Taxation of Non-UK Resident Trusts - How to Avoid the Traps

Introduction

The Finance Act 2025 fundamentally rewrote the UK tax treatment of non-UK resident trusts. The abolition of domicile-based protections means that settlor-interested trusts now face full transparency for income tax and capital gains tax purposes. The shift from domicile to long-term residence status has similarly transformed inheritance tax exposure, introducing new charging events and extended ‘tails’ that follow individuals for years after they leave the UK.

These changes create immediate compliance risks and planning challenges. Trustees and advisers must now grapple with complex attribution rules, the loss of motive defences in many scenarios, strict matching requirements for Qualifying Non-Resident beneficiaries, and a web of anti-avoidance provisions. Failure to adapt existing structures or properly advise on distributions could result in unexpected tax charges and wasted relief opportunities.

This webinar provides practical guidance on navigating the new regime, identifying key traps, and understanding when restructuring or exclusion strategies may be appropriate.

It is suitable for private client practitioners, trust and estate lawyers, tax advisers, wealth planners, and trust administrators advising high-net-worth individuals and families with cross-border structures. The webinar addresses UK tax rules affecting non-UK resident trusts and is relevant across all UK jurisdictions. It will also be of interest to advisers in Ireland and Europe who work with structures involving UK-connected settlors or beneficiaries.

What You Will Learn

This webinar will cover the following:

• Income tax and capital gains tax:
• How the abolition of domicile-based protections affects settlor-interested trusts and the circumstances in which motive defences still apply and why they remain vulnerable to challenge and future reform
• The practical difficulties with settlor and beneficiary exclusion strategies for income tax and CGT purposes
• How distribution matching works for Qualifying Non-Resident (‘QNR’) beneficiaries and the traps around UK income, delayed income, and the closure of the four-year QNR window
• The limitations of Temporary Repatriation Facility relief and the risks of inaction
• How UK tax can result where non-QNR UK residents receive gifts from trust beneficiaries
• Inheritance tax:
• How long-term residence status determines IHT exposure and the mechanics of the IHT tail
• The IHT charging events trustees must monitor, including funding, ten-year anniversaries, capital distributions, and settlor status changes and the interaction with gifts with reservation of benefit charges
• The critical timing distinction between pre- and post-6 April 2025 deaths
• Compliance and administration:
• Key administrative actions: tracking settlor residence, trust-to-trust transfers and trust registrations
• The need to segregate pre- and post-April 2025 income and gains

This pre-recorded webinar will be available to view from Thursday 3rd September 2026

Alternatively, you can gain access to this webinar and 2,300+ others via the MBL Webinar Subscription. Please email webinarsubscription@mblseminars.com for more details.