What is an Excluded Property Trust (EPT)?
September 7, 2025
An Excluded Property Trust (EPT) is a type of trust used by non-UK domiciled individuals (such as Hong Kong citizens moving to the UK) to protect their overseas assets from UK Inheritance Tax (IHT).
🔑 Key Features
- Who can set it up?
Non-UK domiciled persons, ideally before becoming UK tax resident. - What goes into it?
Non-UK assets such as Hong Kong shares, bank deposits, investment portfolios, offshore companies. - Excluded Property
Assets settled into the trust remain “excluded property” and are not subject to UK IHT, even after the settlor becomes UK deemed domiciled. - Governed by
Offshore jurisdictions (e.g. BVI, Cayman, Bermuda, or even Hong Kong trust law) for flexibility and protection.
📊 Example
- Mr. Lee (HK resident) has HK$100M in Hong Kong shares and cash.
- Without EPT: If he later dies UK domiciled → 40% UK IHT = £40M tax.
- With EPT (set up before moving): Assets are excluded → 0% UK IHT.
⚠️ Important Notes
- Must be set up before UK residency to qualify.
- UK assets (e.g. UK real estate) cannot be sheltered in an EPT.
- Trust must be properly structured with professional trustees and compliance (CRS/FATCA, TRS registration if UK-connected).
✅
Takeaway:
An EPT is the
key planning tool for Hong Kong migrants under the BN(O) 5+1 visa scheme, ensuring wealth is preserved across generations without falling into the UK’s 40% inheritance tax net.
EPOA covers property/financial matters only (not medical/welfare). If that’s your aim, proceed.
For Hong Kong migrants in the UK, a UK will is not just advisable, it is essential . It works alongside your Hong Kong will to protect assets in both jurisdictions and ensures a smoother, quicker estate administration.
Moving to the UK under BN(O) brings exposure to a completely different tax regime. Early trust and estate planning before migration is critical to preserve wealth and avoid the 40% IHT trap.
