Private Wealth 2026 Comparisons

The UK has multiple taxes that cover a broad range of circumstances. The most important taxes for individual clients, estates and trusts are outlined below.

Income Tax

• Income tax is, as the name suggests, a tax on income. Almost all forms of income are subject to tax, including:
• income from employment;
• business income;
• property income;
• dividends;
• interest.

The top statutory rate of income tax is 48% in Scotland and 45% in the rest of the UK. There is a personal allowance of GBP12,570, which is not subject to tax, but it is gradually withdrawn when earnings fall between GBP100,000 and GBP125,140. As a result of this tapering, the effective marginal rate of tax in this bracket is 60%.

If a person is resident in the UK under the statutory residence test, they are generally subject to income tax on their worldwide income irrespective of where the income is generated. Non-residents are only subject to income tax on UK-sourced income.

Capital Gains Tax (“CGT”)

CGT is charged on the gain arising from the disposal of assets. For this purpose, assets include any form of property with very narrow exceptions.

The top rate of CGT is 24%. There is an annual exempt amount of GBP3,000 above which gains must be reported and tax paid.

Non-residents only pay CGT on the following specific assets:

• UK-situs assets connected to a person’s UK branch or agency;
• interests in UK land;
• certain assets (eg, company shares) which derive at least 75% of their value from UK land.

Corporation Tax

Corporation tax is charged on both the income and capital gains accruing to companies in the UK. Companies are subject to their own rules, but the broad outcomes are the same as compared to an individual subject to income tax and CGT.

The top rate of corporation tax is 25%, with a reduced rate of 19% for small profits (ie, below GBP50,000). As with income tax and CGT, the scope of corporation tax depends on whether the company is resident. A company is resident in the UK if either of the following conditions is met:

• the company is centrally managed and controlled in the UK, meaning that the day-to-day business of the company is managed from the UK (this is a complex question of fact which has been the subject of extensive case law); and
• the company is incorporated in the UK.

Inheritance Tax (“IHT”)

IHT is, contrary to its name, not just a tax on inheritances but can be a tax on other gratuitous transfers more generally.

Broadly, IHT taxes any dispositions that result in a loss to the donor’s estate. However, any gifts from one individual to another are exempt if the donor survives for at least seven years after the date of the gift. During the seven-year period before the donor dies, these transfers are presumed to be exempt and no tax is due. Any such transfers are known as potentially exempt transfers or “PETs”. If the donor dies within seven years of making a PET, the value becomes chargeable to tax on death. Further, on death, the donor is taxed as if they disposed of their entire estate (ie, all the property to which the donor was beneficially entitled) immediately before death. Subject to the nil-rate band (see 1.2 Exemptions), IHT is charged at 40% in respect of any tax which is due on death.

Some transactions are not PETs and give rise to an immediate charge to tax. The most common immediately chargeable transfer is a transfer to most types of trust. Lifetime transfers are taxed at half the normal rate (ie, 20%).

Where an individual is not a long-term UK resident (see 7.1 Requirements for Domicile, Residency and Citizenship), any assets that are situated outside of the UK are excluded property and do not form part of the individual’s estate for IHT. In effect, this means that transfers of these assets are not subject to IHT.

Most trusts are subject to the “relevant property regime”. Under these rules, the trust pays regular charges every ten years of up to 6% of the value of the property held in the trust. If distributions are made between a tenth anniversary charge and the next, there is an IHT exit charge, subject to certain exceptions. Assets held in trust will be excluded property if they are situated outside the UK and:

• if the settlor is alive, the settlor is not a long-term UK resident;
• if the settlor died before 6 April 2025, the settlor was not domiciled in the UK at the time of their death;
• if the settlor died after 6 April 2025, they were not a long-term UK resident at the time of their death; and
• if the trust is an interest in possession trust, the beneficiary must also not be a long-term UK resident.

Stamp Duty Land Tax (“SDLT”)

SDLT is a tax on land transactions. It is charged as a percentage of the consideration paid for land. The ordinary SDLT rates go up to 12%, although higher rates apply where the purchaser owns more than one property and there is an additional 2% surcharge for purchasers who are not resident in the UK. As a result, the highest possible rate is 19%.

SDLT is not chargeable in respect of land in Scotland (which imposes Land and Buildings Transaction Tax) or Wales (which imposes Land Transaction Tax).

IHT has many different exemptions and reliefs.

As outlined above, PETs are exempt so long as the individual donor survives seven years from the date of the transfer.

Although the nil-rate band is not really an “exemption” (as it forms part of the rate structure of IHT), it means that the first GBP325,000 is taxed at 0%. There is a further nil-rate band for residential property when the direct descendants of the deceased inherit it. This is GBP175,000 but is withdrawn if the estate exceeds GBP2 million. Both the nil-rate band and residential nil-rate band can be transferred between spouses or civil partners.

Gifts to spouses and civil partners are generally exempt from IHT. The relief is restricted in circumstances where the donor is a long-term UK resident and the donee spouse is not.

