The UK government’s recent announcement to abolish the long-standing non-domicile (“non-dom”) tax regime from April 2025 has sent ripples through the tax and wealth planning landscape. For decades, UK-resident but non-domiciled individuals have relied on trusts to shield offshore wealth from UK taxation under the remittance basis. Now, with the regime’s sunset approaching, one question looms large:
Are trusts still worth it in a post-non-dom world?
What’s Changing in 2025?
Under current rules, non-doms can elect to be taxed on the remittance basis for up to 15 years, meaning they are only taxed on their UK income and gains — and not on foreign income and gains (FIGs) unless remitted to the UK. Trusts have played a crucial role here: non-doms could settle offshore trusts without triggering UK inheritance tax (IHT), while deferring UK tax on trust income and gains indefinitely, provided funds were not remitted.
However, from April 2025, the government plans to replace the remittance basis with a new four-year FIG regime. In this new regime:
- Individuals resident in the UK for less than four years (after 10 years of non-residence) may be exempt from UK tax on foreign income and gains, even if remitted.
- Existing protected trust status will no longer apply. Trust income and gains will become taxable for all UK-resident settlors, regardless of when the trust was created.
This is a major shift, and one that brings many offshore trust structures back into the scope of UK taxation.
Are Trusts Still Useful?
While the loss of protected status narrows the tax advantages of offshore trusts, they are not obsolete. In fact, trusts remain a highly relevant planning tool in several areas:
1. Inheritance Tax (IHT) Planning
Even in the new regime, non-UK assets held within a non-UK trust may remain outside the scope of UK IHT, depending on the settlor’s domicile and residence status at the time of settlement. For UK-domiciled or deemed-domiciled individuals, the planning window is closing — but opportunities may still exist ahead of April 2025.
2. Asset Protection and Control
Trusts continue to provide robust benefits for succession planning, wealth protection, and asset control — particularly in multigenerational family structures and cross-border scenarios.
3. Post-Exit Planning
For individuals planning to leave the UK before or after the changes, trusts can still play a role in managing wealth tax-efficiently in their new jurisdiction, provided proper planning is in place.
4. Segregation of Funds
Where mixed funds exist (i.e., income, gains, and clean capital are combined), trusts may still offer a way to segregate income and capital to better manage UK tax exposure, albeit with less flexibility than before.
Key Considerations Before April 2025
If you are a current or former non-dom, or have settled a trust under the existing regime, it is critical to:
- Review existing trust structures to assess how income and gains will be treated post-April 2025.
- Reassess IHT exposure, especially for settlors and beneficiaries with increasing ties to the UK.
- Consider accelerating income or gains within the trust before April 2025, potentially taking advantage of the temporary repatriation facility (if introduced).
- Evaluate whether restructuring or resettling trust assets may offer long-term tax or administrative advantages.
Final Thoughts
While the heyday of the non-dom trust may be drawing to a close, trusts remain a powerful tool in international tax and estate planning. The key difference now is that they must be used more carefully and deliberately.
The post-2025 landscape will demand proactive, transparent, and bespoke planning — especially for globally mobile individuals with complex asset portfolios.
Need a Review of Your Trust or Wealth Planning Strategy?
Fusion Consulting Group’s team of international tax specialists can help you evaluate your options and navigate the upcoming changes. Whether you’re considering trust restructuring, UK exit planning, or reviewing your domicile exposure, we’re here to help.
Get in touch today to schedule a complimentary consultation.
