TSEM4735 - Settlements Legislation: Rules affecting non-domiciled and deemed domiciled settlors of non-resident trusts from 6 April 2025 : Example -the benefits charge and choice of who is chargeable
Mr P has been resident in the UK since 2012/13 but has never been classed as UK domiciled or deemed听domiciled in the UK under condition 础.听 In 2018听丑别 established听the P family Trust for the benefit of him and his family at the trustees鈥�听诲颈蝉肠谤别迟颈辞苍. From 2018/2019听through to 2024/25听income arose to the trustees of 拢150,000 per year.听 No distributions were made听and the income was all retained听in the structure as PFSI amounting to a total of 拢1,050,000.听
In 2025/2026 the trustees purchased听a home in Spain听for the equivalent of 拢500,000听for听Mr &听Mrs P听equally, who were听resident in the UK at the time.听Following this, the total 鈥榰ntaxed benefit total鈥� is 拢500,000 after carrying out the steps at section 643B ITTOIA 2005, and there is sufficient 鈥榓vailable protected income鈥� to match against this amount in full. The full amount of 拢500,000听is chargeable under section 643A ITTOIA 2005.听
Because the benefit has been provided for both Mr P, who is the settlor, and Mrs P who听is a close member of the settlor鈥�s family,听there is a choice about who听the income should be treated as arising to.听 The rule at section 643A (3)听ITTOIA 2005 allows听for听an officer听of HMRC to听apportion听the treatment between Mr P and Mrs P in a way that is just and reasonable.听 In this instance听it is likely that听it would be just and reasonable for them to each have 拢250,000 treated as their income as this corresponds to the share of the 拢500,000 property that they each received听the benefit of.听