The main UK taxes and top rates relevant for individual clients and wealth planning structures are:

• income tax – 45% (48% in Scotland);
• capital gains tax (CGT) – 24% (32% on carried interest);
• inheritance tax (IHT) – 40%;
• corporation tax – 25%; and
• stamp duty land tax (see 1.4 Taxation of Real Estate Owned by Non-Residents).

Distinct rules apply to individuals, trusts and other structures such as companies.

The tax system focuses on taxing the accrual of income and gains as well as specific transfers of wealth, particularly on death (with certain lifetime gifts taken into consideration).

Subject to certain IHT exemptions and an available NRB, the following applies.

• Lifetime gifts into most types of trust or to a company are chargeable lifetime transfers (CLTs) charged at 20%. Further IHT may be charged on a CLT that the donor fails to survive by seven years.
• Other gifts are potentially exempt transfers (PETs) becoming chargeable to IHT if the donor dies within seven years of the gift (the “seven-year rule”).
• Taper relief may apply to reduce IHT arising when a donor fails to survive CLTs or PETs by the full seven years (to the extent that the gifts are not within the NRB available on death).

Most types of trust are subject to an IHT regime of ten-year anniversary charges, at a maximum rate of 6% on value in excess of the NRB available to the trust, and with a proportionate charge levied when capital is distributed between ten-year anniversaries.

UK residents are subject to income tax and CGT on worldwide income and on gains subject to certain exceptions for those arriving from overseas to live in the UK (see 1.3 Income Tax Planning and 1.5 Stability of Tax Laws).

Those who come to live in the UK for ten years or more are now liable for IHT as “long-term residents” on their worldwide wealth rather than only on UK-situated assets, and remain liable for between three and ten years after they leave (see again 1.5 Stability of Tax Laws).

IHT exemptions, NRBs and reliefs include the following.

• Non-UK-situated assets of those not long-term-resident in the UK are excluded from the scope of IHT.
• Individuals have a general NRB, currently GBP325,000 per person (2025/6).
• An additional “residence nil-rate band” (RNRB) may be available when the value of the family home is inherited by the deceased’s children or others who qualify as “lineal descendants”:
1. the RNRB is currently GBP175,000 per person (2025/6); and
2. there is rapid tapered withdrawal of the RNRB for estates over GBP2 million.
• The IHT regime favours couples who are married or in a registered civil partnership:
1. gifts between spouses and civil partners are exempt;
2. an uplift may apply to NRB and RNRB available in the survivor’s estate by reference to any proportion of the NRB and RNRB unused on first death; and
3. with appropriately structured wills, it is usually possible to defer IHT until after the lifetime of both spouses/civil partners.
• The IHT exemption between spouses and civil partners is restricted when only one of them is a long-term UK resident. A surviving spouse or civil partner may elect to be treated as if a long-term UK resident to claim the full exemption.
• Exemptions apply for certain types of gifts. The exemptions most widely relied on are:
1. annual exemption of GBP3,000 (with carry-forward of unused exemption for one year);
2. any number of small gifts of up to GBP250 (to any one individual) during a tax year;
3. gifts on marriage or civil partnership up to a certain amount depending on the relationship between the parties;
4. gifts made as part of a regular pattern of expenditure out of surplus income;
5. gifts to UK charities and certain community amateur sports clubs; and
6. other gifts (PETs) that become exempt on the donor surviving them by seven years.
• Subject to certain conditions, IHT reliefs include:
1. 100% business property relief (BPR) in respect of an interest in a business that is wholly or mainly trading (50% relief for personal assets used in the business); and
2. 100% agricultural property relief (APR) for land and associated buildings and farmhouses used for the purposes of agriculture by an owner occupier (50% relief if let out for agricultural purposes).

See 1.5 Stability of Tax Laws regarding upcoming changes limiting APR and BPR.

Prior to 6 April 2025, the remittance basis allowed UK-resident individuals not domiciled or deemed domiciled in the UK to keep foreign income and gains out of the scope of UK tax if left offshore.

On 6 April 2025, the remittance basis was replaced by a new residence-based “Foreign Income and Gains regime” (“FIG regime”) allowing certain foreign income and gains to be exempted from UK tax during the first four years of UK residence.

Transitional provisions apply, including:

• a Temporary Repatriation Facility (TRF) to encourage former remittance base users to remit pre-6 April 2025 foreign income and gains, to which a significantly reduced rate of UK tax will apply; and
• for remittance base users, rebasing on certain disposals of foreign assets (subject to certain conditions).

Where relevant, double tax treaties can provide opportunities for income tax mitigation, with careful forward planning.

Various investment strategies and structures are available in the UK to optimise income tax efficiency – for example, as follows.

• Tax relief on private pension contributions, including certain types of overseas pension schemes.
• ISAs (Individual Savings Accounts) offer tax-free growth and income.
• Onshore and offshore investment bonds structured around life insurance contracts allow for growth to roll up within the investment wrapper, and for bond segments to be gifted prior to encashment. This is a popular form of investment within UK trusts, particularly where intended beneficiaries are likely to be lower-rate or non-taxpayers at the time of distribution and encashment.
• Certain schemes offering tax relief to encourage investment in unquoted companies and social enterprises (such as the Enterprise Investment Scheme and Venture Capital Trusts).
• Tax relief for donations to charity (for those philanthropically minded).
• Family investment companies (FICs) where growth is rolled up.

