Concept
Trust analysis after 6 April 2025 is no longer built around the old non-dom protections. The live questions are trust residence, settlor interest, beneficiary benefits, matching to income and gains pools, excluded property, and long-term UK residence for inheritance tax. HMRC's TSEM4705 states that from 6 April 2025 domicile is no longer relevant to how individuals are taxed in the UK, and that protection from tax on foreign income and gains inside offshore settlor-interested structures is no longer available in the same way.
This is general legal information, not individual tax advice. UK residence, treaty position, trust attribution, company residence and IHT exposure turn on facts and documents.
Income, gains and benefits
A UK-resident settlor who retains an interest may be taxed on trust income as it arises, and benefits to UK-resident beneficiaries can be matched to the trust's income and gains pools. HMRC's TSEM4720 sets out the post-2025 benefit-charge mechanics. The FIG regime may relieve some settlor or beneficiary charges for a qualifying new resident in the relevant years, but it does not erase the pool mechanics or the matching rules — a benefit paid without a matching analysis is still a benefit.
Inheritance tax: long-term residence
From 6 April 2025 inheritance tax is residence-based, not domicile-based. HMRC's guidance for long-term UK residents and IHTM47001 explain that a person who has been UK resident for at least 10 of the previous 20 tax years is a long-term resident, within IHT on worldwide assets. UK-situs assets are always in scope regardless of residence. The status carries a tail: IHT exposure continues for between three and ten years after leaving the UK, scaling with how long the person was resident.
Before long-term residence
UK-situs assets are within IHT. Non-UK assets of a person who is not yet a long-term resident, and excluded property settled before the relevant date, can sit outside IHT — but the position must be tested, not assumed.
After long-term residence
At 10 of the previous 20 tax years the individual is within IHT on worldwide assets, and the excluded-property status of trust assets is tested on the post-2025 rules. The exposure persists for a three-to-ten-year tail after departure.
Scope
The page covers settlors, beneficiaries, protectors, trustees and family offices dealing with non-resident trusts, including discretionary trusts, reserved-power trusts, private trust companies, foundations, nominee arrangements and trust-owned companies. Mixed-residence families and non-UK-domiciled spouses need careful mapping.
Examples
A settlor who created a Jersey trust while non-dom but remains UK resident after 6 April 2025 can no longer rely on old protected-settlement treatment for the trust's current foreign income. A beneficiary who becomes UK resident and takes a distribution in a FIG year can have a different outcome from a beneficiary outside FIG. A family reaching 10 years of UK residence must model IHT before assuming non-UK assets stay outside the net, and again before departure because of the tail.
Checklist
- Map the settlor, beneficiaries, powers, trustees, underlying companies and assets onto one legal chart.
- Test whether the trust is settlor-interested and whether the settlor or beneficiaries are UK resident.
- Track income and gains pools and match every benefit, loan or distribution before it is paid.
- Test excluded-property status on the post-2025 rules, not the rules at creation.
- Count the settlor's and beneficiaries' UK residence years toward the 10-of-20 long-term-resident test.
- Model the three-to-ten-year IHT tail before any departure.
Common mistakes
- Treating historic trust protections as if they were still current law.
- Paying benefits or loans without a matching analysis.
- Trustee records that do not support the capital or income character of a payment.
- Assuming excluded-property status survives unchanged after 6 April 2025.
- Ignoring the IHT tail on departure.
Advisor trigger
A trust accountant can handle routine reporting where the structure and matching are documented. A UK tax solicitor or STEP practitioner should be involved where there is a settlor-interested offshore trust, post-2025 protected-settlement fallout, benefit-matching, excluded-property analysis, long-term-resident IHT exposure or a contemplated distribution, addition or wind-up.
Q&A
Are old protected settlements still protected
Not in the same way. From 6 April 2025 the protection from tax on foreign income and gains inside offshore settlor-interested structures is no longer available as before. A UK-resident settlor can be taxed on the trust's post-2025 foreign income as it arises, outside the FIG window.
Does FIG help trust beneficiaries
It can relieve some charges for a qualifying new resident in the relevant years, but the trust income and gains pools and the matching rules still apply. FIG does not convert an unmatched benefit into a tax-free one.
Is inheritance tax still based on domicile
No. From 6 April 2025 IHT for individuals is driven by long-term residence: UK resident for at least 10 of the previous 20 tax years brings worldwide assets into IHT. UK-situs assets are always in scope, subject to transitional and specific rules.
When does the IHT exposure end after leaving
Not immediately. A long-term resident keeps worldwide IHT exposure for a tail of between three and ten years after leaving the UK, scaling with how long the person was UK resident. UK-situs assets remain in scope indefinitely.
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