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Welcome to the April 2025 edition of the HMRC Trusts and Estates Newsletter.

We do not have a mailing list for the newsletter.

Changes to the main rates of Capital Gains Tax announced at Autumn Budget 2024 鈥� Self Assessment returns for tax year 2024 to 2025

For the tax year 2024 to 2025, individuals, trustees and personal representatives will need to take additional steps to calculate their Capital Gains Tax if they made disposals on or after 30 October 2024. This is because the Self Assessment tax return will not automatically calculate at the new rates. This excludes:

• residential property
• Business Asset Disposal Relief
• Investors鈥� Relief
• carried interest

An adjustment tool is available to support individuals, trustees, and personal representatives when calculating the correct adjustment figure. Adjustment boxes on the following forms should be used to account for any in-year difference in tax to make sure the tax due is correct:

• SA108 鈥� individuals capital gains summary page
• SA905 鈥� Trusts and Estates capital gains
• SA970 鈥� Tax Return for Trustees of Registered Pension Schemes

Read about changes to the main rates of Capital Gains Tax.

Changing a trust from a taxable to a non-taxable trust on the Trust Registration Service

Trusts registered on the Trust Registration Service (TRS) as 鈥榯axable鈥�, need to be closed when they no longer incur any UK tax liabilities.

A trust registered on the TRS has ceased to be taxable when it is no longer liable to pay any of the following relevant UK taxes:

• Income Tax
• Capital Gains Tax
• Inheritance Tax
• Stamp Duty Land Tax
• Land and Buildings Transaction Tax (in Scotland)
• Land Transaction Tax (in Wales)
• Stamp Duty Reserve Tax

If you believe your trust will never, or is unlikely to ever be liable to pay these taxes again, you鈥檒l need to:

• close your taxable trust
• re-register the trust on the TRS as a non-taxable trust

If you believe your trust will be liable to pay any of these taxes again:

• your trust should remain as a taxable trust on the TRS
• you should update the register with any changes within 90 days

Technical consultation 鈥� reforms to inheritance tax agricultural property relief and business property relief 鈥� application in relation to trusts

At Autumn Budget 2024, the government announced several reforms to agricultural property relief and business property relief from inheritance tax (IHT). A summary of the reforms was published setting out the key changes. Read about agricultural property relief and business property relief reforms for more information.

On 27 February, a technical consultation was launched regarding the application of these reforms to IHT charges on trust property. Read about reforms to inheritance tax reliefs 鈥� consultation on property settled into trust.

We welcome views from individual settlors, trustees and other trust professionals, as well as tax and legal practitioners.

The consultation will close on 23 April 2025.

Reforms to the remittance basis, the introduction of a 4-year foreign income and gains regime and the temporary repatriation facility

From 6 April 2025, the old rules for the taxation of non-UK domiciled individuals ended. The concept of domicile as a relevant connecting factor in the UK tax system has been replaced by a system based on tax residence.

The preferential tax treatment based on domicile status has been removed for all new foreign income and gains (FIG) that arises from 6 April 2025. It has been replaced by an internationally competitive residence-based regime, providing 100% relief on eligible FIG for new arrivals to the UK in their first four years of tax residence. This is provided they have not been UK tax resident in the 10 tax years immediately prior to their arrival (4-year FIG regime).

A new temporary repatriation facility (TRF) is now available for individuals who have been taxed on the remittance basis. Individuals who have previously claimed the remittance basis and have unremitted FIG at 5 April 2025 will be able to make an election to designate amounts of unremitted FIG, or amounts that derived from unremitted FIG that arose prior to 6 April 2025 for a period of 3 tax years, from 6 April 2025.

Designated amounts will be charged to tax at a rate of 12% in tax years 2025 to 2026 and 2026 to 2027. The rate will rise to 15% in tax year 2027 to 2028. Any 鈥榙esignated amounts鈥� remitted on or after 6 April 2025 are exempt from any Income Tax charges or Capital Gains Tax charges.