Significant reliefs are available for agricultural and business property, known as Agricultural Property Relief (“APR”) and Business Property Relief (“BPR”), respectively. Prior to 6 April 2025, APR and BPR were unlimited. Since that date, only the first GBP2.5 million is eligible for 100% relief. Any agricultural property or relevant business property with value more than that amount only receives 50% relief.

There are a range of other miscellaneous reliefs available in respect of IHT.

Since 6 April 2025, the UK has introduced a Foreign Income and Gains (“FIG”) regime, which exempts most overseas income and gains for new residents for four years. It is a condition of the FIG regime that the individual must not have been resident in the UK within the ten years preceding the start of their treatment claim. Transitional rules were introduced to address individuals who had become UK-resident shortly before the introduction of the FIG regime.

Before 6 April 2025, the UK had operated a remittance basis of taxation for individuals who were resident but not domiciled in the UK. A consequence of this regime was that many individuals had established relatively complex overseas structures designed to allow them to bring in money and property they had already acquired before becoming UK residents, while segregating any income or gains that would be subject to tax if remitted to the UK. Alongside the FIG regime, the UK introduced a Temporary Repatriation Facility (“TRF”). In short, this enables an individual to designate amounts of unremitted income or gains and pay tax at a reduced rate on those amounts. The individual can then remit those amounts to the UK without paying additional tax. Any amounts designated in 2026/27 will be taxed at 12%, increasing to 15% in 2027/28. The TRF will not be available from the tax year 2028/29 onwards.

Following the abolition of the remittance basis of tax, many non-domiciled individuals who had relied on it decided to emigrate. Notably, under the statutory residence test (see 7.1 Requirements for Domicile, Residency and Citizenship), an individual can spend a substantial number of days in the UK without becoming resident. The advantage of non-residence is that any overseas income (which had been relieved under the remittance basis) is not taxable in the UK. Careful planning of individual residence has become a popular strategy for mitigating tax liability in the UK.

Alternatively, where it is not possible to break residence in the UK, some individuals have moved overseas and also become tax-resident in another country. This relocation aims to establish dual residency and claim the benefits of the UK’s network of double tax treaties with other countries. Under most double tax treaties, the UK follows the OECD Model’s definition of residence, including the residence tie-breakers used to determine the person’s residence if they are domestically resident in both countries. It is possible to control the outcome of those tie-breakers (eg, by maintaining a permanent home in only one country) and thereby ensure a desired tax treatment. If the individual is not resident in the UK for the purposes of the tax treaty, the UK’s right to tax is limited in accordance with the terms of the treaty.

There are other opportunities in the UK to reduce an individual’s tax liability, including in relation to contributions to a pension scheme, individual savings accounts (ISAs) and certain types of venture capital investments.

With the introduction of the FIG regime (see 1.3 Income Tax Planning), most new arrivals will not be taxed on the majority of foreign income and gains for the first four years of tax residence. However, it is recommended that a review of the individual’s circumstances takes place before they become resident.

Any such review is likely to consider the strategies outlined in 1.3 Income Tax Planning.

That being said, tax structuring should ideally be undertaken before the start of a new UK tax year (which runs from 6 April to 5 April) and, where possible, should be considered (if not implemented) before the individual becomes UK resident. Key pre-immigration planning opportunities include restructuring overseas assets and income sources and ensuring that any gains are realised or income received prior to arrival in the UK.

Non-residents are liable for income tax on rental income generated from properties in the UK. Ordinarily, tax must be withheld at the basic rate under the non-resident land scheme. However, it is important to note that the definition of “non-resident” under the NRLS is not the same as residence under the statutory residence test. Instead, a landlord is ‘non-resident’ for the purposes of NRLS if the person’s usual place of abode is outside the UK. A landlord can apply to HMRC to receive their rental income without withholding tax.

Where the property is the individual’s only or main residence, Principal Private Residence relief is likely to apply such that any capital gain arising on a disposal is exempt from CGT.

If the real estate is commercial property, holding it via an overseas company has an advantage for IHT purposes. The property itself is a UK-situs asset and would therefore be subject to IHT on the individual’s death if owned directly, irrespective of whether the individual is a long-term UK resident. However, if the property is held through an overseas company, the shares of that company will generally not be situated in the UK. Consequently, the shares will be excluded property if the individual is not a long-term UK resident.

Where the property is a residential dwelling, there are no particular tax advantages to holding it through any offshore structure. Any interest in a holding company which derives at least 75% of its value from UK land (whether residential or otherwise) is subject to non-resident CGT. Further, for the purposes of IHT, an interest in an overseas close company is not excluded property to the extent that its value is derived from residential property in the UK (or, since 6 April 2026, agricultural property in the UK). Finally, a company that holds residential dwellings is subject to the Annual Tax on Enveloped Dwellings (or ATED), which requires the company to file a return each year and pay an annual tax based on the value of the property. It should be noted that there is an exemption from ATED for properties that are let to a third party on a commercial basis and are not occupied by anyone connected to the owner.

The UK has been through a prolonged period of relative political uncertainty. At the time of writing, Keir Starmer has resigned and Andy Burnham has just become the UK’s fifth prime minister in four years.

