI protections (to 5 April 2025)

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Practice notes

Abolition of the remittance basis and introduction of a residence-based IHT regime from 6 April 2025

The Finance Act 2025 (FA 2025), which secured Royal Assent on 20 March 2025, enacts the abolition of the remittance basis and introduces a residence-based system from 6 April 2025. FA 2025 also removes Domicile as the principal test for inheritance tax liability. Additional reforms revise the rules for excluded property status, scrap the protected settlements status of offshore Trusts, and alter the overseas workday relief provisions. For further detail on these measures, 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.

Significance of Settlor’s domicile for offshore trusts

A trust’s exposure to UK income tax and capital gains tax (CGT) is governed by the residence of its trustees. In some situations, non-resident trusts can shelter income and gains arising outside the UK. See Practice Note: Tax position of non-resident trusts. For a non-resident trust with a UK-resident settlor, the settlor’s domicile is probably the most critical factor in deciding how far the trust’s non-UK income and gains are brought within UK taxation...

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Web page updated on 22/05/2026

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