Trusts can still play a powerful role in wealth planning, asset protection, and succession. But with the changes that came into play earlier this year, many of the old assumptions no longer hold true. At Dunkley’s Accountants, we are helping clients across Bristol and the UK adapt to the new trust landscape and continue to secure tax relief where possible.
What’s Changed for Trusts
- The protections for trusts involving foreign assets (so-called “excluded property trusts”) have been reduced or removed. Under the new rules, a trust which was previously shielded by domicile-based rules may now lose that status if the settlor becomes a long-term UK resident.
- The remittance basis is abolished. Now, non-UK income and gains in trusts may be taxed on an arising basis if the settlor is UK resident and has powers to benefit from the trust.
- Non-UK resident trusts: trustees must now apply revised rules on reporting, taxation of gains, and income. Some protections for non-resident trust structures have been changed.
- The shift to residence-based IHT system also affects how trust assets (especially non-UK assets) are treated. If a settlor or beneficiary becomes a long-term resident, the trust may attract IHT charges such as exit or relevant property charges.
What Trusts Still Offer – And Where Tax Relief May Apply
Though the environment is more complex, trusts remain useful in several scenarios:
- Protection and control – distribution control, safeguarding for minors or vulnerable beneficiaries.
- Tax relief on qualifying business or agricultural assets can still apply if assets in trust meet the conditions.
- Mitigating IHT exposure via trust structuring where demographics and residence tests align correctly.
- Estate planning flexibility – you can time distributions, manage timing of liabilities, and adapt to changes in tax regimes.
Risks and Pitfalls to Watch
- If you or the settlor become long-term UK residents, previously excluded assets may become taxable.
- Trusts must be re-examined carefully: especially settlor-interested trusts (where the settlor retains benefit), which are front of HMRC’s scrutiny.
- Record keeping, valuations, and reporting will be increasingly essential – mistakes are more visible under the new regime.
- Tax reliefs for trusts are more constrained; aggressive planning could be challenged.
How Dunkley’s Can Support You
Navigating trust law and taxation requires specialist knowledge. Dunkley’s offers:
- Review of trust arrangements under the new framework
- Advice on restructuring or winding down trusts that may be disadvantageous
- Modelling tax outcomes to optimise the use of tax relief and mitigations
- Ongoing compliance, documentation, and reporting support
Final Thoughts
Trusts remain a powerful tool in thoughtful planning, but the rules have changed. What was once relatively safe under domicile-based regimes may now need rethinking. With careful advice and proactive review, you can reposition your trusts to work under the new system.
If you’d like advice on this, or any aspect of your finances, contact our experienced team here at Dunkley’s Accountants. Call us or book a consultation online to get started on 01454 619900 or email advice@dunkleys.accountants.