Keir Starmer’s Government had introduced a number of significant changes that are still coming into effect. In addition to the abolition of the remittance basis and the introduction of the FIG regime, the current Government has enacted several other reforms, including:

• a new concept of "long-term UK residence" replacing domicile as the connecting factor for IHT;
• excluded property trusts having been limited such that a trust will only be excluded property for the purposes of IHT while the settlor is not a long-term UK resident;
• 100% relief in respect of BPR and APR has been capped at GBP2.5 million;
• with effect from 6 April 2027, pensions will be subject to IHT.

However, as noted above, a new Government under Andy Burnham may mean further significant changes in the near future.

Over recent years, there has been a shift towards greater transparency requirements.

The UK co-operates with both the US Foreign Account Tax Compliance Act (“FATCA”) and the OECD’s Common Reporting Standard (“CRS”).

Since 18 November 2025, Companies House (which maintains the register of UK-incorporated companies) has introduced mandatory identity checks for directors of UK companies and persons with significant control.

HMRC maintains the Trust Registration Service, which records the beneficial ownership of almost all express trusts in the UK. New legislation has introduced a de minimis exemption for certain low-value trusts, but the majority of express trusts are still expected to register.

The UK has also implemented the OECD’s crypto-asset reporting framework (“CARF”). As originally implemented, the UK’s legislation only required reporting crypto asset service providers (“RCASPs”) to collect information on non-resident customers. However, the Finance Act 2026 introduced legislation that extended the scope, requiring RCASPs to collect relevant information on all customers, whether resident or overseas.

UK succession planning is shaped by testamentary freedom: individuals may leave their wealth to whomever they choose, unlike jurisdictions with forced heirship. However, the Inheritance (Provision for Family and Dependants) Act 1975 allows spouses, cohabitants, children and dependants to claim “reasonable financial provision” from an estate. How much the dependant will receive will obviously depend on prior tax planning using the exemptions discussed above.

The traditional route is for parents and grandparents to make suitable bequests to their dependants. Grandparents will often skip a generation of bequests to avoid a double taxation of ongoing IHT.

Demographic shifts, including the rise of cohabiting couples and blended families, have increased the complexity of succession and driven a growth in inheritance disputes.

A family constitution, for example, might set out how family members can request support for education or entrepreneurship, the criteria for entry into the family business and the principles governing philanthropy. These documents are not legally binding in the same way as a trust deed or shareholders’ agreement, but they serve an important cultural function: making explicit the assumptions and expectations that might otherwise remain unspoken and become sources of conflict.

Cohabitants have no automatic inheritance rights under intestacy and often lack wills.

A persistent cultural factor is the reluctance of older generations to transfer control to younger family members, despite succession being a stated priority. Intergenerational differences in values, with younger beneficiaries often prioritising sustainability, impact investing and philanthropy, can create tension if not managed through structured dialogue.

Successful families increasingly adopt formal family governance structures, such as family constitutions and councils and use philanthropy to engage the next generation and articulate shared values. Clear communication remains the single most important factor in avoiding succession disputes.

Families that discuss wealth, values and expectations openly and involve the next generation in planning from an early stage are far less likely to experience destructive disputes than those in which wealth is a taboo subject or decisions are made unilaterally and announced only upon death.

One issue that may arise in cross-border succession is double taxation, where both the UK and another country impose an estate or inheritance tax. The UK addresses this problem through a number of double tax treaties and unilateral tax relief.

The UK has inheritance tax treaties with 10 countries:

• India;
• Pakistan;
• France;
• Italy;
• Ireland;
• The United States of America;
• The Netherlands;
• Sweden;
• Switzerland; and
• South Africa.

Each of these treaties operates differently. However, they broadly restrict the right of the UK to tax where the individual is “domiciled” in the other country (as that concept is defined in the domestic law of that country).

Under UK law, unilateral double tax relief is also available if another country imposes a similar tax. The UK provides a tax credit for assets not situated in the UK. If the asset is situated in the other country, credit is allowed equal to the amount of tax imposed in that country in respect of that asset. If the asset is situated in a third country, the credit is calculated as a proportion of the total tax, in accordance with a statutory formula.

Cross-border succession planning is one of the most complex challenges for UK-based international families. Since April 2025, the UK determines worldwide IHT exposure by long-term UK residence (ten of the previous 20 tax years), replacing domicile, with a ten-year “tail” after departure.

With the tightening of the tax regime and an increase in taxation to some of the highest levels in 70 years, a number of individuals are leaving the UK while their dependants remain behind. Because of the complexity and uncertainty created by the Government, it is necessary to seek specialist advice and, unfortunately, to revisit it after each budget to ensure the rules have not changed again.

Double taxation is a material risk: the UK has IHT conventions with only a limited number of countries (including the US, France, Italy and Ireland) and many jurisdictions are uncovered.

A key tension is between English testamentary freedom and the forced heirship rules of civil law jurisdictions, which reserve fixed shares of the estate for children and spouses.