Non-UK residents pay a stamp duty land tax surcharge on buying residential property in England and Northern Ireland. The highest rate applied (to value in excess of GBP1.5 million) is 19% where the purchase is of a property to let out or a second home (taking into account a further surcharge of 5%, which applies in that case).

Different rules apply in Scotland and Wales under their respective land transaction tax regimes.

Non-UK residents are liable for CGT on UK property sales subject to principal private residence relief, and IHT applies to UK land and buildings regardless of the owner’s long-term residence status. Rebasing is available on disposal of UK residential property held by non-UK residents on 5 April 2015 to the value at that date.

Under the Non-Resident Landlord Scheme (NRLS), any letting agent, or otherwise the tenant, must deduct and account for basic rate tax on UK rental income, unless HMRC has specifically agreed that the rent can be paid gross to the landlord.

Higher-value UK residential properties owned within a corporate wrapper are liable for the Annual Tax on Enveloped Dwellings (ATED), and regular revaluations are required. Entities eligible for relief in certain trading and business contexts must still make an annual ATED return.

The introduction of ATED has discouraged the holding of high-value properties through offshore corporate structures.

Recent and Forthcoming Changes

A series of recent and forthcoming tax rule changes will significantly extend the reach of IHT.

From 6 April 2025 – introduction of long-term residence test as basis for UK taxation

Those who come to live in the UK for ten years or more are now liable for IHT on their worldwide wealth, and depending on the length of residence in the UK will remain liable for between three and ten years after they leave.

This is subject to certain transitional provisions and to the application of any relevant double tax treaty provisions, which can be complex to navigate.

This change is leading to an acute need for individuals and fiduciaries to review their position with the assistance of professional advice.

Some may be inclined to cut short living in the UK to avoid being fully exposed to UK IHT, while others may opt to insure the risk (via life insurance for a seven-year term on lifetime gifts or whole-of-life cover in respect of IHT exposure on death, and often written in trust).

The advantages of excluded property trusts have been stripped away (subject to certain transitional provisions). Their exposure to ten-year anniversary and exit charges will depend on the settlor’s long-term residency and necessitate ongoing monitoring.

Offshore FICs may increase in popularity as a wealth planning structure for internationally mobile individuals (as an alternative to excluded property trusts).

The rules provide greater clarity for UK expats who have gone to live outside the UK as regards their being outside the scope of IHT on non-UK-situated assets after ten years of non-UK residence.

From 6 April 2026 – introduction of GBP1 million limit on 100% relief for APR and BPR

BPR and APR are to be limited to 100% on the first GBP1 million of an individual’s business/farm assets, and to 50% thereafter (giving rise to an IHT charge at 20% on the excess, being half the usual death rate). This will also limit APR and BPR in the context of the IHT regime applicable to trusts.

Relief on shares listed on alternative markets such as AIM are to be reduced from 100% to 50%.

The scope of APR is to be broadened to include certain environmental land management and conservation schemes.

Family business owners and farmers are concerned that there will be insufficient liquidity in their estates to meet an increased IHT exposure, and are accelerating their succession planning as a result.

Many are now making lifetime gifts of APR and BPR qualifying assets in the hope of passing these on IHT-free, provided they survive seven years.

Fragmenting ownership among family members will be beneficial going forward (so that relief at 100% for the first GBP1 million of qualifying assets is likewise multiplied).

Careful consideration is needed as lifetime gifts can come at a significant CGT cost (albeit business asset holdover relief may be available).

Some may be more inclined to take out life insurance (written in trust) to cover IHT exposure, but the cost can be prohibitive for older business owners and farmers.

From 6 April 2027 – private pension savings to be brought within the scope of IHT

Pension savings previously exempt from IHT will be included when calculating IHT on death.

Many pension holders who had previously been preserving their pension wealth to pass it on to the next generation are instead looking to draw down and spend or give it away (where possible using the normal-expenditure-out-of-income exemption) in the hope of reducing the value of their estates for IHT purposes.

Draft legislation is pending in relation to changes not yet in force, and the political climate is such that further changes may emerge.

The UK participates in the US Foreign Account Tax Compliance Act (FATCA) and the OECD’s Common Reporting Standard (CRS), requiring UK financial institutions to provide information about foreign account holders to HMRC (in respect of US account holders in the case of FATCA, for sharing with the IRS). A financial institution can, in this context, include fiduciaries such as a corporate trustee.

The UK has implemented Mandatory Disclosure Rules (MDR) requiring intermediaries or taxpayers to disclose arrangements and offshore structures that tend to obscure beneficial ownership, and is due to implement a crypto-asset reporting framework (CARF) from 1 January 2026.

Companies are required to disclose Persons with Significant Control (PSCs) on the PSC register.

