Remittance basis meaning

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, legislates to abolish the remittance basis of taxation and to introduce a residence-based regime from 6 April 2025. FA 2025 also removes domicile as the principal criterion for determining liability to inheritance tax. Further adjustments include: Amendments to the rules that define excluded property status Abolition of protected settlements status for offshore trusts Changes to overseas workday relief For information on these changes, see: Practice Notes: The abolition of the remittance basis of taxation from 2025–26 Practice Notes: A new residence-based regime for IHT from 2025–26 See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) Finance Act 2025 This table compares the principal taxes applicable to home ownership structures for UK residential property where the property is to be...

This diagram mirrors HMRC’s Flowchart 4, set out at paragraph 5.24 of the Guidance Note on residence, domicile and the remittance basis (RDR1). It is for use when a taxpayer clearly plans to depart the UK in the future...

This flowchart mirrors HMRC's diagram in paragraph 5.24 of the Guidance Note on residence, domicile and the remittance basis (RDR1), and continues from Flowchart 1. It is intended for use where the taxpayer's father was not born in the UK and the taxpayer lacks definite intentions, or has only brief plans, to stay in the UK...

This diagram mirrors HMRC’s flowchart 1 in paragraph 5.24 of the Guidance Note on residence, domicile and the remittance basis, RDR1. It is designed to help taxpayers make an initial assessment regarding their domicile status...

D’Angelin v HMRC [2024] UKFTT 462 (TC) The taxpayer was UK-resident but not domiciled and used the remittance basis. In 2016 he brought £1.5m of overseas income to the UK and placed it into a UK company where he was the sole shareholder and director. That company operated providing advice to international clients and family-owned holdings. He claimed business investment relief under section 809VA of the Income Tax Act 2007 (ITA 2007) in relation to the investment, with the result that the £1.5m was treated as not remitted to the UK (and therefore not taxable). During 2017/18 he used the company credit card for private spending, from an iTunes subscription through to the personal use of a jet, and those outgoings were posted to his director’s loan account. The balance on that account peaked at about £71,000. At all times he held sufficient personal funds either to clear the loan account or to have met those expenses personally from his own funds, which were sufficient at all times to...

HMRC v Sehgal and another [2024] UKUT 74 (TCC) The taxpayers were non-domiciled individuals resident in the UK who were taxed on the remittance basis. They disposed of their shareholdings in VGL to CLS, a Luxembourg-resident company. At completion, IRL—owned indirectly via a Jersey vehicle, SKS—owed £6m to a subsidiary of VGL. Under the share purchase agreement, the taxpayers agreed to indemnify that liability. Soon afterwards, it emerged the debt was irrecoverable, thereby triggering the indemnity. At the behest of CLS’s parent, a structured sequence followed: SKS purchased clothing stock from M, another company within the CLS group, for a sum mirroring the amount owed; at the same time, CLS and the taxpayers entered into a side letter confirming that this payment would reduce the outstanding debt to nil. Under these arrangements, the consideration for the clothing matched the £6m debt and, as recorded in the side letter, operated to eliminate the balance in full. The clothing, however, was worth merely £200,000 and was then gifted...

In this issue: Individuals and income tax Employment taxes Budgets and Finance Bills Companies and corporation tax International Tax compliance and administration Daily and weekly news alerts New and updated content Latest Q&A Dates for your diary Trackers Useful information Individuals and income tax High Court allows taxpayer to pursue judicial review regarding his historic domicile status (Aubrey Weis v HMRC). As noted in last week’s highlights, in Aubrey Weis v HMRC [2025] EWHC 2479 (Admin), the High Court accepted the claimant’s request to extend the deadline for issuing judicial review proceedings against HMRC and approved permission for the matter to go forward to a full hearing. The case turns on the taxpayer’s historic domicile and whether he held a legitimate expectation that HMRC would treat him as non-UK domiciled, so that his overseas income and gains would be assessed on the remittance basis. See News Analysis: High Court permits taxpayer to...

Introduction and context This Practice Note provides a summary of the taxation of internationally mobile employees in relation to securities options (Options) charged to tax within Chapter 5 of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). On 30 October 2024, as part of the Autumn Budget 2024 announcements, the Labour government confirmed that it would proceed with the former Conservative government’s plans to abolish the remittance basis of taxation and replace it with a residence‑based regime, scheduled to commence on 6 April 2025. These changes were enacted through Finance Act 2025 (FA 2025) and have also affected, in particular, the availability and operation of overseas workday relief. This Practice Note reflects the current position under the new tax regime; however, the previous regime is still relevant for Options granted before 6 April 2025, because any elements of the Options’ ‘relevant period’ (see discussion below—broadly, the vesting period) that occur before 6 April 2025 remain subject to certain aspects of the earlier rules. For...