The UK does not have forced heirship laws. However, the Inheritance (Provision for Family and Dependants) Act 1975 allows certain persons (including spouses, cohabitants, children and dependants) to apply to the court for “reasonable financial provision” where the will or intestacy rules fail to provide adequately. For surviving spouses, the standard is unrestricted: for all others, it is limited to maintenance.

England and Wales operate under a separate property regime: marriage does not automatically create joint or community ownership of assets and each spouse retains ownership of property held in their name.

Marital property can be held jointly (in which case the survivor takes the property upon death) or as a tenancy in common, in which case the property passes in accordance with the will.

A sole owner can transfer property without spousal consent, subject to protections for the matrimonial home and anti-avoidance provisions where statute offers some protection.

However, on divorce, the court has broad discretion under the Matrimonial Causes Act 1973 to redistribute assets through financial provision and property adjustment orders, considering factors including needs, contributions, standard of living and the welfare of children, with the welfare of any child of the family under 18 being the court’s first consideration.

Prenuptial and postnuptial agreements are not automatically binding by statute, but following a 2010 decision, the court will give them decisive weight where they are freely entered into with full appreciation of their implications, unless enforcement would be unfair.

The effect of a property transfer on CGT base cost in the UK depends on the type of transfer.

On death, there is an automatic uplift to market value, with no CGT charge, permanently eliminating all accrued gains. This includes transfers from a deceased spouse to a surviving spouse.

Lifetime gifts are treated as a disposal at market value, triggering a CGT charge for the donor: the donee acquires a market-value base cost.

Transfers between connected persons (including family members) are also deemed to be at market value.

Lifetime spousal transfers are the exception: under section 58 of the Taxation of Chargeable Gains Act 1992, transfers between spouses or civil partners living together are made on a no gain/no loss basis, with the transferor’s original base cost carrying over to the recipient, subject to their period of residence in the UK as described above.

Other Reliefs

Hold-over relief on IHT-chargeable transfers allows the CGT charge to be deferred by reducing the donee’s base cost by the amount of the held-over gain.

Transfers into and out of trusts are generally at market value, but holdover relief is typically available for discretionary trust transfers.

The death of a life tenant triggers a market value deemed disposal with no CGT charge, mirroring the personal death uplift.

Historically, trusts were a popular vehicle for managing succession for non-domiciled individuals because the overseas assets held within the trust would remain excluded property even if the individual became deemed domiciled in the UK. Since the limitation of excluded property trusts to those whose settlors are currently not long-term UK residents or were not long-term UK residents when they died, the use of trusts has declined significantly.

Another popular structure is a family investment company (“FIC”). A FIC does not have a special legal status but is a common term for a company used to make long-term investments, with ownership divided across multiple generations of a family. The benefits of an FIC are that shares can be gifted to the next generation as PETs and therefore will not attract IHT so long as the donor survives 7 years and a company is generally simpler to manage than a trust. HMRC introduced a specialist FIC unit in 2019, but this was disbanded in 2021. HMRC found no correlation between FIC users and non-compliant behaviour. This cannot be seen as an “endorsement” for FICs by HMRC, albeit it was a recognition that FICs operate within the normal tax environment.

The Property (Digital Assets etc) Act 2025 (Royal Assent 2 December 2025) confirms that digital assets (including cryptocurrency, NFTs and tokenised assets) can be objects of personal property rights under English law.

For tax purposes, HMRC treats cryptoassets as property subject to IHT (valued at market value at death) and eligible for the CGT death uplift with no CGT charge on death.

From January 2026, crypto service providers must report user information to HMRC.

The most significant practical challenges relate to access and control. Self-custodied cryptoassets are permanently lost if private keys or seed phrases are not accessible to executors.

Email and social media platforms typically restrict posthumous access, even with a grant of probate.

Valuation of volatile or illiquid digital assets can be difficult. Best practice includes maintaining a secure digital asset inventory, recording private keys for executor access, nominating platform legacy contacts, appointing digitally competent executors and expressly addressing digital assets in the will.

Trusts are liable to both income tax and CGT and their tax treatment can be complex, depending on the beneficiaries’ rights to the income and capital arising in the trust.

For IHT purposes, most trusts are taxed in the same way. Almost all trusts are subject to the ‘relevant property regime’ outlined in 1.1 Tax Regimes. The tenth anniversary charges (and the costs of administering them) mean that, over time, maintaining a trust can be expensive.

The use of trusts for tax planning has been curtailed. What remains largely is as follows.

• Discretionary trusts are the most widely used UK estate-planning vehicle, offering flexibility, asset protection and multi-generational succession governance. They fall within the relevant property regime, attracting entry charges (up to 20%), ten-year periodic charges (up to 6%) and exit charges. Trust income is taxed at 45% (39.35% on dividends; rising to 47% on savings/property income from April 2027) and trust CGT at 24%.
• Other key structures include interest in possession trusts (life interest trusts for blended families), bare trusts (for grandchildren), bereaved minor trusts (excluded from relevant property charges) and discretionary will trusts, with section 144 “reading back”, meaning that on a transfer within two years of death, the distribution is taxed once, as if the testator had always intended it.

