An offshore trust holding UK property faces four separate charges, and the trustees are directly liable for most of them. Rents are taxed at 45% for a discretionary trust with no personal allowance, gains at 24% reportable within 60 days whether or not tax is due, and the inheritance tax shelter that once justified these structures has gone.
Rents: the non-resident landlord scheme
The scheme turns on usual place of abode, not tax residence — a test that can be applied at any time, rather than in retrospect across a tax year.
For trustees, HMRC's position is specific: the trustees "have a usual place of abode outside the UK, as a group, if each trustee has a usual place of abode outside the UK". If one or more trustee does not, the trustees as a group are not a non-resident landlord for scheme purposes — though the UK property income remains taxable and the trustees will need to register for self assessment.
So appointing a single UK trustee takes the structure out of the scheme. It does not reduce the tax.
Where the scheme applies, letting agents must deduct basic rate tax at 20% from the net rent regardless of amount, unless HMRC has authorised gross payment in writing. Tenants paying direct operate it only where rent exceeds £100 a week — the statutory figure is £5,200 a year — though HMRC can direct otherwise. No de minimis applies to payments made through an agent.
Trustees apply for gross payment on form NRL3, the trust-specific form. Approval requires that the form is complete and correct and that HMRC is satisfied the trustees will follow their UK tax obligations, and authorisation is generally backdated to the start of the quarter in which the application is received. Gross approval does not remove the liability — it removes the withholding, and the trustees still self-assess.
On the agent's side, expect quarterly accounting within 30 days of each quarter end, an annual return by 5 July, and a certificate of tax deducted by the same date — the documents trustees need to reconcile their own return against.
The rate on the rents
This is where offshore trusts are expensive. For a discretionary or accumulation trust, UK property income is taxed at the trust rate of 45%. Dividends are taxed at 39.35%.
For an interest in possession trust the rate is 20% on property income, with dividends at 10.75% from 6 April 2026 — up from 8.75%, which is a change worth catching in any model built before this tax year.
Two structural points make this worse than the headline:
- Trustees get no personal allowance. HMRC's position is that trustees "are not individuals. They are not entitled to the 'personal reliefs' provided for individuals". That is true regardless of residence, so the nationality and treaty arguments available to non-resident individuals do not help trustees at all;
- The £1,000 standard rate band is gone. It was withdrawn from 6 April 2024 and replaced by a £500 de minimis — where net income would be £500 or less it is treated as nil, reduced to £100 where the settlor has five or more such trusts. It operates as a nil-income rule, so exceeding £500 taxes the whole income rather than the excess.
One forward-looking item: a new property trust rate of 47% has been enacted, but it takes effect for 2027-28 and later years. For 2026/27 the rate is still 45%.
Gains: 60 days, even with nothing to pay
Non-resident trustees are within the UK capital gains charge on interests in UK land — all UK land since 6 April 2019, not just residential, and residential since 6 April 2015.
The rate for trustees is 24%, and note that there is now no separate residential property rate — 24% applies to residential and non-residential gains alike, direct or indirect. The annual exempt amount is £1,500, being half the individual's £3,000, or the full £3,000 for a disabled person's trust.
The reporting obligation is the part that generates penalties. A return must be delivered on or before the 60th day following completion, and for a non-resident it is required whether or not a gain accrues. HMRC is explicit that a non-resident trust must submit a report by the deadline even where there is no tax to pay, and trustees must register with HMRC before they can create a CGT on UK property account or file by post — "even if there's no tax to pay or you believe the trust is exempt from registration".
Payment falls due on the same filing date. The only relaxation is where a self assessment return has already been delivered before the 60-day date and self-assesses at least the amount that would have been payable. There is no facility to file the 60-day return and pay later.
Rebasing softens the charge: the default is a deemed sale and reacquisition at market value on 5 April 2019, or 5 April 2015 for residential property already chargeable then, with elections available for a whole-period basis or time apportionment. On an indirect disposal, electing out has a sting — any resulting loss is not allowable.
Indirect disposals are caught where the asset derives at least 75% of its value from UK land and the person has held a 25% investment at any time in the two years before disposal. Both conditions must be met. Our guide to reporting capital gains on UK property covers the mechanics.
A useful technical point for trust advisers: where a gain falls within the direct non-resident charge, it is excluded from the settlor and beneficiary attribution computations — so the trustees' own charge takes priority rather than stacking on top.
Holding through a company
If the trust holds the property through a non-UK company, two things change and one does not.
The company pays corporation tax rather than income tax on UK property profits, from 6 April 2020. And it pays the 25% main rate on everything — a non-UK resident company cannot use the small profits rate or marginal relief, because both require the company to be UK resident. There is no £50,000 band and no taper.
ATED then applies to residential property worth more than £500,000, with 2026/27 charges from £4,600 up to £303,450 for property over £20 million. Reliefs exist for genuine commercial letting but must be claimed annually on an ATED return — a filing missed precisely because the relief means no tax is due.
What does not change is inheritance tax. UK residential property held through a non-UK company has been within the IHT net since 2017, so the company no longer shelters it — and after the April 2025 reforms the trust's own position turns on the settlor's long-term residence status, retested at each chargeable event rather than fixed when the assets were settled.
Is the structure still worth it?
For most families holding UK residential property, no. The IHT shelter has gone, the income rate is 45%, there is no personal allowance, and the compliance load runs to NRL3, quarterly agent returns, 60-day CGT reporting, ATED filings and the overseas entities register.
Unwinding has its own consequences and should be modelled rather than assumed. But a structure built for a 2015 tax landscape is worth re-testing against this one.
Acumon advises trustees and overseas owners through trust tax, property taxes and international tax work, handling ATED and the 60-day returns. If a disposal is in progress, the 60-day deadline runs from completion and applies even with no tax to pay.