TSEM4745 | Settlements Legislation: Rules affecting non-domiciled and deemed domiciled settlors of non-resident trusts from 6 April 2025: Close family members  

For details of the close family member (CFM) rules introduced from 6 April 2018 see TSEM 4650.

From 6 April 2025 the close family member rules remain the same.

A close family member of the settlor’s family is a person who at that time is:

• the settlor’s spouse or civil partner;

• a child of the settlor, or a child of the settlor’s spouse or civil partner, and has not reached age 18 at the time.

Two people living together as a married couple are treated as spouses/civil partners for this purpose.

As explained in more detail in TSEM4720 (Benefits) a tax charge will arise under section 643A ITTOIA 2005 when a CFM receives a benefit from the trust. If the CFM is UK resident, then the charge will, in most cases, fall to them. There are some exceptions such as them being eligible for the 4-year FIG regime.

If the CFM is not UK resident, then the charge will fall to the settlor.

If there is a choice about who is taxable then HMRC can apportion the charge on a just and reasonable basis.

The onward gift rules (TSEM4755) extend to CFMs in a similar manner.