Subject to certain limited exemptions, UK express trusts and certain non-UK trusts must register with the Trust Registration Service (TRS) even if not liable for UK tax.

These initiatives and the ATED regime have affected tax planning involving offshore structures. There will likely continue to be a move towards more transparent wealth-holding structures, such as FICs.

The cultural diversity of the UK means that succession planning motivations and expectations can be nuanced and varied.

A common theme is a desire to preserve wealth for the next generation, motivating individuals to consider parting with assets sooner rather than later in the hope of reducing IHT exposure.

Conversely, tax complexity and some reluctance to discuss financial matters within families can result in inaction, leading to missed opportunities to reduce tax exposure and a greater risk of future family conflict.

The high cost of housing has led to the prevalence of children buying property with financial help from parents (the so-called “Bank of Mum and Dad”). Increasing awareness of the attendant threat of third-party claims on gifts made in this context has caused an uptick in the use of trusts and other asset protection tools, such as pre- and postnuptial agreements and cohabitation agreements.

Globally, mobile families and businesses are exposed to a web of complex and ever-changing tax and regulatory rules.

This requires multi-jurisdictional advice to align tax and legal strategies across borders, taking into consideration:

• domestic and foreign tax and inheritance laws, as well as conflict-of-laws rules;
• increasing anti-avoidance measures;
• relevant international treaties; and
• monitoring of residence-based tax triggers.

A bespoke approach to testamentary provision is required depending on the jurisdiction and the nature and location of assets involved. From a UK perspective, the EU Succession Regulation remains relevant for those owning property in the EU member states where the regulation applies (see 2.3 Forced Heirship Laws). Separate wills in relevant jurisdictions often remain advisable, not least for ease of the probate process according to local laws.

The following applies for those domiciled in England and Wales or in Northern Ireland:

• testamentary freedom prevails;
• if not disposed of by will, statutory rules of intestacy determine the distribution of the estate according to proximity of relationship to the deceased; and
• there is, however, a statutory basis for claim by certain relations and dependents not reasonably provided for by the deceased’s will or under the intestacy rules.

For those domiciled in Scotland, testamentary freedom is tempered by a statutory framework of legal rights, particularly for spouses, civil partners and children of the deceased.

Forced heirship rules of other jurisdictions can be relevant for UK-resident nationals owning real estate outside the UK, unless an effective choice of UK law is made by reference to the EU Succession Regulation, where applicable.

A concept of matrimonial property versus non-matrimonial assets is relevant in the UK in the context of division of assets on divorce. This has been developed by case law (save that in Scotland there is a statutory definition of what constitutes matrimonial property).

Broadly speaking, the jurisdiction of the courts within the four nations making up the UK revolves around domicile and habitual residence. The existence of a former matrimonial home within the jurisdiction can also be a factor.

Non-matrimonial property is typically property brought into or acquired by one party to the marriage from an external source such as a gift or inheritance (albeit such property can become “matrimonialised” depending on how it is viewed and treated by the parties to the marriage).

The court has discretion to take into account “non-marital” assets to achieve a fair outcome on divorce by reference to needs (whereas the starting point for division of matrimonial assets is usually an equal split).

Pre- and postnuptial agreements are not formally binding in England, Wales and Northern Ireland. However, they are taken into account and can be decisive in financial proceedings (provided the outcome is not unfair, leaving one party in financial need or prejudicing reasonable provision for the children, for example).

The Law Commission has recommended the introduction of qualifying nuptial agreements (QNAs) to provide greater certainty and enforceability, subject to conditions such as the inability to contract out of financial needs.

In Scotland, pre- and postnuptial agreements are viewed as being enforceable as a contract, subject to general contract law principles.

To demonstrate that both parties understood the implications and that neither had been unduly influenced to enter into a nuptial agreement, there should be full financial disclosure and independent legal advice for each party. Prenuptial agreements should be concluded well in advance of the marriage or civil partnership ceremony.

As the approach to enforcement of nuptial agreements can differ significantly across borders, joined-up international advice is needed where the parties have assets in different jurisdictions, particularly if place of domicile or residence may be in issue or prone to change.

UK CGT applies when a chargeable person (eg, an individual or trustee) makes a chargeable disposal (eg, a sale or gift) of a chargeable asset (anything not specifically exempt under legislation, such as cash).

When a disposal is made during a lifetime, the gain to which CGT applies is generally based on the proceeds of sale or on the market value at the time of transfer (including on disposal between certain connected parties).

Certain opportunities for rebasing are afforded to non-residents, for example in respect of non-resident disposal of UK residential property owned on 5 April 2015 to its value at that date.

Transfers of property between spouses or civil partners who live together generally take place on a “no gain no loss” basis, so that the recipient spouse inherits the transferor spouse’s base cost. This can be helpful where one spouse or civil partner is a lower-rate taxpayer.

On death, the cost of an asset for CGT purposes is uplifted to market value at the date of death. This can be a motivation for refraining from making lifetime gifts of assets pregnant with gain, particularly if they may not be liable for IHT on death (due to being within an available NRB or otherwise eligible for reliefs such as APR or BPR).

