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If the settlements legislation at ITTOIA05/S624 or S629 applies, the amount of income arising under the settlement which is chargeable to income tax on the settlor will depend on:

• the nature of the income;
• the residence status of the settlor; and
• whether the settlor is a ‘remittance basis userâ€� (RDRM32020).Ìý

for the tax year (ITTOIA05/S648).

For example, where income of the trust is ‘foreign income�, then -

1. if the settlor is not resident in the UK, foreign income of the trust is not treated as that of the settlor;
2. if the settlor is resident and not domiciled in the UK, and not a remittance basis user, foreign income of the trust is treated as that of the settlor;
3. if the settlor is resident and not domiciled in the UK and a remittance basis user, foreign income of the trust is only treated as that of the settlor when remitted to the UK.

The settlor is chargeable to Income Tax at his or her appropriate rate/s of tax. If tax has been paid by the trustees on income chargeable on the settlor, see TSEM4512.

Where a capital sum is paid to the settlor, see TSEM10335.

From 6 April 2025 with the introduction of the non-domicile reforms the remittance basis of taxation will no longer be available and UK resident settlors will be assessable on all the income arising within the trust in the year the income arises. This will be the case unless the settlor is a qualifying new resident and makes a claim for exemption in the year in which the income arises. For ´Ú³Ü°ù³Ù³ó±ð°ùÌýdetails on the qualifying new residents see RFIG41000.Ìý