STOP PRESS: Abolition of non-dom regime and remittance basis of taxation from 2025–26 The Finance Act 2025 has scrapped the remittance basis and, from 6 April 2025, substitutes a residence-based system. The reforms bring in a new Foreign Income and Gains (FIG) regime and revise the rules for overseas workday relief. For detailed guidance on these updates, refer to Practice Note: The abolition of the remittance basis of taxation from 2025–26. The UK operates a comprehensive framework for taxing employment income. This Practice Note explains the core income tax principles for employment income and the way they attach to earnings. Keep in mind that any form of remuneration connected to an individual’s employment can give rise to income tax and National Insurance contributions (NICs) liabilities (for NICs, potentially affecting both employer and employee), together with possible apprenticeship levy costs for the employer. In addition, intricate provisions govern the withholding and collection of income tax on employment income and employee NICs under the Pay As You Earn (PAYE) system. These...

This Practice Note consolidates the HMRC Manuals tracker that featured weekly in the Private Client highlights from January 2021 to December 2024, arranged by HMRC Manual in reverse chronological order. It captures many of the key amendments to the HMRC Manuals set out below that will interest Private Client practitioners. For the combined tracker from January 2025 onwards, see Practice Note: Consolidated HMRC Manuals tracker 2025–26–Private Client. Avoidance Handling Process Manual Pages amended • Date of change • Comments Added: AHP1000, AHP1200, AHP1300, AHP1400, AHP1450, AHP2000, AHP2100, AHP2200, AHP2300, AHP3000, AHP3100, AHP3200, AHP3300, AHP3400, AHP3500, AHP4000, AHP4100, AHP4200, AHP4300, AHP4350, AHP4400, AHP4500, AHP4550 and AHP4570 Date: 29 September 2023 Summary: This new manual sets out HMRC’s method for managing tax avoidance risks across all taxes and HMRC directorates, aiming for consistency and effectiveness. The overview sections describe what HMRC regards as tax avoidance, as distinct from lawful tax planning. They also outline the role of iTAPE, a specialist network within HMRC that leads...

FORTHCOMING CHANGE: Potential changes to Wills Act 1837 The Law Commission’s review of wills culminated in a final report on 16 May 2025. Volume II contains a Draft Bill proposing replacement of the Wills Act 1837. For details of these proposals, including the published draft legislation, see Practice Note: Hot topic—modernising Wills and Modernising wills: Final Report Volume II: Draft Bill for a new Wills Act. STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime The Finance Act 2025 (FA 2025), which received Royal Assent on 20 March 2025, implements the abolition of the remittance basis and introduces a residence-based regime from 6 April 2025. FA 2025 makes residence, rather than domicile, the main determinant of liability to inheritance tax. changes to the rules defining excluded property status; removal of protected settlements status for offshore trusts; and modifications to overseas workday relief. For further information, see Practice Notes: The abolition of the remittance basis of taxation...

FORTHCOMING CHANGE: Potential changes to Wills Act 1837 On 16 May 2025, the Law Commission’s review of Wills published its final report, formally setting out its conclusions, with Volume II containing a draft Bill intended to supersede the Wills Act 1837. For details of these proposals, including the published draft legislation, consult Practice Note: Hot topic—modernising Wills and Modernising wills: Final Report Volume II: draft Bill for a new Wills Act. STOP PRESS: Ending the non-dom regime and moving to a residence-based IHT regime. The Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, enacts legislation for the removal of the remittance basis of taxation and substitutes a residence-based system commencing on 6 April 2025. It also displaces domicile as the principal determinant of inheritance tax (IHT) liability for individuals. Further measures cover revisions to the rules for excluded property status, the removal of protected settlements status for offshore trusts, and alterations to overseas workday relief as applicable. For more on these reforms, see...

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime The Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, enacts the removal of the remittance basis of taxation, replacing it with a residence-based framework from 6 April 2025. FA 2025 likewise substitutes domicile as the primary factor for determining liability to inheritance tax. Further measures include: Revisions to the rules that define excluded property status; The abolition of the protected settlements status of offshore trusts; and Amendments to overseas workday relief. For guidance on these developments, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025. [Your ]Will—[ name of testator ]—[ explanatory note ] This [ explanatory note ] outlines the main provisions of your Will. Please read this [ explanatory note ]...