Tax on UK resident beneficiaries of non-resident trusts ― overview

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance

Tax on UK resident beneficiaries of non-resident trusts ― overview

Produced by a Tolley Trusts and Inheritance Tax expert
Trusts and Inheritance Tax
Guidance
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This guidance note outlines the UK tax treatment of UK resident beneficiaries of non-resident trusts. It considers how to identify whether a distribution is of income and capital and where it is income, how the different types of interest are treated. It outlines how the transfer of assets abroad code applies and how capital gains of the trust could be attributed to a beneficiary under TCGA 1992, s 87. It also outlines the changes made from 6 April 2025 and directs the reader to more detailed guidance.

Introduction

UK resident beneficiaries of non-resident trusts are subject to UK tax on payments or benefits received from the trust. They are liable for income tax on income distributions from the trust and they may also be liable to income tax or capital gains tax on payments of capital from the trust.

In contrast to UK settlors of non-resident trusts, the liability of beneficiaries is determined by the extent of their entitlement or the amounts actually paid to them. They have

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