How Much Did UK HNW Investors Save Through Offshore Trusts in 2025?

High net worth investors in the UK use offshore trusts to protect their wealth and reduce taxes. In 2025, these trusts remained a key strategy despite new tax rules that changed how wealth is taxed for non-domiciled individuals. This article explains how much UK high net worth investors saved using offshore trusts in 2025. It uses clear data to show why trusts are still a smart choice for protecting wealth.

What Are Offshore Trusts?

An offshore trust is a legal arrangement where an individual, called the settlor, transfers assets like money, property, or investments to a trustee in another country. The trustee manages these assets for beneficiaries, such as family members. Popular places for offshore trusts include the Cayman Islands, Nevis, and the Channel Islands. These locations have laws that protect assets from UK lawsuits, creditors, or taxes. For high net worth individuals, defined as those with 10 million pounds or more, offshore trusts help keep wealth safe and reduce tax costs.

How April 2025 Tax Changes Affected Non-Domiciled Wealth

In the UK, a person’s domicile is their permanent legal home, often the country of their birth or where their parents are from. Non-domiciled individuals, or non-doms, live in the UK but have a permanent home elsewhere. Until April 2025, non-doms enjoyed special tax rules. They paid no UK tax on foreign income or gains unless they brought the money into the UK. This made offshore trusts popular for non-doms to hold foreign assets tax-free.

The UK government changed these rules in the March 2024 Budget, effective from 6 April 2025. Non-doms no longer get special tax treatment after living in the UK for four years. After this period, they pay UK taxes on all worldwide income and gains, just like UK-domiciled residents. For offshore trusts, this means non-doms who set up trusts before April 2025 now face UK income tax and capital gains tax on trust earnings if they are long-term UK residents. Additionally, trusts face a 6 percent inheritance tax charge every 10 years, which applies to assets held in the trust.

Despite these changes, non-doms who set up trusts before becoming long-term residents can still avoid some taxes. For example, foreign assets in a trust remain free from UK inheritance tax, which is 40 percent on estates above 325,000 pounds, or 1 million pounds if a main home is passed to family.

Tax Savings with Offshore Trusts

Offshore trusts help reduce taxes by holding assets in countries with no or low taxes. Places like the Cayman Islands have no income tax, capital gains tax, or inheritance tax. This allows trust assets to grow without tax deductions until money is paid out to beneficiaries.

For non-doms, a trust with 20 million pounds in foreign assets could avoid UK inheritance tax. Without a trust, this tax could cost 8 million pounds at the 40 percent rate. If trust assets grow by 5 percent each year, a 20 million pound trust could also defer 1 million pounds in capital gains tax over 10 years, based on the UK’s 20 percent rate.

A new rule called the Temporary Repatriation Facility, running from April 2025 to March 2028, helps non-doms save more. It lets them bring pre-April 2025 foreign trust income into the UK at reduced tax rates: 12 percent for the first two years and 15 percent in the third year. For a trust with 5 million pounds in foreign income, this could save 1.4 million pounds compared to the standard 45 percent income tax rate.

UK-domiciled investors face more taxes. A 20 million pound trust could owe 1.2 million pounds in inheritance tax charges over 10 years due to the 6 percent periodic charge. However, non-doms who act before becoming long-term residents can avoid these costs.

Protecting Assets from Lawsuits and Creditors

Offshore trusts keep wealth safe from UK lawsuits, creditors, or divorce claims. Countries like Nevis have strict laws. Creditors must pay a 100,000 dollar bond to challenge a trust. They also face a one-to-two-year time limit to file claims. These rules make it nearly impossible for UK claims to reach trust assets.

In 2025, UK investors saved millions through asset protection. A business owner with 15 million pounds in a Nevis trust could protect it all from a lawsuit. Without the trust, a claim could take 7.5 million pounds or more. By moving assets offshore, investors kept their wealth secure.

Simplifying Wealth Transfer

Offshore trusts make it easier to pass wealth to heirs. In the UK, inheritance tax applies at 40 percent on estates above 325,000 pounds, or 1 million pounds if a home is passed to direct descendants. For a 30 million pound estate, a trust holding non-UK assets could save 11.6 million pounds in inheritance tax for non-doms. Trusts also avoid probate, the legal process to distribute an estate. Probate costs 3 to 7 percent of an estate’s value, which is 900,000 to 2.1 million pounds for a 30 million pound estate.

Non-doms using trusts in places like the Channel Islands can pass non-UK assets to heirs without UK inheritance tax. This saves millions compared to direct inheritance in the UK.

Total Savings in 2025

Savings depend on whether an investor is UK-domiciled or non-domiciled, the trust’s location, and asset size. A non-dom with a 20 million pound trust in the Cayman Islands could save:

• 8 million pounds in inheritance tax on foreign assets.
• 1 million pounds in deferred capital gains tax over 10 years.
• 20 million pounds from lawsuits or creditors.
• 6 million pounds or more in inheritance tax and probate costs for larger estates.

UK-domiciled investors saw lower savings due to the new tax rules. A 20 million pound trust could face 1.2 million pounds in periodic tax charges over 10 years. Non-doms who set up trusts early or used the Temporary Repatriation Facility saved the most. Data suggests UK high net worth investors saved billions through offshore trusts in 2025.

Costs and Risks to Know

Offshore trusts have costs. Setting up a trust costs 3,000 to 8,000 pounds. Legal fees for complex trusts can be 10,000 to 100,000 pounds. Yearly trustee fees range from 5,000 to 20,000 pounds. For trusts under 250,000 pounds, costs may be higher than savings. The new UK tax rules also increased paperwork and costs. Choosing stable countries like the Cayman Islands reduces risks from political changes.

Why Trusts Remain a Smart Choice

Offshore trusts are a powerful tool for UK high net worth investors, especially non-doms. In 2025, they saved millions through tax reductions, asset protection, and easier wealth transfer. Investors who chose places like Nevis or the Cayman Islands saw the biggest benefits, even with new tax rules.