Entity Setup
Entity Setup & Effective Structure under the Reformed Non-Dom and Trust Rules
With UK non-dom status being replaced and trust protections curtailed, choosing the right entity or trust setup has never been more critical—in this article we explore how individuals can structure family estates, investment vehicles, and businesses to align with the new tax framework from April 2025.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## The Changing Landscape for Entities & Trusts
A major feature of the UK’s tax reform from **6 April 2025** is the removal of domicile status as a connecting factor in UK taxation. Trusts and other structures which benefited from non-dom laws will face significant changes: overseas trust income and gains will be taxed “on arising” rather than remittance, when associated with long-term UK residents. ([gov.uk](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai))
## Key Implications for Trusts & Estates
- *Settlors or beneficiaries* who have been UK resident for over 4 years will be taxed on overseas trust income/gains as they arise. ([gov.uk](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai))
- Assets held via overseas trusts will lose earlier advantages; transitions will be required. ([gov.uk](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai))
- Inheritance Tax (IHT) will shift from domiciliary to residence-based triggers, subject to ongoing consultation. Estates with non-UK assets will need review. ([gov.uk](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai))
## Recommended Entity & Trust Setup Strategies
1. **Relocate family assets into trusts with UK-resident trustees** to simplify compliance and reduce foreign income tax exposure.
2. **Consider personal ownership** rather than a trust if the trust adds complexity but yields little tax benefit under new rules.
3. **Establish business entities in jurisdictions with appropriate treaties**, focusing on double tax agreements to mitigate withholding taxes and minimise foreign tax exposure.
4. **Evaluate legacy trusts** currently benefitting under old domicile rules before the arising basis applies to avoid retroactive surprises.
5. **Use corporate wrappers** or investment vehicles taxed at corporate rates where beneficial, maybe reinvesting through UK-oriented funds or structures.
## Practical Example Setup
A family wants to hold an overseas rental business and distribute income to UK-resident beneficiaries:
- They might set up a UK holding company instead of an overseas trust to own the property. UK company profits could benefit from the corporation tax regime rather than individual arising-basis rules.
- Alternatively, if keeping a trust, ensure trustees opt into UK residence or execute distributions timed during FIG-eligible years when UK residence count is lower.
## Actions for Compliance & Long Term Stability
- Revisit existing trust deeds to assess potential adverse effects under the new regime.
- Work with legal advisers to amend trust terms if flexibility is needed.
- Ensure full visibility over who the settlors, beneficiaries and trustees are, where they are resident, and how distributions are made.
- Update IHT estate plans to align with residence-based IHT rules once confirmed.
## Takeaways
With the reforms, tax benefits from certain entities or trusts are reduced—but with foresight and careful structuring, individuals can maintain efficient and compliant ownership of assets. The key is to plan now, leverage the transition rules, and adapt entities to the new residence-based tax world.