Entity Setup

Entity Setup & Planning: Using Trusts After UK’s Non-Dom Reforms

With the non-dom regime overhauled, how should entities and trusts be structured (or re-assessed) to manage tax risk and inheritance exposure under the new laws?

By NomadicTax Research Team • 5-8 min read • April 22, 2026

## Trusts & Offshore Structures Under the New Rules - From **6 April 2025**, the concept of domicile is replaced with a residence-based regime. That means settlors and beneficiaries of **non-resident trusts** (or previously non-dom or deemed non-dom individuals) are more exposed to tax if trust income is used for their benefit, regardless of whether income is remitted or not. ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4705?utm_source=openai)) - Trusts settled or benefiting after 6 April 2025 lose many of the protections formerly available under the old non-dom regime. Even income retained offshore may be taxed if it's used as a benefit or onward gift to the settlor or close family member. ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4705?utm_source=openai)) ## Inheritance Tax Exposure & Residency Based IHT - Inheritance Tax (IHT) is moving towards a **residence-based system** from April 2025; consultations are still underway for detailed design (residence criteria, tail provisions, trust interactions). ([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)) - If a settlor is non-UK resident initially but becomes UK tax resident, trust property—even non-UK assets—may come into scope depending on trust structure and use. ([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)) ## Structuring Recommendations & Actionable Steps - Review existing trust deeds and structures: determine when income was generated, whether assets are already “within scope” under old trust protections. - For new entities or trusts: plan structures with tax residence, benefit streams and distributions in mind. Avoid late-entry traps where assets built up offshore become taxable when a UK resident beneficiary accesses them. - Consider succession and inheritance planning now—if beneficiaries likely to reside in UK long term, IHT exposure on trust-held assets may increase. - Document clearly which trust assets, income and gains arise pre-6 April 2025 vs after; transitional rules may allow relief or reduced rates (e.g. Temporary Repatriation Facility). ## Example Scenario *The Smith Family Trust* holds foreign property and investments. The settlor was previously non-dom and used trust protections. Post-April 2025, the settlor (now UK tax resident) uses income from the trust for personal benefit. Under new rules, that income may be taxed in the UK, even if the income is never remitted, because of the link via benefit or gift. If a new settlor trust is established after 6 April 2025, trust assets are more likely to be exposed under the residence-based IHT system. ## Final Thoughts Trusts remain powerful tools, but the recent reforms increase transparency and exposure. Getting ahead with proper documentation, residence planning, and professional structuring advice will help preserve benefits while reducing tax risk under the new non-dom and IHT frameworks.