Trusts are fully recognised and deeply embedded in the law of England and Wales.

The trust concept of separating legal ownership (in the trustee) from beneficial ownership (in the beneficiaries) is a creation of English equity.

Foreign trusts are recognised through the Recognition of Trusts Act 1987, which implements the Hague Convention on Trusts, ensuring that trust property constitutes a separate fund and that trustees may act in their capacity across jurisdictions.

Practical considerations include significant tax costs (relevant property IHT charges, 45% trust income tax rate, 24% CGT rate), mandatory Trust Registration Service registration, the removal of non-dom trust protections from April 2025 and potential non-recognition in civil law jurisdictions with forced heirship rules.  

The location where a trust is established or administered is relevant to the extent that it determines the trust’s residence. For the purposes of income tax and CGT, a trust is deemed to be resident in the UK if all the trustees are UK resident and not resident in the UK if all the trustees are non-resident. Where some, but not all, of the trustees are UK residents, the trust will be resident if the settlor was resident when the trust was created.

Where an individual creates an overseas trust, this may engage the Transfer of Assets Abroad (“TOAA”) legislation. If the settlor is UK-resident and has the power to enjoy the income of the trust, any income arising within the trust will be deemed to be income of the settlor. Further, even if that provision is not engaged (eg, the settlor is deceased or is not a UK-resident), any benefits received by UK-resident beneficiaries out of the trust may give rise to a charge to income tax matched against the income of the trust.

If a settlor of a non-resident trust is a UK-resident, any chargeable gains arising in the settlement are taxable on the settlor. If the settlor is not a UK resident, capital payments made from the trust to any UK-resident beneficiaries are matched against chargeable gains arising in the trust. The matched gains are then taxable on the UK-resident beneficiaries who receive the capital payments.

It is quite common that the settlor will also be a trustee of the trust they have created. There are no specific tax consequences arising from that arrangement.

If the settlor is not expressly excluded from benefitting from the trust, the income arising within the trust may be attributed to the settlor under the so-called ‘Settlements Code’. Further, any property distributed to the trust is likely to be a ‘gift with reservation of benefit’ and therefore be deemed to remain a part of the settlor’s estate on their death for the purposes of IHT.

Asset protection planning is a central concern for HNW individuals and family offices in the UK. The most widely used and most popular vehicle for asset protection in England and Wales is the discretionary trust. However, family investment companies, prenuptial agreements and limited liability structures also play supporting roles.

With discretionary trusts, trust assets are held separately from any individual’s personal estate and no beneficiary has an automatic right to them.

However, the UK’s legal framework imposes significant limitations on the effectiveness of any asset protection strategy, particularly through the insolvency clawback provisions, the transactions defrauding creditors regime and the divorce court’s broad powers over financial remedies.

The key principle underlying all UK asset protection planning is that structures must be established early, in good faith and when no creditor claims or matrimonial disputes are foreseeable. Planning undertaken in the shadow of a known threat is highly vulnerable to challenge.

Family investment companies and prenuptial agreements provide complementary protection for succession and divorce risk respectively.

However, significant statutory limitations constrain asset protection planning. Legislation allows any creditor to challenge transactions at undervalue made to put assets beyond creditors’ reach, with no time limit and no insolvency requirement.

The statute provides a bankruptcy-specific clawback for transactions at undervalue (within two to five years) and for preferences (within six months to two years).

On divorce, the court is empowered to set aside transactions intended to defeat claims for financial relief.

The overriding practical principle is timing: structures must be established early, in good faith and before any threat is foreseeable.

The common mechanisms used to manage succession of a family business are trusts or companies, outlined in 2.6 Transfer of Assets: Vehicle and Planning Mechanisms.

Historically, it was common to hold business assets until death because they would attract unlimited relief from IHT under BPR. Further, on death, there is a free uplift in the base cost of the assets for CGT purposes. It was therefore advantageous to hold onto the assets.

Since 100% BPR has been limited to the first GBP2.5 million, some business owners have begun giving away shares in the family business as a PET, hoping to survive seven years. This does not give rise to an immediate CGT charge, as holdover relief is available for gifts of business assets. Nevertheless, it is less advantageous for CGT purposes than holding until death, as the recipient of the gift does not benefit from an uplift in the base cost.

Ordinarily, if only a partial interest in a company is transferred, the market value of the shares will be partially discounted, to reflect the lack of marketability and control inherent in a minority shareholding.

For the purposes of IHT, the related property rules will apply where assets are held by both a person and either:

• that person’s spouse; or
• a charity, charitable trust or limited list of other bodies following a transfer to that body by that person.

If the value of those assets together is greater than the sum of the values of those assets held separately, the related property rules aggregate the value of the assets and attribute an appropriate portion of that value to the person’s estate. The effect of these rules is to ignore any minority discount.

The explosion of wealth over a generation or two has led to multiple disputes between heirs.

