Technical article

United Kingdom: If the Trustees Move Abroad, Does the UK Charge for Leaving?

A similar charge applies if the trust becomes resident abroad under a tax treaty, even while it stays UK resident under UK law.

By Neil Solomon · 3 min read

Imagine a family with a UK trust that holds a share portfolio and a rental flat. The grandparents who set it up now live in Portugal, and the family would like the trustees to be there too. The trust has been in place for twenty years, and the shares have grown a great deal. What does the UK say if the trustees move?

The UK does not wait for a sale. It treats the move as one.

What happens on the day

If the UK-resident trustees are replaced so that the trust becomes non-UK resident, the trustees are treated as having sold every chargeable asset, and bought it back, at market value, immediately before the change. This is a deemed disposal. The gain on paper becomes a gain to be taxed that year, and it falls on the trustees.

A similar charge applies if the trust becomes resident abroad under a tax treaty, even while it stays UK resident under UK law. One exception applies to assets used in a UK trade through a branch.

The rate is the one trustees pay on any gain. From 6 April 2026 that is 24%, or 18% where Business Asset Disposal Relief applies. The trustees get a yearly exempt amount of GBP 1,500, or GBP 3,000 for a trust for a vulnerable beneficiary, reduced if the same person set up several trusts.

Those two rows are examples with round numbers, before the exempt amount and any reliefs.

What counts as "moving" since April 2025

Trust residence changed on 6 April 2025. Domicile no longer counts. A trust is now non-UK resident in two cases:

• none of the trustees is UK resident, or
• some trustees are UK resident but the settlor was not UK resident when the trust was set up or funded.

The trustees are treated as one body. A trust that is resident for part of a year is treated as resident for the whole year. A non-resident professional trustee who acts through a UK business can be treated as UK resident. So a trust can look as though it has moved when one trustee is still tied to the UK.

The rule works in both directions. Residence follows the trustees and, in a mixed group, the settlor's own status at the time of funding.

The inheritance tax side

A second charge can arise. Foreign assets in a trust are outside UK inheritance tax only while the settlor is not a long-term UK resident. When the status changes and relevant property becomes excluded property, an exit charge of up to 6% can arise. One tier B source calls this charge potentially punitive, and a second confirms that it applies.

The UK also keeps a hold on a settlor who leaves. The inheritance tax tail runs 3 to 10 years after departure, depending on how long the person lived in the UK.

You might say: "I only changed who holds the paperwork. The assets did not move." That is how it feels, and it is a fair reading of what happened physically. The UK treats the change of trustees as the event. The charge falls on the growth that built up while the trust was UK resident.

You could look at the timing. The tax is worked out on market value at the date of the change, so the size of the gain on that date is what counts. A trust with small gains meets a small bill, and a trust with large gains meets a large one.

The people this touches are the trustees, who pay the bill; the grandchildren, whose share is smaller by that amount; and the settlor, whose own UK tail runs on whatever the trust does.

If your family has weighed where a trust is run, what did you ask first? Share it here, because someone planning a similar move may benefit from the question.

Figures are estimates for planning, based on public data. Date read: October 2026.