Tax-efficient transfer of wealth to younger generations generally revolves around making use of the “seven-year rule”, whereby lifetime gifts (PETs) become exempt from IHT after seven years (as described in 1.1 Tax Regimes).

Less well used is the immediate exemption for gifts made as part of a regular pattern of expenditure out of surplus income.

Trusts and FICs, or sometimes family limited partnerships (FLPs), are commonly used as a vehicle for making lifetime gifts, but with an element of control and asset protection.

Lifetime gifts into trusts are typically kept within the available NRB, which is effectively restored every seven years to avoid an IHT entry charge or funded with assets qualifying for APR or BPR.

When structured correctly, FICs are not subject to the same limitations as trusts in terms of amount of wealth that may be transferred in without an entry charge, and growth can be rolled up tax-efficiently.

There is scope for deferral of CGT for gifts into trust or of qualifying business assets (via a claim for holdover relief).

The statutory scope for varying an inheritance by deed of variation within two years of the death of the deceased, with retrospective effect for IHT purposes and/or certain CGT purposes, provides a useful tool for tax-efficient generation skipping. There is scope for the original beneficiary to retain the ability to benefit without the inheritance forming part of their estate for IHT purposes.

The legal status and associated property rights of digital assets have been somewhat unclear under UK law.

Such assets often exist solely as data, and it has been thought that no property rights exist in information itself (albeit intellectual property rights may sometimes arise). It has been argued that any other right is effectively a “thing in action”, being a right to bring a claim or merely a bundle of contractual rights between a user and a service provider (rather than entitlement to ownership of an underlying asset).

A Property (Digital Assets etc) Bill has been introduced in the UK Parliament, which aims to clarify the position and pave the way for further development of the law in this area. The Bill sets out that a digital asset is not prevented from being the object of personal property rights merely because it is neither a thing in possession nor a thing in action.

If passed, the Bill will effectively recognise that digital assets can attract personal property rights, with the expectation that the law in relation to digital assets will rapidly develop via principles established by case law (as is already beginning to happen).

Some testators will choose to make certain digital assets part of a specific legacy in their will and/or complete a digital assets inventory to record key details. It may be necessary to review ISP terms and conditions to be clear about the extent of ownership and the access rights of executors and trustees on death.

High net worth individuals typically use trusts or corporate entities such as FICs (or in some cases FLPs) for wealth structuring.

Charitable bodies (with UK charitable status) benefit from generous tax reliefs, and gifts to such bodies are exempt from IHT.

The recent and forthcoming significant changes to the UK IHT regime will have a bearing on the efficacy of using certain types of trust (such as those holding property, which were originally excluded from the scope of UK IHT, and those holding assets, which previously qualified for 100% BPR or APR).

Trusts in the UK as a means of separating the legal and beneficial ownership of property are a concept rooted in property law and the related obligations and equitable principles, overlaid by a statutory framework. Notably:

• the Trustee Act 2000 sets out trustees’ duties, powers and protections in England and Wales, including the duty of care and rules on delegation;
• the Trusts of Land and Appointment of Trustees Act 1996 makes particular provision in respect of land held in trust; and
• the Trustee Act 1925 remains of relevance – for example, in relation to the provision for the basis and manner of appointment and retirement of trustees.

Scotland and Northern Ireland have their own statutory frameworks.

Distinct income tax, CGT and IHT rules apply to trusts, with some variation depending on the particular type of trust (with trusts qualifying as disabled trusts also qualifying for special tax treatment, for example).

Many modern trusts (including trusts created by a will) include express provisions that extend the trustees’ statutory powers or relax their statutory obligations.

Trusts have traditionally been widely used in the UK to hold and pass on family wealth, with a degree of control and protection from third-party claims.

The residence status of a trust is relevant for tax purposes and is determined by reference to the residence status of individual trustees or, in some scenarios, to that of the settlor at the time of funding the trust.

It is possible, therefore, for a UK resident acting as a trustee of a non-UK trust to make the trust UK-resident for tax purposes.

It is common for the settlor of a UK trust to also be one of the trustees – the following should be noted:

• this does not itself present any tax issue;
• where a UK resident is both the settlor and a beneficiary or potential beneficiary, or where the settlor’s own minor children are beneficiaries, the trust is treated as “settlor interested” in certain tax contexts (and the income of the trust may be attributed to the settlor); and
• if the settlor is a beneficiary or potential beneficiary of a trust, the funds settled will usually be treated as if still forming part of the settlor’s estate for UK IHT purposes under the “gift with reservation of benefit” rules.

Rules concerning structures facilitating the transfer of assets abroad, including offshore trust structures, may also serve to attribute income from transferred assets to a UK-resident settlor.

The replacement from 6 April 2025 of the remittance basis and of previous rules relating to “protected foreign source income” (PFSI) has tax implications where there are UK-resident beneficiaries of an offshore trust. Transitional relief may apply where distributions to beneficiaries can be matched to pre-6 April 2025 income and gains.

The FIG regime offers some benefits for UK-resident settlors of trusts that are settlor interested in relation to trust income and gains from 6 April 2025.

