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General principles relating to foreign trust income

This guidance note deals with foreign income received by a UK resident trust. For the position relating to non-UK resident trusts, see the UK tax position of non-resident trusts guidance note.

Foreign income is income arising from a source outside the UK. Foreign investment income includes interest payable by an overseas bank or dividends paid by a non-UK company.

As a general rule, all categories of foreign income are taxed under the same provisions as apply to UK equivalents. However, there are some provisions relating specifically to foreign income which are discussed in this guidance note.

Note that rental income from foreign land constitutes an ‘overseas property business’ which is taxed separately from a UK property business. See the Property income guidance note

A UK resident trust pays tax on all its foreign income on an arising basis, except where the beneficiary is absolutely entitled to the income and is either:

1. •

   non-resident, or

2. •

   non-domiciled and a remittance basis user for the year in question

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