Taxation of trusts—inheritance tax

Copyright © 2026 LexisNexis

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime

Finance Act 2025 (FA 2025) which received Royal Assent on 20 March 2025, implements legislation to abolish the remittance basis of taxation and replace it with a residence-based regime, commencing on 6 April 2025. FA 2025 also replaces domicile as the key factor in establishing liability to inheritance tax. Other changes include amendment of the rules determining excluded property status, the abolition of protected settlements status of offshore trusts, and changes to overseas workday relief.

For information on these changes, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025.

Tax—introduction and background

An introduction to the taxation of trusts

The direct taxes which apply to trusts are the same as those that are relevant to individuals (namely income tax, capital gains tax (CGT) and inheritance tax (IHT)). The application of these taxes differs depending on the type and terms of the trust. For example,

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Existing user? Sign-in TAKE A FREE TRIAL
Powered by Lexis+®
Latest Private Client News

Clinical decisions and the Mental Capacity Act 2005 (Townsend v Epsom)

Private Client analysis: The case involved an application by the family of an incapacitated patient regarding the lawfulness of his clinicians’...

Private Client weekly highlights—21 May 2026

This week’s edition of Private Client highlights includes: (1) Jennings v Appleby, a decision granting permission for the trustees to terminate an...

Taxpayer avoids late payment penalties on reallocation of earlier tax payments (Herrmann v HMRC)

Tax analysis: In Herrmann v HMRC, the First-Tier Tax Tribunal (FTT) allowed the taxpayer’s appeal against late payment penalties and surcharges,...

Question of the week: Can a trustee use some of the trust fund to make payment of a mortgage on a property owned by a person who is not a beneficiary of the trust so that a beneficiary of the trust can move into the property in the future?

This Q&A refers to whether a trustee may use part of the trust fund to pay a mortgage on a property owned by a non-beneficiary, in order to enable a...

View Private Client by content type :  
News
Practice notes
Precedents
Q&As

Popular documents

Is a deed of appointment always required when appointing capital out of a discretionary trust?

Is a deed of appointment always required when appointing capital out of a discretionary trust?Generally, a deed of appointment is not always necessary when appointing capital out of a discretionary trust. Needless to say that is not the end of the matter. Appointment of capital from a discretionary

There must be at least two acting trustees to give a valid receipt for the sale proceeds of trust owned

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

What is the difference between an appeal and a review?

What is the difference between an appeal and a review?What is an appeal?An appeal in insolvency proceedings is no different to an appeal in normal litigation. An appeal will be allowed only if the appeal court is satisfied that the decision of the lower court was 'wrong' or 'unjust because of a

If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal

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
Is a deed of appointment always required when appointing capital out of a discretionary trust?

Is a deed of appointment always required when appointing capital out of a discretionary trust?

Is a deed of appointment always required when appointing capital out of a discretionary trust?Generally, a deed of appointment is not always necessary when appointing capital out of a discretionary trust. Needless to say that is not the end of the matter. Appointment of capital from a discretionary

There must be at least two acting trustees to give a valid receipt for the sale proceeds of trust owned

There must be at least two acting trustees to give a valid receipt for the sale proceeds of trust owned

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

What is the difference between an appeal and a review?

What is the difference between an appeal and a review?

What is the difference between an appeal and a review?What is an appeal?An appeal in insolvency proceedings is no different to an appeal in normal litigation. An appeal will be allowed only if the appeal court is satisfied that the decision of the lower court was 'wrong' or 'unjust because of a

If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal

If a beneficiary signs a deed of disclaimer of their share of an estate and the estate pays their legal

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