From 6 April 2025, the TRF (Temporary Repatriation Facility) is available for distributions from a non-UK-resident trust to a UK-resident individual that can be matched with gains or income arising before that date. This offers scope for beneficiaries to benefit from reduced rates of tax on pre-6 April 2025 matched income and gains within a limited three-year tax window (2025/6 to 2027/8).

It is for the individual rather than the trust to opt in to these transitional reliefs and undertake related reporting.

Trustees of offshore trusts may wish to consider segregating pre- and post-6 April 2025 income and gains for ease of administration and effective use of the above-mentioned concessions.

UK law recognises irrevocable trusts as binding legal arrangements but also permits a range of mechanisms to introduce flexibility.

Unlike in some other jurisdictions, UK trust deeds do not typically include the appointment of a trust “protector” with power of oversight separate from the body of trustees.

While the settlor of a UK trust is typically excluded from benefitting from the trust fund (to avoid adverse tax consequences), the settlor may retain indirect influence by way of:

• acting as one of the trustees;
• the trust deed providing that the power to appoint new trustees is reserved to the settlor during the settlor’s lifetime; and
• a detailed letter of wishes that the trustees will generally feel morally obliged to follow unless there is some good reason to depart from it.

It is not typical for UK trusts to allow trustees to act by majority. Instead, all must agree when exercising decision-making powers.

Modern UK trusts are typically drafted to provide a strong degree of flexibility, often via general overriding powers of appointment, allowing trustees to rearrange the distribution of capital or income among beneficiaries while considering what is in their interests, from time to time.

Trustees are also usually granted very broad administrative powers in the trust deed, going beyond what is provided for by statute, including:

• power to delegate functions (even irrevocably);
• power to apply capital for the benefit of discretionary beneficiaries (even during the lifetime of the primary intended beneficiary);
• power to alter the trust period or change the governing law; and
• power to vary or add to administrative powers.

Trusts have traditionally been the go-to means of protecting family wealth being passed through the generations, including in the context of succession for the family business.

Trusts have long been valued as providing a layer of protection against the circumstances and choices of individual beneficiaries (providing at least a line of defence, albeit not immune from attack, in the context of divorce).

Tax rule changes are due to take effect in April 2026 which, broadly speaking, will limit 100% BPR and APR to a value of GBP1 million across any number of trusts settled by the same individual. The rule change will also affect the amount of APR and BPR assets that can be transferred into trust without a lifetime IHT charge on the transferor. These changes will likely make trusts somewhat less attractive as an asset protection vehicle for holding assets qualifying for APR and BPR.

Family investment companies are increasingly popular as a conduit for passing on the benefit of investment assets within a protected environment controlled by the founder of the company (as discussed in 2.6 Transfer of Assets: Vehicle and Planning Mechanisms).

The use of prenuptial and postnuptial agreements has also increased in recent years. Less well appreciated is the importance of living-together agreements in respect of cohabiting partners for whom there is no statutory framework for division of assets on separation.

Nuptial and living-together agreements are often used alongside other asset preservation tools, such as trusts and FICs, to add an additional layer of protection when family business wealth is being passed on.

Family businesses in the UK rely on a robust governance structure to address areas of sensitivity and complexity caused by family dynamics. This includes regulating management and ownership succession, conflicts of interest, and differing income expectations among family members.

Some larger family businesses use a two-tier board structure to manage overall business strategy, and well-established businesses may have multiple governance entities such as:

• a family council;
• a family assembly;
• a shareholder assembly;
• a family office;
• a charitable foundation; and
• a venture capital or enterprise fund.

These entities help manage different aspects of family and business governance.

Tax-efficient business succession (in the case of trading rather than investment holding businesses) has long been facilitated by the availability of 100% APR and BPR. It has not been uncommon for handing-over of family business assets to be deferred until death, particularly given the free uplift on death for CGT purposes (see 2.5 Transfer of Property).

However, the fact that APR and BPR at 100% is due to be restricted from 6 April 2026 is causing family business owners to accelerate their business succession planning, seeking to limit future IHT exposure relying on holdover relief in order to alleviate CGT liabilities that would otherwise arise (see 1.5 Stability of Tax Laws).

A careful review of the business structure as well as monitoring activities and assets can maximise BPR for shareholders, partners and sole traders.

Other popular asset protection measures for family business owners – particularly those holding investments rather than wholly or mainly trading – include:

• creating different classes of shares;
• carrying the right to future growth without passing on control to the next generation;
• constitutional documents that restrict the transmission of shares outside the bloodline;
• the fragmentation of shareholdings among multiple family shareholders; and
• depressing the value of those minority holdings in the context of any third-party claims.

On transfer of a partial interest in an entity, the value for tax purposes may be affected by a minority discount. There are, however, “related property” rules for IHT purposes – for example, where similar property (such as shares in the same company) is owned by a spouse or civil partner. In these circumstances, an asset may have a higher value than its standalone value, as it will be based on a proportionate value of an overall larger or majority shareholding or group of assets.

