Last Thursday (1st May 2025), I had the pleasure of moderating a webinar that explored one of the biggest shake-ups in UK tax planning in decades. We called it "Doom or Boom: The Future of Trusts in the UK Tax Landscape" – and the title wasn't just for dramatic effect.
Why? ... Because the UK's abolition of the remittance basis and the non-dom regime, alongside the introduction of the new Foreign Income and Gains (FIG) regime, has left many families, trustees, and advisors asking, "What now?"
For years, domicile status formed the foundation of tax planning for internationally mobile individuals. It gave structure, clarity (well, most of the time), and a level of planning certainty; 5especially for those who had lived overseas for decades but still had ties to the UK.
But from 6th April 2025, it's gone. Just like that.
We now shift to a residence-based framework, and while the change brings simplification in some ways, it also introduces a slew of transitional reliefs, thresholds, and tests that create a whole new kind of complexity.
Enter: The FIG Regime
If you've been non-UK resident for 10 years or more, the FIG regime offers a four-year exemption from UK tax on foreign income and gains, even if remitted to the UK.
Sounds great on paper. But the devil, as always, is in the detail.
For new arrivals, it's a gift. For long-term UK residents and returning UK doms, it's a mixed bag.
Some will win. Some won't. And some are still trying to figure out where they land.
Let's Break it Down
A major focus of the session was on what these changes really mean in practice.
From the abolition of the remittance basis to the rebasing of foreign gains, we covered a lot of technical ground but with a view to practical implications.
Here are some of the key themes that emerged:
1. From Domicile to Residence
The move away from domicile as a tax anchor represents more than just a technical shift, it's a fundamental change in how planning strategies are built. Under the new rules, a person's UK tax exposure is now defined by where they live, not where their "permanent home" is.
For clients who previously relied on non-dom status, this change removes what many saw as a long-standing planning pillar. But it also removes ambiguity, and in its place offers a new framework – one that's arguably more predictable, though no less complex.
2. Winners and Losers
We explored this directly in the webinar; who stands to benefit, and who might be caught out?
The Winners?
- Those eligible for the FIG regime (non-UK residents for 10 consecutive years)
- Returning UK doms (who now get a 10-year runway instead of immediate IHT exposure)
- Clients planning shorter-term UK stays
- Those with historic unremitted income and gains, now able to utilise the TRF at a lower tax rate
The Losers?
- Long-term UK residents who previously relied on the remittance basis
- Expats who've left the UK but remain within the 10-year IHT tail
- Trustees managing legacy structures that haven't yet been reviewed for compliance
- Any clients who assume the old rules still apply
It became clear that careful timing and a clear understanding of residency status is now everything.
3. Bringing it to Life with Case Studies
To ground these changes in reality, we explored two fictional (but highly relevant and real-world inspired) case studies:
Fatima, an Emirati entrepreneur, highlighted the intersection of FIG planning, Islamic succession, and cross-border structuring. Her case demonstrated how offshore trusts can still be used, ethically and effectively, to navigate succession goals while respecting cultural and religious considerations.
Fabrice, a long-term UK resident, raised the issue of existing structures now losing their exclusions. For him, and clients like him, the focus must now shift to strategic restructuring, use of TRF, and careful IHT planning. The key takeaway? Just because a structure worked before doesn't mean it's future-proof.
4. The Trustee's Perspective
We offered a practical lens on what all of this means for trustees, particularly those based offshore by addressing the increased responsibility on trustees to:
- monitor settlor residency status;
- manage matching rules with precision;
- understand when IHT charges arise, and how to fund them; and
- ensure TRS registration is in place, if triggered by UK tax exposure.
Perhaps most importantly, we highlighted how trustees aren't expected to be tax experts but they do need to know when to seek expert advice. That means collaboration is no longer optional; it's an operational necessity.
What Next for Trustees?
So as trustees what do you need to know?
Firstly, here are a few priorities trustees should be focusing on right now:
- Understand whether your settlor is (or is becoming) a Long-Term Resident (LTR).
- Revisit trust matching pools and make use of the temporary repatriation facility (TRF).
- Ensure trusts are correctly registered on the Trust Registration Service (TRS), if applicable.
- Review trust structures: Are they still fit for purpose?
- Collaborate early with tax advisors and lawyers
The Future of Trusts
Let's address the elephant in the room... is this the end for offshore trusts?
Our expert panellists were unanimous: Absolutely Not.
Yes, the rules have changed. Trust protections have narrowed. Income and gains are more readily taxed. And exposure to UK inheritance tax now ties directly to the settlor's residence, not just their domicile.
But trusts were never just about tax. They're also about governance, succession, asset protection, and family stewardship. Consequently, for some families, offshore trusts remain an essential tool.
So, is it Doom of Boom?
I closed the session by putting this question to each of the panellists.
And the answer was clear.
It's Boom. Not in the 'break-out-the-bubbles' kind of way. But in the sense that there are opportunities for those who adapt, plan, and stay ahead of the curve.
Trusts are evolving, not disappearing.
And while the terrain may be unfamiliar, there is still a well-planned route to success available to those who embrace the change (rather than fear it).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
