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HMRC internal manual

Trusts, Settlements and Estates Manual

Non-resident trusts: residence rules: trust residence for Income Tax and Capital Gains Tax purposes - periods from 6 April 2007

ITA/S474 and TCGA92/S69(2)

From 6 April 2006 the trustees of a settlement are treated as a single person for both Income Tax and Capital Gains Tax purposes and this deemed person (referred to below as ‘the trust’) is distinct from the actual persons (individuals and/or companies) who act as the trustees.

From 6 April 2007 a common residence test applies for both Income Tax and Capital Gains Tax purposes.

All trustees are resident in the United Kingdom

The trust is resident in the UK for Income Tax and Capital Gains Tax purposes.

All trustees are resident outside the UK

The trust is not resident in the UK for Income Tax and Capital Gains Tax purposes.

There is a mixture of resident and non-resident trustees acting at the same time

The trust is resident in the UK unless the settlor was:

  • not resident in the UK and
  • not ordinarily resident in the UK and
  • not domiciled in the UK

at the time the settlor made or is treated as making the settlement and any time when the settlor adds property to the settlement. If the settlement arises on a settlor’s death then the settlor’s residence and domicile status are considered immediately before the death (ITA/S475(5) and ITA/S476, TCGA92/S69(2B) and (2C).

Professional trustee resident in the UK

There is no special treatment for UK resident professional trustees.

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Professional trustee not resident in the UK

A professional trustee who is not resident in the UK is treated as resident for income tax and CGT purposes if they are carrying on the business of a trustee through a branch, agency or permanent establishment in the United Kingdom. More detailed guidance on this particular point is available at TSEM Appendix 1(Word 151KB)