IHTM42601 - Foreign element: practice

Foreign assets

Where the settlor is domiciled in the UK, any foreign assets included in the trust are taxed in the normal way. 

Double Taxation Relief might be available against lifetime transfers into trust, but not on discretionary trust charges. (IHTM27185)

Domicile

If the taxpayer claims that the trust is exempt or partly exempt because of the domicile of the settlor, review the appropriate schedule in the account and refer to IHT Technical as appropriate.  (IHTM10685)

The next page gives some details of the impact of overseas domicile. General domicile details are at the domicile section of this manual. (IHTM13000)

Avoidance

The use of foreign trusts by individuals domiciled in the UK may be an indication of avoidance.