We summarise the April 2025 HMRC Trusts and Estates Newsletter so trustees can act with confidence. The update replaces the old domicile-based inheritance tax (IHT) rules with a residence-based system from 6 April 2025. That change in tax treatment affects how estates are reported and how overseas income flowing through trusts is assessed by HMRC.
We will explain the practical steps in plain English. Expect clear guidance on record-keeping, online services and reporting obligations across the tax year. Our focus is on everyday trust administration — the kind of tasks trustees deal with week in, week out.
We know trustees often face the same pain points: unclear responsibilities, missing documents and uncertainty about online declarations on the Trust Registration Service (TRS). This piece is organised so you can find the section you need, whether you are managing a family discretionary trust or administering a complex estate as a personal representative.
Throughout, we give practical steps and simple explanations. For help with registration duties, see our advice on registering a trust as an agent.
Key Takeaways
- Major reform from 6 April 2025 replaces domicile-based IHT rules with a residence-based system, affecting how overseas assets in trusts are treated for inheritance tax.
- Trustees must tighten record-keeping and ensure full access to HMRC’s online services this year.
- We focus on practical, trustee-first guidance rather than legal jargon — because as Mike Pugh says, “plan, don’t panic.”
- Common pain points include unclear responsibilities, missing paperwork and delayed online filings.
- Read the section relevant to your role — whether you are a family trustee, a professional trustee, or a personal representative.
April 2025 reforms trustees need to know about
From 6 April 2025 the IHT landscape shifts significantly. The government is replacing the long-standing domicile test with a residence-based approach for determining liability to inheritance tax on worldwide assets. This change also affects the treatment of foreign income passing through trusts and estates.
What the shift means in practice
This is more than a technical tweak. Under the old rules, a settlor’s domicile status at the time a trust was created determined how overseas assets were treated for IHT purposes. Under the new regime, residence becomes the key factor. This can pull certain trust arrangements into the UK IHT net earlier than before. UK-resident trustees who manage overseas bank accounts, shares or foreign property may face new UK tax obligations they did not previously have.
It is worth remembering that a trust is not a separate legal entity — it is a legal arrangement where the trustees hold legal title to the assets. That means the trustees are personally responsible for meeting tax obligations, and HMRC will look to them directly for any IHT, income tax or CGT due. Getting this right matters.
Who is most exposed
Trustees with non-UK family links or cross-border assets are most affected. If a trust holds overseas assets — particularly where the settlor was previously treated as non-UK domiciled — trustees should assume closer HMRC scrutiny and take action now rather than waiting for a tax demand to arrive.
- Gather the trust deed, recent bank and investment statements, and up-to-date asset valuations.
- Confirm residency records for the settlor, all trustees and named beneficiaries.
- Review reporting duties and make sure you have the cash flow to meet any tax payment deadlines.
If your trust could gain new UK tax exposure under the residence-based rules, seek early advice from a specialist solicitor, tighten your records and plan cash flow to pay any tax on time.
hmrc trusts and estates newsletter: key compliance actions for trusts and complex estates
Trustees need a clear checklist to navigate the registration and reporting requirements under the current regime. Here is what is live now and what you need to do about it.
What is live now
Trust Registration Service and 5MLD extension
The TRS micro-service is the current route for registering trusts, having replaced the old iForm system which closed in September 2020. Under the 5th Money Laundering Directive (5MLD), all UK express trusts — including bare trusts and non-taxable trusts — must be registered on the TRS within 90 days of creation. Some registrations remain phased as HMRC continues to improve the system, but trustees should not use this as a reason to delay.
One important point: the TRS register is not publicly accessible — unlike Companies House — so trust information remains confidential. This is a significant privacy advantage for families who use trusts as part of their estate planning.
Registering and moving from the old iForm
If you have an unfinished registration from the old system, complete the missing details on the micro-service as soon as possible. Keep a copy of the trust deed, trustee identification documents, and settlor details readily accessible for any HMRC query.
Updating TRS details: people vs assets
You must update the register whenever there is a change to any person connected with the trust — that means trustees, beneficiaries, settlors and any other persons with significant control. This obligation applies when the trust has been liable to relevant UK taxes during the period.
You do not need to use TRS to log routine changes in asset values. HMRC has confirmed that assets and valuations do not require the same frequent updates as changes to people.
Annual declaration and deadlines
If the trust is liable for Income Tax, Capital Gains Tax (CGT), IHT, Stamp Duty Land Tax (SDLT) or similar charges, you must complete the online annual declaration even when nothing has changed during the year. This confirmation is due by 31 January following the end of the tax year. For the 2024/25 tax year, that means 31 January 2026.
Remember, the trust income tax rate is currently 45% for non-dividend income and 39.35% for dividends (with the first £1,000 at the basic rate). Trustees also have a reduced annual CGT exempt amount — currently half the individual level. Getting returns filed on time avoids interest charges and penalties that eat into trust assets the beneficiaries should be receiving.
SA900 tick box 20.1, closing records and agent access
Use SA900 question 20.1 to confirm that TRS details have been updated when filing the trust’s self-assessment tax return. Mark a trust as ended on TRS only once all final distributions have been made and the accounts reconcile with the trust deed.