Detailed guidance for former remittance basis users and those who may need to use the new:

• 4-year FIG regime can be found in the FIG regime internal manual (RFIG41000)
• TRF can be found in the Remittance Basis and Domicile Manual (RDRM70000)

More detailed guidance on both of these subjects has recently been added to the Residence and FIG Regime Manual (RFIG44000).

Reforms to inheritance tax from domicile basis to long-term UK residence

From 6 April 2025 the domicile-based system for IHT was replaced with a residence-based system. This affects the scope of property brought into UK IHT for individuals and settlements.

The test for whether non-UK assets are in scope for IHT is whether an individual has been resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event (including death) arises. The time the individual remains in scope after leaving the UK is shortened where they have only been resident in the UK for between 10 and 19 years.

Subject to transitional points, the excluded property status of non-UK settled assets is not fixed at the time the assets are added to a settlement. Instead, they are only excluded property (and so not subject to IHT charges) at times when the settlor is not long-term UK resident. When a settlor is long-term UK resident, any assets they have settled (even when not long-term UK resident) will be subject to IHT.

There is an additional test for qualifying interest in possession (QIIP) settlements so that the property comprised in the settlement is only excluded property if both the settlor and the beneficiary with the QIIP are not long-term UK resident.

How this may impact you

Individuals may continue to be a long-term UK resident for a period of 3-10 years after leaving the UK.

Trustees, including those outside the UK, will need to review the long-term residence status of the settlor.

Non-UK trust property will become excluded property (and outside the scope of IHT) when the settlor loses long-term UK resident status.听An exit charge will arise on this. For a small number of trusts, this exit could occur on 6 April 2025.

The UK鈥檚 Double Taxation Conventions for IHT continue to operate.听Where a Double Taxation Convention operates by reference to deemed domicile, that will now mean an individual鈥檚 long-term UK residence.

Completing Inheritance Tax forms

We鈥檝e updated the IHT400 form and IHT100 form.听Existing schedules IHT401 and D31 remain in use for older events. New schedules IHT401a, D31a and D31b cover events where the deceased, transferor or settlor is not a long-term UK resident and transitional provisions.

More Information

A new chapter of the Inheritance Tax Manual (Chapter 47 Long term UK residence) has been published on gov.uk. This contains full guidance, including both:

• transitional arrangements for individuals who are non-resident in 2025-26
• carve-outs for existing excluded property trusts from 40% charges on death

Direct Payment Scheme

On 1 October 2024, HMRC extended the Direct Payment Scheme so that personal representatives can ask brokers and investment management firms to sell assets and release funds from the deceased鈥檚 investment accounts directly to them. In response to feedback, we have removed the references to pension and insurance providers from the Direct Payment Scheme form and guidance. The scheme remains fully open to investment providers as originally intended.

Read the updated guidance about Direct Payment Schemes for Inheritance Tax (IHT423).

Errors relating to trusts, rectification, mistakes, and Hastings-Bass

The following guidance provides information on how to contact听HMRC听where a taxpayer is considering seeking a trust law remedy in the High Court of England and Wales or a court of another jurisdiction, and wishes to contact听HMRC听before issuing court proceedings.听

Where the application to the court is being made for tax reasons, the taxpayer seeking the trust law remedy may ask whether听HMRC听wants to be joined as a party to the court proceedings.

If a taxpayer is considering applying to the High Court or a court of another jurisdiction and the tax position of the taxpayer may change as a result of the application to the court, HMRC should be given the opportunity to decide whether to be joined in the court proceedings.

We request that the taxpayer write to us well ahead of time to:

• ask whether HMRC wish to be joined in the proceedings
• notify us of the date of any hearing听
• provide us with a copy of the claim and any witness statements

The heading of the letter should specify whether the claim falls under 鈥榬ectification鈥�, 鈥榤istake鈥� or 鈥楬astings-Bass鈥�.

Write to us at the following address:

This contact address is not to be used to serve new legal proceedings on HMRC. If you wish to serve new legal proceedings on HMRC, please refer to the following guidance.

HMRC accepts service of legal proceedings by email.

Further information about rectification, mistake and Hastings-Bass can be found in the Trusts, Settlements and Estates Manual (TSEM1900).