Offshore trusts—general principles

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This subtopic covers the non-taxation aspects of offshore private trusts. For guidance on the taxation of trustees, settlors and beneficiaries of such trusts, see: Offshore trusts—taxation—overview.

Guidance on onshore and offshore commercial trusts, including employee benefit trusts, can be found in the Commercial uses of trusts—overview and Share incentives (Private Client)—overview.

What is an offshore trust?

An offshore trust is simply a trust, the trustees of which are resident outside the UK, usually in a no/low tax jurisdiction.

Most offshore trust jurisdictions follow the basic common law principles of trust law, but are likely also to contain additional features such as:

  1. •

    the ability to appoint a protector

  2. •

    longer or unlimited duration and ability to accumulate income

  3. •

    clauses which enable the trust to re-domicile to another jurisdiction (also known as 'flight' or 'flee' clauses)

  4. •

    provisions which insulate the trust assets from attack by those claiming by reason of a personal relationship with the settlor (also known as 'firewall provisions')

  5. •

    the ability to create trusts for non-charitable purposes, or trusts with both beneficiaries and specified purposes

The most commonly used offshore trusts are:

  1. •

    discretionary

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Latest Private Client News

Private Client weekly highlights—14 August 2025

This week’s edition of Private Client highlights includes: (1) analysis of domicile and jurisdiction in divorce applications (Ramana v Kist-Ramana); (2) the Court of Appeal’s decision in Helliwell v Entwistle, which held that wilful non-disclosure invalidated pre-nup; (3) the Supreme Court’s decision that liability for fraudulent trading not limited to directors or other persons exercising management or control over the company in question (Bilta v Tradition Financial Services); (4) court confirms beneficiaries’ direction to personal representative to waive forfeiture rule following assisted death (In re the estate of David Peace); (5) analysis of Sayers v Dixon, an insolvency case, where several interspousal transfers were held to be a sham; (6) FTT’s decision that the pension of a non-UK resident was taxable under Article 17 of UK/Portugal double tax treaty (Trevor John Masters v HMRC); and (7) news of the first corporate prosecution of the offence of failure to prevent the facilitation of UK tax evasion, which has been brought against an accounting firm.

Bennett Verby faces 2027 trial over first UK failure to prevent tax evasion case

MLex: Bennett Verby, an accounting firm in the north of England, faces a trial in September 2027 over allegations that it failed to prevent tax evasion, in the first prosecution of the offence in the UK. Representatives for the company appeared at a court in Manchester on 7 August 2025.

FTT allows postponement of disputed VAT pending appeal due to taxpayer hardship (Clear Pay Payroll Ltd v HMRC)

Tax analysis: In Clear Pay Payroll Ltd v HMRC, the First-tier Tax Tribunal (FTT) allowed the taxpayer’s hardship application because it was satisfied that the general requirement for a taxpayer to pay a disputed VAT assessment before an appeal against the assessment is heard would in this case cause the taxpayer hardship.

HMRC Trusts and Estates Newsletter: August 2025

HMRC has published its August 2025 Trusts and Estates Newsletter, announcing several key developments in inheritance tax (IHT) administration and confirms that starting in April 2027, personal representatives will assume responsibility for IHT reporting on unused pension funds due to death in service benefits becoming IHT-exempt.

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