The accumulation of wealth available for redistribution including high property values in the UK frequently leads to contention among beneficiaries – a great deal is at stake and emotions run high.

The rise in modern blended families – such as marriages in later life, second or third marriages – and the increase in cohabiting couples adds to estate planning complexity and increases the risk of disharmony and dispute.

The legal and procedural aspects of probate disputes remain complex. Disputes may arise over the allocation of IHT burdens, particularly where foreign assets or trusts are involved. Other common issues include the validity of wills, domicile of the deceased determining which country’s succession law applies, and claims that reasonable financial provision has not been made (see 2.3 Forced Heirship Laws and 5.2 Mechanism for Compensation). Cross-border elements – such as foreign assets or differing succession laws in other jurisdictions – add significant complexity.

In Scotland, the law differs from England and Wales regarding the revocation of wills upon marriage and the rights of surviving spouses, which can lead to disputes over the distribution of heritable and movable property

The use of trusts and other family arrangements to manage wealth has contributed to the increase in disputes. Questions often arise regarding the origins of wealth, the legitimacy of asset transfers, and the control or ownership of properties. Disputes may involve allegations of sham agreements or attempts to obscure the true ownership of assets, as seen in cases where family members or trustees are implicated in litigation over wealth distribution.

The jurisdiction of UK courts in relation to wealth disputes involving trusts, estates and corporate entities hinges on a combination of statutory provisions, common law and equitable principles, depending on the nature of the dispute:

• trust disputes typically relate to the exercise of trustees’ powers and actions or omissions that may amount to breach of trust;
• the courts of England and Wales have inherent jurisdiction over all trusts and estates (of deceased individuals) governed by the law of England and Wales;
• trustees and personal representatives may be removed by the courts and can be called to account for all actions in a fiduciary capacity, including any financial advantage gained while acting as a fiduciary;
• equitable compensation may be available for financial loss caused by breach of trust; and
• the family law courts have an ability to vary or set aside trusts on divorce, particularly sham trusts or those set up to defeat financial claims.

The courts have jurisdiction to moderate testamentary freedom by making provision for close relations and dependents in certain circumstances.

Where the deceased died domiciled in England and Wales, a claim may be brought under the Inheritance (Provision for Family and Dependents Act) 1975. This can include lump sum or periodical payments from the deceased’s estate, transfer of property from the estate, or variation of trusts on which the estate is held.

The court considers factors such as the financial needs and resources of the applicant, the size and nature of the estate, and the deceased’s obligations to the applicant. The court can also take into account lifetime dispositions made by the deceased, including any intended to defeat a claim.

Different statutory frameworks exist in Scotland and Northern Ireland, respectively (see also 2.3 Forced Heirship Laws).

It is becoming increasingly common in the UK for corporate fiduciaries such as corporate trustees or individual legal or tax professionals to act as trustees, particularly in an increasingly complex global tax and regulatory world and where significant wealth is involved.

While all trustees are subject to scrutiny and are accountable as fiduciaries (to those intended to benefit), professional trustees are expected to meet an enhanced standard of care and due diligence. This is borne out by the approach taken by the courts where there has been a breach of trust, and also tends to be reflected in any express provisions included in the trust deed that provide for indemnification of the trustees (so that professional trustees are not absolved in the case of negligence, for example).

Trustees can be held personally liable for breaches of the terms of the trust or of their general fiduciary duty, as well as for mismanagement of the trust.

Modern trust deeds often include very wide powers to delegate investment management to third-party advisers and indemnification, save in the case of fraud or negligence, to protect fiduciaries from personal liability – provided they act within their powers, with due diligence and in good faith.

It is incumbent on professional trustees to be proactive about compliance in an ever-evolving tax and regulatory environment – particularly in a cross-border context – and to be mindful of the increased onus on them compared to lay trustees.

Trustees have a wide power of investment conferred upon them by statute, akin to those of an absolute owner. However, the exercise of such power is subject to an overarching duty of care to invest prudently – usually with the benefit of suitable investment advice from a regulated financial adviser – and to keep investments under review.

Many modern trust deeds explicitly exclude or modify the statutory duties to provide additional flexibility, so that trustees need not strictly balance the interests of capital and income beneficiaries, for example. This is intended to provide flexibility but is always underpinned by the trustees’ general fiduciary duty to be guided by what is appropriate in the interests of the beneficiaries.

Typically, trustees are also expressly empowered by trust deed to:

• appoint investment advisers;
• delegate investment management; and
• set terms for remuneration and indemnity of advisers.

The aim is to ensure that there is professional oversight combined with flexibility with regard to investment strategy.

The statutory power conferred on trustees is that of an absolute owner, which includes power to trade. This also means that trustees need not diversify and may invest in assets prone to depreciation. Modern trust deeds often make more extensive express provision in this context.

It is considered desirable for trustees to be able to adapt their investment strategy to suit the beneficiaries’ needs, particularly in complex estates and taking into account the purpose for which the trust was established (to hold shares in a family business, for example, or to hold a property as a residence for a particular beneficiary).

