Tax for UK resident beneficiaries on capital payments from non-resident trusts before 6 April 2025

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

Autumn Budget 2024

Tax for UK resident beneficiaries on capital payments from non-resident trusts before 6 April 2025

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

Autumn Budget 2024

This guidance note explains the rules for capital payments from non-resident trusts where the payment was before 6 April 2025. The abolition of domicile as a concept for inheritance tax and the remittance basis from that date means that new rules apply for distributions from 6 April 2025 onwards. For changes to domicile impacting remittance basis users and the foreign income and gains (FIG) regime, see the Abolition of the remittance basis from 2025/26 guidance note.

Introduction

Payments made by a non-UK resident trust to UK resident beneficiaries are governed by a series of ‘tax hierarchy’ rules, which govern the tax treatment of the amounts received by the beneficiary. See the Tax on UK resident beneficiaries of non-resident trusts (overview) guidance note.

The first step is to determine whether the payment is a distribution of income. If it is, the payment is subject to income tax according to the principles set out in the Tax on income distributions from non-resident trusts

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Tax for UK resident beneficiaries on capital payments from non-resident trusts before 6 April 2025