If they were not long-term resident when they died then non-UK settled assets will be excluded property and if the settlor was a long-term resident at death, then all UK and non-UK settled assets will be in scope for IHT for the duration of the trust.
However, if a settler dies before April 6 2025, then non-UK assets will be excluded property based on the old test.
Matthew Sperry, private wealth partners at Katten Muchin Rosenman LLP, said he fully expected the news of no grandfathering for trusts that were IHT protected will hasten the exit for many non-doms that were advised to postpone any moves until after this budget.
“Labour has ignored those that have warned that this move would eviscerate the non-dom tax base.
“The Labour plan makes the US even more attractive for global ultra-high net worth wealth as pre-arrival trusts can be used to eliminate exposure to US estate tax, and US income and capital gains rates are lower than the UK.
“As much as I love the UK, this places the US, Italy, Switzerland, the UAE and other global jurisdictions in a much stronger position in competing for UHNW wealth and investment in the coming years,” he added.
alina.khan@ft.com
