The UK’s proposals for non-doms and their structures

The UK’s new tax

The UK’s new tax regime for internationally connected individuals and their structures (as of 25 June 2025)The impact for trusts established or funded on or after 30 October 2024The status of new trusts will also be determined by whether or not the settlor is a Long-Term Resident.However, as and when the settlor has that status the trust will potentially face two forms of IHT exposure:• the trust fund will be within the scope of the “relevant property regime” (so subject to the various chargesof up to 6% described above); and• if the settlor can potentially benefit from the trust then the trust fund will also be deemed to be part of thesettlor’s estate (under the GWROB rules). This could expose the trust fund to IHT at a rate of up to 40%on the settlor’s death (in addition to the 6% charges applied by the relevant property regime).Again, if a settlor ceases to be Long-Term Resident, such that the trust becomes an excluded property trust,there could be an IHT exit charge.To the extent that pre-existing trusts receive additional funding on or after 30 October 2024, such additionalfunds will be subject to the new regime.Trusts with UK domiciled but non-UK resident settlorsTrusts established by UK domiciled settlors were previously within the relevant property regime even if thesettlor was non-UK resident.That changed under the new rules. For example, if a settlor is UK domiciled but was not Long-Term Residenton 6 April 2025 then the trust will have become an excluded property trust (such that non-UK assets in thetrust will be outside of the scope of IHT) from that date.In many cases this will be welcomed. However, the change in status may have triggered an exit charge of upto 6% of the value of the non-UK assets in the trust fund at the time and so thought should be given as tohow to fund this if relevant.Trusts with deceased settlorsIf the settlor of a trust has died then the IHT status of non-UK assets in the trust will depend on when thedeath occurred:• If the settlor died on or before 5 April 2025 then the trust will be an excluded property trust provided thatit met the previous criteria for such trusts (i.e. provided the settlor was neither domiciled nor deemeddomiciled when the trust was established and funded); whereas• If the settlor died on or after 6 April 2025 then the trust will only be an excluded property trust if thesettlor was not Long-Term Resident at their death. If the settlor was Long-Term Resident on death thenthe trust will remain within the relevant property regime for the remainder of its existence.In other words, if a settlor dies on or after 6 April 2025 then whether or not they are Long-Term Resident atthe time of their death will permanently impact the IHT exposure of any trusts they settled.Qualifying Interest In Possession Trusts (a sub-category of life-interest trusts)Qualifying Interest In Possession Trusts (known as “QIIPs”) are a particular type of fixed interest trust. Theperson who holds the fixed interest, also known as a life interest, (i.e. the person who is entitled to theincome of the trust) is known as the “life tenant”.The trust fund of a QIIP is treated for IHT purposes as being owned by the life tenant and is not within thescope of the relevant property regime.The application of the new rules to QIIPs is complicated (and the Long-Term Resident status of the lifetenant may be a relevant factor) but in practice if the trust fund benefited from excluded property status as of29 October 2024 then there is unlikely to be a charge to IHT on the death of the current life tenant.18

The UK’s new tax regime for internationally connected individuals and their structures (as of 25 June 2025)Domicile remains relevantWhen announcing the changes on 30 October 2024, the Chancellor stated that domicile will cease to be arelevant factor for (most of) UK tax law. However, it is important to recognise that it continues to play a rolein other aspects of UK law.For example, a person’s domicile is key to determining which country’s (or countries’) succession laws willapply to their estate on their death and can also impact matters such as divorce proceedings.Even in the context of taxation, domicile will continue to be important for the application of certain double taxtreaties.Domicile will therefore continue to play a role in UK law for many years to come.Other relevant tax changesThere were plenty of other announcements in the October 2024 Budget which have either come into forcealready or which are due to come into force. These include:• An increase in the rate of capital gains tax on most assets from a maximum of 20% to a maximum of24%, effective for disposals made on or after 30 October 2024;• An increase in the rate of stamp duty land tax (SDLT) paid on the purchase of second homes (thesurcharge for such properties increased from 3% to 5% with effect from 31 October 2024);• Business Property Relief and Agricultural Property Relief (both of which can currently reduce IHT by upto 100%) will be reformed from 6 April 2026. Rather than applying to an unlimited value of assets, theywill (in aggregate) be able to provide 100% IHT relief on up to £1m of assets and then 50% IHT relief onthe value of any qualifying assets in excess of that threshold;• Pensions will be brought within the scope of IHT from April 2027; and• The taxation of carried interest is changing (the tax rate has already increased but further reforms areexpected in 2026).How we can help:We have a vast amount of experience advising non-domiciled individuals and their structures, as well asthose moving to and from the UK.We can advise you as to how the new regime might impact you, help you plan your affairs accordingly andassist you in making the most of the transitional rules.Edward HayesPartnerT +44 (0) 117 939 2244M +44 (0) 7812 001 827E edward.hayes@burges-salmon.comThis document gives general information only and is not intended to be an exhaustive statement of the law. Although we have takencare over the information, you should not rely on it as legal advice. We do not accept any liability to anyone who does rely on its content.19