It is typical for express absolving provisions to be included in the trust deed permitting trustees holding shares in a business to leave the day-to-day running of it – including decisions over declaration of dividends – to its directors, provided the trustees have no knowledge of or any reason to suspect mismanagement or fraud.

Domicile

Domicile is a common law concept that broadly speaking equates to an individual’s permanent home:

• a domicile of origin is acquired at birth (usually based on the domicile of the child’s father); and
• a person’s domicile may change over the course of their lifetime – for example, on moving to a new country, intending to make that country their permanent home.

Domicile has long been used as a connecting factor in determining which jurisdiction’s succession laws and tax rules apply to an individual, and for resolving cross-border conflicts of law.

Prior to 6 April 2025, the UK also relied on a statutory concept of deemed domicile, which broadly speaking applied after 15 years of UK residence.

Since 6 April 2025, domicile is no longer a connecting factor when determining an individual’s liability to UK taxes. Those who are “long-term resident” in the UK (for ten years or more) are exposed to UK tax on worldwide income and gains and on their worldwide estate for IHT purposes (subject to transitional provisions, limited concessions – such as the FIG regime – and any relevant double tax treaty provisions). (See also 1. Tax.)

UK Residence

UK residence is determined by a statutory residence test based primarily on number of days spent in the UK. Those not automatically resident based on days spent may still be regarded as resident depending on the extent of their ties to the UK (such as economic, family and work ties).

Broadly speaking, permission to reside on a temporary basis in the UK is based on a visa system for students, graduates and skilled workers sponsored by an employer, and offers a pathway to permanent residence.

The ability to reside permanently in the UK is open to those who have been continuously resident in the UK for either five or ten years (potentially earlier in certain exceptional circumstances). In this context, any absences from the UK must not be for more than 180 days in any 12-month period without permitted reasons, and there cannot have been any time during the qualifying period when the individual has been without permission to stay in the UK. An individual may lose permanent residence status if outside the UK continuously for more than two years.

Citizenship

UK citizenship allows individuals to settle in the UK with full civic rights, including:

• the right to hold a British passport;
• no restrictions on travelling into or out of the UK; and
• being able to live anywhere in the world without loss of British citizenship.

Individuals who have a British parent can be eligible for citizenship without any residency requirement, whether born in the UK or not.

Otherwise, the route to citizenship is through a process called naturalisation: this requires a period of continuous residence with limited absences allowed for a period of either three or five years, depending on whether the applicant for citizenship is married or in a registered civil partnership with a British citizen.

Those applying as the spouse of a British citizen may apply for citizenship as soon as having been granted permanent stay in the UK, whereas other routes require a permanent stay of 12 months before the date of application.

Other requirements include the passing of a life-in-the-UK test, proving the applicant’s knowledge of English and good character.

There are currently no expeditious means for an individual to obtain citizenship in the UK.

Trusts are widely used to provide for minors and other vulnerable beneficiaries, often giving no fixed entitlement to the intended beneficiary or postponing entitlement of young beneficiaries beyond the age of 18. This offers protection for vulnerable beneficiaries not capable of managing money or who may be more at risk of financial abuse, or where entitlement would interfere with the beneficiary’s welfare benefits.

Personal injury compensation can be ring-fenced from means testing for welfare benefits via a simpler bare trust arrangement, whereby the injured person remains absolutely entitled. This is because of specific disregards provided for in relevant welfare benefit legislation.

Certain types of trust for disabled individuals qualify for special IHT treatment (under Section 89 of the Inheritance Tax Act 1984):

• broadly speaking, this is provided that only the person qualifying as a disabled person within the meaning of the legislation may benefit from the trust during that person’s lifetime (subject to an annual de minimis amount);
• a lifetime transfer into such a trust is a PET rather than a CLT (see 1.1 Tax Regimes);
• the trust fund is treated as if part of the beneficiary’s estate for IHT purposes, rather than being subject to the relevant property regime of ten-year anniversary and exit charges;
• an election can be made for income tax and CGT purposes for income and gains to be treated as if accruing to the beneficiary; and
• a discretionary trust where the disabled person is one of a number of potential beneficiaries from the outset can sometimes be better suited from a tax and practical perspective, depending on particular circumstances and objectives.

Certain trusts on death of the parent of a minor, pending the child reaching the age of 18 or where the deceased’s child will become entitled between the age of 18 and 25, also qualify for special tax treatment.

In England and Wales, the Court of Protection has jurisdiction under the Mental Capacity Act 2005 to appoint a “deputy” to manage the property and financial affairs of an individual who has lost mental capacity.

This is typically relevant where the person who has lost capacity has not made a valid enduring or lasting power of attorney, choosing one or more people as their attorneys to make decisions for them in that scenario.

A deputyship order generally confers wide powers on the deputy, which must be exercised in the best interests of the person who has lost capacity.

The application is usually dealt with on paper but can take some months to conclude.

It is not typical for a deputy to be appointed to make health and welfare decisions, and the application process is less straightforward.

The Court of Protection can make orders about specific financial and health and welfare issues relating to the person who has lost capacity.

The Office of the Public Guardian undertakes ongoing supervision of deputies, who must make an annual return to account for their decision-making.

