TSEM4755 - Settlements Legislation: Rules affecting non-domiciled and deemed domiciled settlors of non-resident trusts from 6 April 2025 : Onward gifts鈥��
From 6 April 2025 sections 643I through to 643N ITTOIA 2005 have been replaced by new section 643EA.鈥� The conditions for the application of the onward gift rules have not changed听in essence, but听they have been simplified.听
The onward gift rules apply if a benefit is provided to an individual (the original recipient) at a time that:听
they are听not听taxable听in relation to the amount or value of the benefit, or they are a qualifying new resident;听and听
there are arrangements or an intention听for them to pass the whole or part of that benefit, directly or indirectly, to another person听who is UK resident.听
There are various conditions, all of which must be met:听
The onward gift is provided听either before or within 3 years of听the original benefit being provided,听
The onward gift includes the whole or part of the original benefit, or anything that represents听or derives from听the original benefit, or听is any other property where the original benefit was provided with a view to facilitate听or in connection with the onward gift,听
The subsequent听recipient is the settlor or a close member of the settlor's听family.听
The legislation does not apply where the close family member鈥檚 benefits are included in the settlor鈥檚 untaxed benefits total under section 643B(2) ITTOIA 2005.听
Where this legislation applies,听the amount of the onward gift is included in the subsequent听recipient鈥�s untaxed benefits total听鈥� see section 643B(1) and听section 643B(2)(a)听ITTOIA 2005.听
If there is a series of gifts, starting with the original recipient and ending with the settlor or听a close family member (CFM), then the onward gift is treated as being provided when it arrives with the settlor or the CFM.听 However, each benefit in the series should include the whole or part of the original benefit, or anything that represents听or derives from the original benefit or is any other property where the original benefit was provided with a view to facilitate听or in connection with the onward gift.听
If the听onward gift is made in advance of the original benefit being provided,听then it is treated as being made immediately听after and in the same tax year as the original benefit is provided to the original beneficiary.听