Excluded property trusts before and after 6 April 2025

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Trusts and Inheritance Tax

Guidance

This guidance note discusses the treatment of excluded property trusts before and after 6 April 2025 and the grandfathering rules that apply. In all cases where an ‘excluded property trust’ is discussed it is assumed that it holds only foreign situs assets which do not include property whose value is indirectly derived from UK residential property or holdings in an authorised unit trust in a share in an open-ended investment company.

The position before 6 April 2025

The position before 6 April 2025 was that a trust settled by a non-domiciled individual was non-UK domiciled for IHT purposes. Foreign assets held by a non-domiciled person are ‘excluded property’ and excluded property is outside the scope of IHT. Therefore if the trust held non-UK assets then it would be an excluded property trust. The status of the trust was fixed at the time that it was created and would have remained non-UK domiciled even if the settlor subsequently acquired a UK domicile (either under general law or under the deemed

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