Similar legal frameworks exist in different forms in Scotland and Northern Ireland for the appointment and supervision of “guardians” or “controllers”.

The costs and complexities associated with living longer are very topical and a focal point for legal and financial planning.

There is no statutory requirement to make a will, and the intestacy rules that determine the distribution of assets in the absence of a will are not always suited to the circumstances. The Law Commission has recently proposed making the process of drawing up a will simpler and more accessible while protecting vulnerable testators.

The process of putting in place a lasting power of attorney is also being further refined and digitised, in order to optimise accessibility for the management of the financial affairs and the health and well-being of those suffering loss of capacity in later life.

Financial and estate planning advice should take account of possible future care needs.

From a policy perspective, there is access to welfare benefits including carer’s allowance, attendance allowance, pension credit and the winter fuel allowance.

A child may have up to two legal parents.

Succession rights and nationality flow from legal parentage. Only legal parents automatically acquire parental responsibility, to be able to make decisions about the child’s upbringing, education and medical care, for example.

The birth mother is always the legal mother and is registered as such on the birth certificate.

If a child is born to a couple within a marriage or civil partnership, the spouse or civil partner of the mother is usually the second legal parent. Otherwise, the biological father is not automatically recognised, unless:

• he is named on the child’s birth certificate (for births registered after 1 December 2003 in England and Wales); and
• he obtains a court order to that effect.

When a child is conceived artificially at a licensed clinic in the UK with donor sperm and the couple are not spouses or civil partners, the birth mother’s partner can become the child’s second legal parent, subject to certain requirements.

It is possible for a deceased parent to be a child’s legal parent, but only for the purpose of being named on a birth certificate. The situation is different if a parent dies during pregnancy (post-conception). Whether the deceased parent can be named on the child’s birth certificate will depend on various factors, such as whether they gave written consent to the use of their sperm after their death. The deceased party’s parentage does not impact succession.

“Altruistic” (non-commercial) surrogacy arrangements are permitted in England and Wales. Any agreement entered into by the parties is not legally enforceable, and legal professionals cannot be involved in preparing these.

The surrogate is the child’s legal mother from birth, and, if she is married or in a civil partnership, her husband/civil partner is the second legal parent. Legal parentage is transferred to the intended parents by way of a parental order.

The inheritance rights of children – including those who are adopted, born via surrogacy or whose parents are not married – are governed by specific statutory provisions and case law:

• adopted children are treated as legal children of their adoptive parents for all purposes including inheritance, but are no longer considered as children of their biological parents for inheritance purposes;
• children born through surrogacy where a parental order is obtained are the legal children of the commissioning parents, including for inheritance purposes; and
• children born to parents who are not married or in a civil partnership generally have the same succession rights as children of married parents, subject to exceptions in connection with registration on the birth certificate.

The UK recognises same-sex marriage and civil partnerships.

Under the Civil Partnership Act 2004, same-sex couples can enter into civil partnerships, which gives them the same rights and responsibilities as married couples. Civil partnerships and same-sex marriage are treated equally for taxation, inheritance and divorce.

The UK also allows opposite-sex couples to enter into a civil partnership as opposed to a marriage.

Provided they adhere to the Civil Partnership Act 2004, overseas same-sex marriages and civil partnerships are recognised in the UK, but recognition of UK same-sex marriages or civil partnerships overseas depends on the laws in the foreign jurisdiction.

In the UK, the law encourages charitable giving through various tax reliefs afforded to charitable organisations and those who support them.

Income tax relief applies when an individual either makes a donation using Gift Aid or under the UK’s Payroll Giving Scheme, allowing the charity to reclaim basic rate tax deducted at source, enhancing the value of the donation. A higher or additional-rate taxpayer can obtain additional income tax relief at 20% or 25%.

Income tax relief is available on donations of land, property and certain shares.

Gifts made to UK charities (including those permitted to make grants overseas) are exempt from IHT.

Broadly speaking, there is a reduction in the rate of IHT from 40% to 36% where at least 10% of the chargeable estate is left to a UK charity.

UK recognised charities enjoy exemptions from income and corporation tax on most income and gains if expended for charitable purposes.

UK charities typically take one of the following forms depending on the size, nature of the charity’s activities and level of risk involved.

• A charitable trust, whereby trustees manage assets solely for charitable purposes:
1. trustees are exposed to potential personal liability if the trust fund is insufficient to meet liabilities; and
2. changing trustees necessitates transfer of assets, which can be administratively burdensome.
• A charitable company usually limited by guarantee with members and directors:
1. this is well suited for larger charities, and those with staff, holding property and entering into contractual arrangements; and
2. the need to register with Companies House offers transparency and potentially easier access to funding but also adds an additional layer of regulation and governance.
• A Charitable Incorporated Organisation (CIO) is a relatively new type of corporate structure, offering limited liability and simpler administration (as regulated only by the Charity Commission). This is likely to be most attractive for medium-sized charities, though some funders may be cautious due to its newer status. Smaller charities may prefer unincorporated associations for their simplicity and lower costs.