Disputes take several forms:

• family provision claims (discussed above) for reasonable financial provision;
• will validity challenges on grounds of capacity, undue influence, knowledge and approval or fraud;
• proprietary estoppel claims based on promises of inheritance;
• trust disputes including trustee removal, breach of trust and variation applications;
• cross-border jurisdictional conflicts; and
• HMRC investigations into IHT underpayments.

Early planning, transparent communication and professional governance remain the best defences.

England and Wales compensate aggrieved parties in wealth and trust disputes primarily through equitable remedies rather than common law damages.

For breach of trust, the court awards equitable compensation to restore the trust fund to the position it would have occupied but for the breach, with the quantum assessed by reference to the loss caused.

An account of profits strips a fiduciary of unauthorised gains, regardless of whether the trust suffered loss.

Proprietary remedies – tracing, constructive trusts and equitable liens allow beneficiaries to claim the trust property itself or its traceable substitute, giving priority over unsecured creditors.

The court may order periodical payments, lump sums, property transfers, settlements or trust variations to provide reasonable financial provision from a deceased’s estate.

Proprietary estoppel remedies are discretionary, balancing the claimant’s expectation against their detriment.

The court may remove trustees under the Trustee Act 1925 and specialist procedural orders protect the administration of trusts.

Punitive or exemplary damages are not generally available.

Corporate and professional fiduciaries play an increasingly important role in the administration of trusts, estates and other wealth structures in England and Wales. The growing complexity of the tax, regulatory and compliance environment, particularly following the reforms of 2025 and 2026, has made professional trusteeship not merely a convenience but, for many HNW families, a practical necessity. English law expressly recognises the distinction between lay (non-professional) and professional trustees. It imposes a higher standard of conduct on the latter through the statutory duty of care in the Trustee Act 2000.

Corporate and professional fiduciaries are increasingly prevalent in England and Wales, driven by growing regulatory complexity, tax reform and dispute risk.

English law does not permit the courts to “pierce the veil” of a trust in the corporate sense, but trusts can be set aside as shams where the settlor and trustee never genuinely intended the trust to operate as stated. Transfers into trust may be unwound (for transactions defrauding creditors, with no time limit) or under bankruptcy clawback rules.

The divorce court can treat trust assets as a financial resource and set aside avoidance transactions.

Trustees are personally liable for trust obligations and have a right of indemnity from the trust fund.

England and Wales have a comprehensive framework encouraging prudent investment by fiduciaries.

The management of trusts is regulated by the Trustee Investments Act 1961 and the Trustee Act 2000.

Trustees are given a broad general power of investment: they may make any investment a private investor could make.

This power is constrained by standard investment criteria:

• trustees must consider the suitability of each investment to the trust and the need for diversification;
• these criteria cannot be excluded by the trust deed;
• requires ongoing review of investments;
• requires trustees to obtain and consider proper advice before investing;
• provides a statutory duty of care to investment decisions, with a higher standard for professional trustees;
• the equitable duty requires trustees to invest for the best financial return for beneficiaries, subordinating personal ethical or political views; and
• trustees may delegate investment management to professional agents with liability limited to compliance, with the duty of care in appointment and review.

The investment standard applied to fiduciaries in England and Wales has evolved from a restrictive, asset-by-asset “prudent man of business” test into a modern framework that expressly aligns with portfolio theory.

The Trustee Act 2000 provides the current statutory regime, conferring broad default investment powers subject to structured duties of suitability, diversification, advice and care. Trusts are permitted to hold active businesses, but doing so imposes significant additional obligations on trustees.

The following sets out the investment theory, its relationship to modern portfolio theory, the diversification requirement and the rules governing the ownership of active businesses by trusts.

Diversification is required by section 4 of the Trustee Act 2000, but only “so far as is appropriate to the circumstances of the trust” — allowing concentrated positions where the trust’s purpose demands it (eg, a family business), provided trustees document their reasoning.

Trustees must also consider suitability, obtain proper advice and apply the statutory duty of care.

Trusts may hold active businesses, typically through a controlling shareholding. Where they do, the duty established in Bartlett v Barclays Bank Trust Co Ltd [1980] Ch 515 (the “Bartlett duty”) requires trustees to actively supervise the company and intervene if directors take excessive risks.

Anti-Bartlett clauses can modify this duty but cannot exclude liability for dishonesty. Trustees carrying on a business directly (not through a company) are personally liable for business debts, making corporate structuring essential.

Domicile is a common law concept and is distinct from immigration status or nationality. UK tax residence is determined by the Statutory Residence Test (SRT), which applies a series of automatic and sufficient ties tests based on days spent in the UK and connections to the UK. To maintain most types of immigration permission and to qualify for Indefinite Leave to Remain (ILR), an individual generally needs to reside in the UK for at least six months per year. If the ultimate goal is British citizenship through naturalisation, the residence requirement increases to nine months per year.

Tax Residence – Statutory Residence Test

The SRT applies a series of automatic tests that determine whether a person is resident or non-resident for a tax year.

