TSEM10050 - Non-resident trusts: residence rules: professional trustees not resident in the UK - introduction and background

Introduction

The following guidance gives HMRC바카라 사이트s view on the application of the residence tests in section 69(2D) Taxation of Chargeable Gains Act 1992 and section 475(6) Income Tax Act 2007 in relation to overseas trust companies, particularly those owned by UK-based groups.

Background

There have been longstanding tests to determinethe residence of trustees to establishwhether the trust of which they are a trustee is subject to UK tax.

However, these rules were different for Income Tax and Capital Gains Tax with the result that trustees could be UK-resident for Income Tax purposes but non-UK resident for Capital Gains Tax, or vice versa.

Therefore,in Finance Act 2006, as part of the Trust Modernisation programme, the 바카라 사이트 made some changes to the trustee residence test and introduced a common test for both Income Tax and Capital Gains Tax.

One of the objectivesof the Trust Modernisation programme was to provide greater consistency of approach between Income Tax and Capital Gains Tax in relation to the taxation of trusts so reducing the administrative burden especially on smaller trusts.

The new legislation, Section 69 Taxation of Chargeable Gains Act 1992 (and for Income Tax section 685E Income and Corporation Taxes Act 1988, now replaced by sections 475 and 476 IncomeTax Act 2007) took effect from 6 April 2007.

The rules that came into force on 6 April 2007 treat the trustees of a settlement as a single person, as distinct from the persons who may be trustees from time to time. The residence status of that single person (referred to below as the 바카라 사이트body of trustees바카라 사이트) at any given time is determinedin the first instance by the residence status of the persons who are trustees at that time:

  • If all the trustees are either resident in the UK or not resident in the UK, the residence status of the body of trustees follows that outcome.

  • If at any time at least one trustee is resident in the UK and at least one is not, the body of trustees is resident in the UK only if any settlor of the trust was resident, ordinarily resident or domiciled in the UK at any time when he or she introduced property into the trust.

Regardingthe second bullet point above, with effect from 6 April 2025 it is only the settlor바카라 사이트s residence or ordinary residence that is consideredin determiningthe trustee's residence. From this date the settlor바카라 사이트s domicile is no longer taken into account.