What Is a Non-Resident Trust?
A Non-Resident Trust is a trust treated as resident abroad for tax purposes, typically under trustee and settlor residence criteria set by national law.
Also known as: Offshore Trust, Non-UK Resident Trust.
How Non-Resident Trust works
A Non-Resident Trust is a trust whose residence, decided mainly by where the trustees are resident and sometimes by the settlor's status when assets were added, lies outside the country concerned, so the trustees are generally taxed there only on local-source income and certain local gains. In the United Kingdom, a trust created on or after 6 April 2025 is usually non-resident where no trustee is UK resident, or where only some are and the settlor was not resident when the trust was set up or funded, and settlor domicile no longer counts. Settlor and beneficiary rules often attribute trust income or gains to UK-resident individuals, and criteria differ in other countries.
Non-Resident Trust vs Foreign Trust
Unlike a Foreign Trust, a label used chiefly in US law under a court test and a control test, a Non-Resident Trust is the general term for a trust which fails a country's residence criteria, most often by reference to trustee residence.
Example
Illustrative example: A settlor resident in Country A appoints Country B trustees to hold family investments. Country B treats the trust as resident, while Country A treats the trust as non-resident, yet Country A may still tax the settlor or resident beneficiaries on income or gains under attribution rules.
Common misconception
Myth: Moving trustees abroad removes trust income and gains from the reach of the settlor's home country.
Reality: Many countries apply settlor-attribution, beneficiary and anti-avoidance rules to a Non-Resident Trust, so income or gains may still be taxed on resident individuals.
Frequently asked questions
What makes a trust non-resident?
A trust is generally non-resident when the trustees, and in some systems the settlor at funding, fail the country's residence criteria; for UK trusts created from 6 April 2025, the settlor's domicile is no longer considered.
Do non-resident trusts pay UK capital gains tax?
Non-resident trustees usually pay no UK Capital Gains Tax, according to HMRC, but must report and pay tax on disposals of UK property or land within 60 days, and settlors or beneficiaries may be taxed instead.
Related terms
- Foreign Trust — US counterpart label with different tests
- Trust — Underlying legal arrangement being classified
- Foreign Grantor Trust — US grantor rules attributing trust income to settlors
Related guides
- Why digital nomads are leaving the UK — UK departures affecting trust and settlor residence
- Tax management approaches: from compliance to aggressive strategies — Spectrum from compliant to aggressive structuring
Sources
Last verified: 2026-10-08. This entry is general information, not tax or legal advice; rules vary by country and change over time.
