TSEM4675 - Settlements legislation: Rules affecting non-domiciled and deemed domiciled settlors of non-resident trusts from 6 April 2018 鈥� 5 April 2025: Onward gift to settlor or close family member by other recipient

The guidance on this page relates to the period 6 April 2017 - 5 April 2025. From 6 April 2025 the rules around the taxation of non-UK domiciled individuals ended and individuals are taxable based on their residence position only.鈥� Detailed guidance on the changes from 6 April 2025 can be found at TSEM4700 onwards.听

There are circumstances where a charge will apply to the settlor or a close member of the settlor鈥檚 family under ITTOIA05/S643M.听 This will apply where a gift is made,听and:听

  • the听鈥渢he original recipient鈥� is not听taxed on听the original benefit,听听

  • they are听not听the settlor or a close family member of the settlor,听听

But:听

  • the final recipient is the settlor or a close family member of the settlor's听family.听听听

There are various conditions that must be met for this charge to apply:听

  • At the time the original benefit is provided there must be arrangements, or an intention听to directly or indirectly pass听the whole or part of the benefit on to another person (鈥渢he subsequent recipient鈥�), and it is reasonable to expect that the subsequent recipient will be UK resident when they听receive at least part of what is passed to them.听 This will be assumed to be met where the other conditions are met.听

  • The original recipient directly or indirectly听makes听the gifts to the recipient (whether the subsequent recipient, or a recipient within a series of gifts) within 3 years of the day containing the time when the original benefit was provided to them or at any before the original benefit was provided, where it is reasonable to assume it was provided in anticipation of original benefit being provided.听

  • The gift is or includes the whole or part of the original benefit, or anything that derives from or represents听that benefit, or any other property where the original benefit is provided with a view to enabling or facilitating听the making of the gift.听

If part of the benefit is taxable on the original recipient,听then only the remainder听will be taxable on the settlor or the close family member.听听