Agents need separate TRS authorisation — a standard 64-8 form does not cover TRS registration or access. Each trust requires its own Government Gateway organisation user ID, and any invitation to an agent must be accepted within seven days to avoid access being revoked.
| Action | Who | Deadline | Notes |
|---|---|---|---|
| Register on micro-service | Trustees / Agents | Within 90 days of creation (or as soon as a tax liability arises) | iForm closed 23 Sep 2020; migrate any unfinished records promptly |
| Update people details | Trustees | When any change occurs | Required whenever the trust has been liable to relevant UK taxes |
| Annual declaration | Trustees | 31 Jan after tax year end | Required even if no changes — failure to declare can result in penalties |
| Close trust / estate record | Trustees / Personal representatives | When administration ends | Align TRS with the trust deed and final accounts before closing |
For how recent inheritance tax changes affect family planning, see our guidance on how the new inheritance tax rules affect your family’s future.
Related HMRC updates affecting estates, property and inheritance tax
Day-to-day estate administration has some important new practical steps that trustees and personal representatives should note before filing any forms this year.
IHT clearance, Dropbox and turnaround expectations
New clearance letters now replace the old stamped IHT30 form. HMRC issues a letter with a unique authorisation code instead. Keep that letter safely with the estate papers as it serves as your proof of clearance — you will need it when dealing with Land Registry transfers and financial institutions holding the deceased’s assets.
Dropbox use is now available only by exception. Where possible, plan for postal filing of IHT400 (for estates) or IHT100 (for trusts) unless there is a clear operational reason to request a dropbox slot from HMRC. Bear in mind that HMRC processing times for IHT forms can vary — during busy periods, turnaround may stretch beyond the standard timescales. Factor this into your planning, particularly where assets are frozen during the probate process and beneficiaries are waiting for access to funds.
Excluded property and residence-based checks
Under the new regime, the treatment of foreign assets held in trust depends on the settlor’s residence status rather than domicile. Where the settlor meets the conditions for non-UK residence at the time the trust was created, overseas assets may still qualify as excluded property for IHT purposes. However, the legislation also requires a check when assets are added to or moved between settlements.
When transferring assets between trusts, confirm the settlor’s residence status both at the time the trust was originally created and at the point of transfer. Getting this wrong can trigger an unexpected IHT charge that could have been avoided with proper planning. The IHT nil rate band remains frozen at £325,000 per person (it has not increased since 2009 and is confirmed frozen until at least April 2031), so the margin for error is getting smaller each year as asset values continue to rise.
CGT on UK residential property and relief changes
Personal representatives must report and pay CGT within 60 days of completion when disposing of UK residential property on behalf of an estate. You can use HMRC’s CGT property disposal service without needing TRS access, but a complex estate may need a Unique Taxpayer Reference (UTR) obtained via the TRS.
For trustees, the CGT rate on residential property disposals is currently 24%, with a reduced annual exempt amount (currently half the individual level). Holdover relief may be available when assets are transferred out of certain trusts to beneficiaries, deferring the CGT charge — but this needs to be claimed correctly, so specialist advice is essential.
Budget update: From April 2026, Business Property Relief (BPR) and Agricultural Property Relief (APR) will be capped at 100% relief for the first £1 million of combined qualifying business and agricultural property, with only 50% relief on the excess. This is a significant change for family farms and small business owners. Trustees holding such assets should review succession plans now to understand the potential IHT exposure and plan cash flow for any tax that becomes payable. Additionally, from April 2027, inherited pensions will become liable for IHT for the first time — a change that could affect how families structure their retirement wealth alongside trust planning.
- Practical step: file for IHT clearance early and keep meticulous records of all correspondence with HMRC.
- Check the settlor’s residence status before adding foreign investments or property to an existing trust.
- Plan cash reserves or financing options to meet the 60-day CGT reporting and payment deadline on property disposals.
For further official updates see the government bulletin, or read our inheritance tax planning guidance for practical steps you can take today.
Conclusion
With the April 2025 reforms now in force, getting into a straightforward routine of regular compliance will keep trustees on top of their duties and protect beneficiaries.
Keep calm and stay organised. Treat compliance as protection for the family, not just a box-ticking exercise. Check that the people details on the TRS register are accurate, and keep a clear file of all trustee decisions, distributions and correspondence. Remember — England invented trust law over 800 years ago. The system works, but only when trustees engage with it properly.
Before the next tax year, diarise every key date. Confirm agent access to the Government Gateway, chase bank and investment statements early, and make sure you have up-to-date valuations for any property held in trust. The average home in England is now worth around £290,000 — and with the nil rate band frozen at £325,000 since 2009 and the residence nil rate band at £175,000 (only available when a qualifying home is passed to direct descendants), the interaction between trust assets and IHT thresholds requires careful attention. A married couple can potentially shield up to £1,000,000 from IHT by combining both nil rate bands and both residence nil rate bands — but only if their planning is properly structured.
Common issues that cause problems include Government Gateway access failures, late arrival of documents from financial institutions, and uncertainty about which reporting route to use. You reduce risk by preparing sooner, briefing every trustee and decision-maker involved, and seeking specialist advice where the trust arrangement is complex. As Mike Pugh puts it, “the law — like medicine — is broad. You wouldn’t want your GP doing surgery.” The same logic applies to trust administration: if you are unsure, consult a specialist solicitor rather than guessing.
For discretionary trusts — by far the most common type used in family estate planning — trustees have absolute discretion over distributions, which is the key mechanism that provides protection against care fees, divorce and other threats to family wealth. But that discretion comes with responsibility. Trustees must be able to demonstrate they are administering the trust properly, keeping records current, and meeting their obligations to HMRC. Not losing the family money provides the greatest peace of mind above all else.
Systems change, and HMRC’s processes will continue to evolve. Keep records current each year, review this newsletter summary whenever HMRC publishes an update, and you will avoid the last-minute pressure that catches so many trustees off guard.