Trusts and Non-Long-Term Resident Inheritance Tax (IHT) Reforms
The government is closing loopholes for non-long-term UK residents and trusts. From 6 April 2026, trusts that relocate situs before exit charges will be caught under new rules, and long-term UK residents & overseas investors will receive equal treatment regarding UK agricultural property. (gov.uk)
What qualifies as a 'long-term resident'?
Defined as someone who has been a UK resident for 10 of the previous 20 tax years, and then remains in scope for 3-10 years after leaving. Non-UK assets and interests in trusts may become subject to UK IHT depending on residence status. (gov.uk)
Changes to Employee Benefits & Expenses Reliefs
From 6 April 2026, certain employer-reimbursed costs such as eye tests, home working equipment and flu vaccinations will be exempt from Income Tax and National Insurance. Also, relief for employees for non-reimbursed home-working expenses is being removed; only employer-reimbursed or provided items qualify. (gov.uk)
Key Compliance Actions
- If you operate or benefit from a trust, review situs changes or settlor interests. For overseas trust holders, pre-2025 foreign income may be taxed under new matching or IHT rules.
- Employers: set up policies to reimburse home-working expenses correctly; ensure taxable benefit reporting follows new exemptions.
- Employees: make sure any home-working expenses you pay yourself are not assumed deductible after April 2026—unless employer covers them.
- Prepare for enquiries: IHT valuation of agricultural property and trust exit charges may now include overseas or offshore interests where previously avoided.
Examples
- Landowner “GreenFields Ltd.” owns UK agricultural land via offshore trust: under the new rules, this may now be taxed like land held onshore, if trust is overseas or settlor-interested.
- Employee “Alex” works from home and buys a desk himself: previously could claim some deduction if self-employed or via policy, but after 6 April 2026 this relief is removed; must get reimbursement from employer if available.
Conclusion: Budget 2025 introduced multiple compliance changes that will bite from April 2026. Trust owners, long-term residents, employers, and employees alike should perform tax health checks now—make sure policies, benefits, and structures are compliant to avoid surprise liabilities.