An offshore trust lets you transfer assets to trustees (rather than giving them directly) without losing control — so you may still receive income or capital back if needed. An offshore trust structure can be tailored to individual needs and can hold assets such as real estate, investment portfolios, business interests, and intellectual property. In the right jurisdiction, you also gain extra privacy or protection from claims (e.g. by creditors or ex-spouses).
Many foreign jurisdictions and offshore structures offer different legal protections, privacy, and costs, so choosing the right foreign jurisdiction is crucial. Many offshore jurisdictions are well regulated, and specialist trust companies can bring experienced professionals to manage the trust and its holdings. Wealthy individuals and those in high risk professions often use offshore trusts to protect assets and provide for future generations.
Over the past two decades, the UK has introduced complex anti-avoidance rules that have eroded many of the tax advantages once available to UK-based settlors and beneficiaries. Even so, for individuals who are non-UK domiciled, some offshore trust structures remain viable for deferring or reducing UK tax obligations.
When setting up and managing an offshore trust, the trust deed is a foundational legal document that outlines the trust’s terms, conditions, and key protections. Seeking professional advice is essential when establishing or managing an offshore trust to ensure compliance and optimal structuring.
If you are a non-UK domiciled settlor (i.e. the person creating the trust), placing foreign assets into an offshore trust before you become “deemed UK domiciled” can shield those assets from UK inheritance tax — without giving up your interest in them. For long term UK residents, worldwide assets may become subject to UK inheritance tax depending on their residence status and the classification of assets as excluded property. Settled offshore trusts and property trusts can provide inheritance tax protection for non UK domiciled individuals, but this protection may be lost if the settlor becomes deemed domiciled or a long term UK resident.
However, note that using an offshore trust with UK residential property (held via a non-UK company) no longer provides the same inheritance tax protection. Excluded property status is now determined by residence status and recent legislative changes, and deemed domiciled individuals may lose excluded property protection. Assets abroad placed in offshore trusts before becoming deemed domiciled can retain excluded property status, but this may change with new rules affecting settled offshore trusts. That said, non-UK assets that have no connection to UK residential property may still benefit from trust protection.
A trust is considered a “non-UK resident trust” if:
A non resident trust is one where the trustees or the trust itself are not UK tax resident. Non UK resident trusts are subject to different tax rules than UK resident trusts, particularly regarding the tax treatment of foreign income and capital gains.
Under such a structure, the trust itself is generally exempt from UK tax on foreign income and capital gains (though it remains liable on UK-source income, gains tied to UK real estate, companies deriving value from UK land, or UK businesses). However, UK residents who are beneficiaries or settlors of non UK resident trusts may still face UK taxation on certain income and gains, depending on the settlements code and other tax rules.
The UK has specific anti-avoidance provisions to treat trust income or gains as attributable to UK-resident settlors or beneficiaries in certain circumstances. The tax treatment and tax implications for UK residents involved with offshore trusts are complex, and understanding the relevant UK taxation rules is essential to determine when and how to pay UK tax or claim tax benefits.
To qualify as a protected trust: you must not have been deemed UK-domiciled when settling it, and you must avoid making additions to it after becoming deemed UK domiciled.
Recent legislative changes have introduced a temporary repatriation facility, allowing beneficiaries to remit foreign income and gains to the UK at a reduced tax rate within a limited time frame.
In favorable circumstances, an offshore trust can still yield UK tax efficiencies:
It is strongly recommended to seek further advice from qualified professionals to ensure compliance with current tax rules and to optimize the tax treatment of your offshore trust.
A detailed review of your global assets, liabilities, and family objectives ensures every element of your estate is structured to minimise tax and protect wealth.
Utilising trusts, Family Investment Companies, and lifetime gifting, we help reduce exposure to Inheritance Tax (IHT), Capital Gains Tax, and other UK and international taxes.
Custom plans ensure seamless wealth transfer to the next generation, balancing fairness, family dynamics, and long-term financial security.
Strategies such as Asset Protection Trusts safeguard property and investments from creditors, divorce settlements, and market volatility.
For clients with cross-border assets, we provide integrated planning to manage multi-jurisdictional tax laws and ensure compliance worldwide.
