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HMRC internal manual

Trusts, Settlements and Estates Manual

From
HM Revenue & Customs
Updated
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Non-resident trusts: residence rules: trust residence for Income Tax and Capital Gains Tax purposes - periods from 6 April 2007 - changes during the tax year - examples

Example 1 - individual acting as trustee changes residence

The Alpha Trust was established many years ago and A an individual has been acting as sole trustee. A has been resident overseas. However, on 1 October 2013 he comes to live in the UK and is considered to be UK resident from that date. As A has become resident in the UK during 2013-14 the Alpha Trust is considered UK resident for both Income Tax and Capital Gains Tax for the whole of 2013-14.

Example 2 - individual ceases to act as trustee

The Beta Trust was established many years ago and A an individual has been acting as sole trustee. A has been resident overseas. However, on 1 October 2013, A comes to live in the UK, after resigning as a trustee on 25 September 2013 and is replaced as trustee by B who is not resident in the UK. As A only acted as a trustee of the Beta Trust during the part of the year 2013-14 when he was not resident in the UK he is regarded as being not resident in the UK when determining the Trust’s residence for the year. As B is not resident in the UK for any part of 2013-14 the Beta Trust is considered non-resident for both Income Tax and Capital Gains Tax for the year.

Example 3 - individual ceases to act as trustee

The Gamma Trust was established many years ago, and A an individual has been acting as sole trustee. A has been resident overseas. However, on 1 October 2013, A comes to live in the UK and resigns as trustee on 1 December 2013. B, who is not resident in the UK, replaced A as trustee on 1 December 2013. As A acted as a trustee of the Trust during the part of the year in which he was resident in the UK, he is regarded as resident in the UK when determining the Trust’s residence for the year. In the circumstances, the Gamma Trust is considered to be UK resident for both Income Tax and Capital Gains Tax for the whole of the year 2013-14.

For the year 2014-15 assuming that B remains trustee and continues to be non-resident the Trust will be non-resident.

Example 4 - change in corporate trustees

A Ltd, a trust company resident overseas, has always acted as sole trustee of the Delta Trust. On 1 October 2013, A Ltd resigns as trustee and is replaced by B Ltd, a company which is resident in the UK. In the circumstances, the year 2013-14 can be split with the result that, for Income Tax purposes, the Trust is not resident in the UK up to 1 October 2013, and resident in the UK from that date.