A person will not be resident in the UK if they meet any of the following tests:

• they spend fewer than 16 days in the UK in that tax year;
• they spend fewer than 46 days in the UK in that tax year and have not been resident in the UK in any of the preceding three tax years; and
• they work full-time overseas.
• A person will be resident in the UK if they meet any of the following tests:
• they spend at least 183 days in the UK in that tax year;
• they have their main or only home in the UK; and
• they work full-time in the UK.

If none of the automatic tests is met, there is a sufficient ties test under which a person’s residence is determined by the number of days they have spent in the UK and the number of connections they have to the UK. The number of ties they can have to the UK before becoming resident depends on whether they have been resident in any of the previous three tax years.

Ordinarily, if a person is resident for a particular tax year, they are treated as a resident for the entirety of that tax year. In certain circumstances, when a person is either arriving in or leaving the UK, “split-year treatment” will apply, treating the person as resident for only a portion of the tax year and as non-resident for the remainder.

Tax Residence – Long-Term UK Residence

From 6 April 2025, the UK stopped using domicile as a connecting factor for tax and instead moved towards an entirely residence-based system of taxation. For IHT, this meant creating an entirely new connecting factor called long-term UK residence.

A person will be a long-term UK resident for a particular tax year if they have been resident in the UK for at least ten out of the previous 20 tax years. A person will cease to be a long-term UK resident if they are non-resident for a minimum number of years. The number ranges from three to ten and increases with the length of their residence in the UK.

Indefinite Leave to Remain (ILR) must be obtained before an individual can apply for British citizenship by naturalisation. The standard route to ILR requires five years of continuous lawful residence in the UK; however, certain visa categories offer an expedited three-year route to ILR, including the Global Talent visa and the Innovator Founder visa.

There is presently no direct investment-based route to UK settlement or citizenship following the closure of the Tier 1 (Investor) visa in February 2022. Unless they are applying as a spouse or civil partner of a British citizen, citizenship can be applied for at the earliest after 12 months of holding ILR, provided the individual has been resident in the UK for five years. In practice, this means those individuals on the standard five-year ILR route would be eligible to apply for citizenship after six years of residence, while those on an expedited three-year route to ILR could apply for citizenship in year five.

Notably, there is a statutory discretion “in the special circumstances of any particular case” to naturalise a person whose time restrictions were lifted less than 12 months prior.

Where the applicant has a British citizen spouse or civil partner, the qualifying period for naturalisation is three years instead of five years and the applicant must have no time restrictions on their immigration status only on the date of application (not for a whole 12 months). So, in such cases, the spouse/civil partner can apply for naturalisation immediately after obtaining ILR, provided they have been resident in the UK for three years. That being said, the standard route to ILR for a spouse or civil partner of a British citizen requires five years of continuous lawful residence in the UK in this capacity.

Different categories of immigration status lead to ILR at different times, eg, after three, five or ten years.

England and Wales provide several special planning mechanisms for minors and adults with disabilities. For disabled persons, a trust qualifying is excluded from the relevant property regime (no ten-year or exit charges), with gifts into the trust treated as PETs.

A vulnerable beneficiary election allows trust income and gains to be taxed at the beneficiary’s personal rates rather than the higher trust rates, with the full individual CGT annual exempt amount available.

Discretionary trusts protect means-tested benefits as the beneficiary has no vested right to the trust fund.

Personal injury trusts are specifically exempt from benefits means-testing.

The Mental Capacity Act 2005 provides for lasting powers of attorney, Court of Protection supervision, deputyship and statutory wills for adults lacking capacity.

For minors, bereaved minor trusts and age 18-to-25 trusts are excluded from the relevant property regime and are eligible for the vulnerable beneficiary election.

Bare trusts, discretionary trusts, Junior ISAs and child pensions provide additional planning tools, though bare trusts are unsuitable where benefits protection is needed.

England and Wales use different mechanisms depending on whether the subject is a child or an adult lacking capacity.

For children, a parent may appoint a testamentary guardian by will without any court proceeding. There is no ongoing court supervision of the guardian.

The court may also appoint a guardian on application. For adults, a Lasting Power of Attorney (“LPA”) is created privately by the donor. At the same time, they have capacity and are registered with the Office of the Public Guardian (“OPG”); no court proceeding is required and there is no routine ongoing supervision.

By contrast, deputyship under the Mental Capacity Act 2005 requires a Court of Protection application. It is subject to ongoing OPG supervision, including annual reporting, security bonds and the power to direct Court of Protection Visitors.

Deputies cannot settle property or execute wills – these require separate court orders.

Mental Health Act 1983 guardianship is an administrative (not court) process under local authority supervision, conferring only limited welfare powers.

For HNW families, the LPA is the preferred tool because it avoids court proceedings entirely.

England and Wales provide three principal mechanisms for planning for mental incapacity under the Mental Capacity Act 2005:

• lasting powers of attorney (“LPAs”) are the primary planning tool (a property and affairs LPA authorises an attorney to manage finances, investments, property and business interests, usable immediately upon registration, even before capacity is lost);
• a health and welfare LPA authorises decisions about medical treatment and care, exercisable only once capacity is lost;
• advance decisions to refuse treatment allow a person to specify medical treatments they wish to refuse if they later lack capacity; decisions concerning life-sustaining treatment must be in writing, signed and witnessed.

