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Tax on UK resident settlors of non-resident trusts (to 5 April 2025)

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

Tax on UK resident settlors of non-resident trusts (to 5 April 2025)

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
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This guidance note details how UK resident settlors of non-resident trusts are taxed in the UK before 6 April 2025. The abolition of the domicile rules and remittance basis rules mean that the treatment after this date is different.

Where a UK resident settlor has created a non-UK resident trust, they may become personally liable to income tax or capital gains tax in relation to the trust’s income or gains, even if they do not receive a payment from the trust. The following legislative provisions levy a potential charge on UK settlors of non-resident trusts:

  1. •

    the settlements code set out in ITTOIA 2005, ss 619–648 imposes an income tax charge on settlors with respect to income arising within a ‘settlor-interested’ trust. The provisions apply equally to UK resident and non-resident trusts

  2. •

    the transfer of assets abroad code (TAAC) set out in ITA 2007, ss 714–747 imposes an income tax charge on settlors who may benefit from a non-resident trust as a result of a ‘relevant

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