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Tax on income distributions for beneficiaries of non-resident trusts (6 April 2025 onwards)

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Tax on income distributions for beneficiaries of non-resident trusts (6 April 2025 onwards)

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
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This guidance note explains the treatment of income from a non-resident trust which is not settlor interested. This note applies to income entitlements from 6 April 2025. The treatment of Income for previous years is explained in the Tax on income distributions from non-resident trusts guidance note.

Introduction

The tax liabilities of UK resident beneficiaries of non-resident trusts are governed by a series of ‘tax hierarchy’ rules. See the Tax on UK resident beneficiaries of non-resident trusts (overview) guidance note.

The first step is to establish whether:

  1. •

    the beneficiaries’ entitlement under the trust is fixed or discretionary, and

  2. •

    any payment is capital or income

The nature of the beneficiaries’ interest will help to determine what type of payment it is. This is discussed further in the Tax on UK resident beneficiaries of non-resident trusts (overview) guidance note.

Payments of and entitlement to income are subject to income tax according to the principles set out in this guidance note.

Fixed interest

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