Where no LPA exists, the Court of Protection may appoint a deputy, requiring a formal court application and ongoing OPG supervision including annual reporting and a security bond. Deputies cannot execute wills or settle property: these require separate court orders.

Deputyship is significantly more expensive and restrictive than an LPA, making advance LPA planning essential for HNW individuals.

The UK’s framework for planning for longer lives encompasses pension flexibility, tax reform, care funding, incapacity planning and intergenerational coordination.

Pension freedoms (from 2015) allow flexible drawdown.

However,, once again, the policymakers have backtracked and from April 2027, most unused pension funds will be brought within IHT, potentially facing a combined 67% effective tax rate (40% IHT plus 45% income tax). This is prompting a reassessment of spending sequences, lifetime gifting from pension income and the use of spousal bypass trusts.

Social care remains means-tested and uncapped in practice, requiring dedicated care reserves and planning around trust structures and property ownership.

Equity release products provide access to property wealth without sale.

ISAs offer tax-free growth and flexible access throughout retirement.

Wills and estate plans require regular review, particularly following the April 2027 pension changes. Wealthy families increasingly adopt a whole-family planning approach, coordinating care funding, gifting and succession across multiple generations through family offices and professional advisers.

English law has moved decisively towards equal treatment of all children for succession and inheritance purposes, regardless of the circumstances of their birth. The legal framework is built on three principal statutes, which together determine the legal parent-child relationship for all purposes, including intestacy, class gifts in wills and trusts and entitlement to inheritance claims.

The key principle is that inheritance rights follow legal parentage, not biological parentage and legal parentage is determined by the applicable statute rather than by genetics alone.

The Family Law Reform Act 1987 abolished the distinction between children born in and out of wedlock, applying the equality principle to intestacy and statutory relationship references.

Adopted children are treated as children of the adoptive parents and not of the birth parents.

For assisted reproduction, legislation determines legal parenthood: the birth mother is always the legal mother and the identity of the father or second parent is determined by statutory rules based on marriage, civil partnership or agreed conditions.

Posthumously conceived children are treated as the deceased’s child for birth registration only (not for inheritance), creating a gap that requires express testamentary provision.

Surrogacy is permitted in the UK, but surrogacy agreements are not legally enforceable. At birth, the surrogate is recognised as the legal mother. Legal parenthood transfers to the intended parents only through a parental order, which requires:

• a genetic link;
• the surrogate’s consent; and
• a court application within six months of birth.

Until the parental order is granted, the child cannot legally inherit from the intended parents. For all non-traditional family arrangements, it is crucial to draft wills with clear and explicit definitions.

The UK has recognised same-sex marriage since 2014 (with the exception of Northern Ireland, where same-sex marriage was recognised in 2020). Further, the UK permits couples (whether same-sex or not) to enter into a civil partnership as an alternative to marriage.

For tax purposes, there is no distinction drawn between marriage and civil partnerships.

For tax purposes, unmarried couples are treated as entirely independent individuals. Such couples do not receive any particular treatment, even if they are cohabiting. This means that any disposals of assets from one partner to another will be subject to CGT and there is no IHT exemption for transfers between an unmarried couple.

Gift Aid

Any UK taxpayer can make a Gift Aid declaration in respect of charitable donations they have made. This declaration allows the charity to reclaim the basic rate of tax which was paid on the donation. This means that for every GBP1 donated, the charity receives GBP1.25. Higher- or advanced-rate taxpayers can also claim back any additional tax paid on donations in excess of the basic rate.

IHT

Charity gifts are exempt from IHT. Further, if a person leaves a sufficiently large donation to charity in their will, the IHT rate is reduced from 40% to 36%. The necessary amount is approximately 10% of the taxable estate, but this is subject to precise calculations set out in the legislation.

The most commonly used UK charitable planning structures are charitable trusts, Incorporated charities, donor-advised funds and direct Gift Aid giving.

Charitable trusts are simple to establish, offer full tax exemptions and family governance, but lack separate legal personality, exposing trustees to personal liability. CIOs (Charities Act 2011) provide separate legal personality and limited liability with a single Charity Commission regulation, making them the preferred incorporated vehicle for new charities. Charitable companies offer similar protection but suffer from dual regulation (Companies House and Charity Commission), increasing cost and complexity.

Donor-advised funds (“DAF”) provide immediate tax relief on contributions with minimal administration – the host charity manages compliance, but the donor has advisory rather than legal control over distributions.

They are increasingly popular for donors wanting simplicity and privacy. Direct Gift Aid giving is the simplest mechanism but offers no governance, endowment or legacy structure.

All structures benefit from full income tax, CGT and IHT exemptions. For family foundations, a charitable trust or CIO provides the strongest governance and intergenerational engagement. For donors prioritising speed and simplicity, a DAF is optimal. The choice depends on the scale of giving, the desire for family involvement, the need for limited liability and the appetite for administrative responsibility.