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As with individuals and companies, the extent of a trust’s liability to UK taxation is dependent upon its residence status. A trust which is UK resident is liable to UK income tax and capital gains tax on its worldwide income and gains (subject to double tax relief where applicable).

If it is not UK resident, its liability to income tax is restricted to UK source income. Its liability to capital gains tax is restricted to interests in UK land and the assets of a UK branch or agency. See below.

A trust’s liability to inheritance tax is not determined by residence but by the domicile of the settlor if they died before 6 April 2025, the long-term UK residence status of the settlor at the date of the chargeable transfer (subject to transitional rules) from 6 April 2025 onwards and where the trust property is situated. See the Excluded property trusts before and after 6 April 2025 guidance note.

Since non-resident trusts may escape liability to UK taxation, there are