Trusts are subject to the same taxes as individuals—income tax, capital gains tax (CGT) and inheritance tax (IHT)—but the application of those taxes varies according to the status and terms of the trust. The determining factor is most commonly the entitlement of the beneficiaries. Other relevant factors are the date of commencement of the trust, the age of the beneficiaries, and whether it was created during lifetime or on death. Therefore, the first step in working out how a trust is to be taxed is to read the trust deed or instrument to assess what type of trust it is. For a basic introduction as to how trusts are taxed, see Practice Note: Introductory guide to the taxation of trusts.
This subtopic deals with trusts that are resident for UK tax purposes and have no foreign connections (such as a non-UK resident or domiciled settlor). The concept of domicile has been removed for taxation purposes from 6 April 2025 and replaced with a concept of ‘long term residents’ For information on the taxation of trusts whose trustees are non-UK
To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.
**Trials are provided to all LexisNexis content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisNexis services please email customer service via our online form. Free trials are only available to individuals based in the UK, Ireland and selected UK overseas territories and Caribbean countries. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
This week’s edition of Private Client highlights includes: (1) Stock v Neal, where the court held that royalties were held as capital, not income,...
HMRC has published a General Anti-Abuse Rule (GAAR) Advisory Panel opinion, dated 30 January 2026, addressing inheritance tax (IHT) arrangements...
Q&A considers whether further 100% relievable agricultural or business property can be added by the same settlor to a pre‑30 October 2024 trust on or...
Tax analysis: In Elborne and others v HMRC, the Court of Appeal held that a 2003 inheritance tax (IHT) home loan scheme succeeded because the...
There must be at least two acting trustees to give a valid receipt for the sale proceeds of trust owned land. Where there is only one trustee, common practice is to appoint a second trustee on panel 11 of Form TR1 specifically for the purpose of giving valid receipt for the purchase monies. Provided
Trustees—removal of trusteesA trustee may be removed against their will in any of the following ways:•under an express power in the trust instrument•under section 36(1) of the Trustee Act 1925 (TA 1925)•by court order under TA 1925, s 41•by direction of the beneficiaries under section 19 of the
Termination of trusts—methods of terminationDuration of a trustThe duration of an express trust is subject to the restrictions imposed by the rules against remoteness of vesting and against the creation of trusts of perpetual or indefinite duration otherwise than for charitable purposes, and by the
If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal fees, will that count as a PET against their estate?A disclaimer is the refusal of a gift prior to acceptance. The refusal of the gift must take place before the beneficiary accepts any benefit
0330 161 1234