Legal Practice Notes

FORTHCOMING CHANGES: At the 2025 Budget on 26 November 2025, the government signalled plans for modest corrective changes to the residence-based tax regime established by the Finance Act 2025......

ARCHIVED : This Practice Note has been archived and is not maintained. It describes the rules for overseas workday relief ( OWR) in force before 6 April 2025. Overseas Workday Relief ( OWR) provides an exemption from UK income tax for eligible non-domiciled persons who choose the remittance basis, covering unremitted 'general earnings' from employment attributable to duties carried out abroad in the relevant tax year. Following the government’s reforms to the tax treatment of non-domiciled individuals in Finance ( No 2) Act 2017, many who had formerly been treated as non-domiciled under UK rules are now treated as UK domiciled for all tax purposes; consequently the remittance basis and OWR are no longer accessible to them under the amended UK tax rules in force. Consult Practice Note: Deemed domicile for tax from 6 April 2017. Before 6 April 2013, a comparable facility to OWR existed on a...

What is outsourcing? Outsourcing refers broadly to arrangements where one party ( A) supplies services to another ( B) that B could otherwise deliver internally, for instance via its own staff. In these scenarios, A delivers the services and B consumes them within their respective businesses. B may choose to outsource to A for several commercial, non-tax reasons, including lowering operating expenditure, tapping into A’s specialist know‑how or independence, or allowing B to concentrate on expanding and developing its core activities. For example, banks and insurance firms often hand over back‑office operations to dedicated specialist service providers. Tax can also be a material consideration when assessing whether an outsourcing deal is cost effective. Such structures may leave B with tax liabilities on the services that are higher or lower than if the work were done in‑house, though they may equally be tax neutral,...

ARCHIVED : Section 20 of the Finance Act 2025 ( FA 2025) repealed the offshore receipts in respect of intangible property ( ORIP) regime for amounts accruing on or after 31 December 2024. Accordingly, ORIP is relevant only to receipts arising from 6 April 2019 through to and including 30 December 2024. The regime was withdrawn on the basis that the undertaxed profits rule ( UTPR), which came into force in the UK on 31 December 2024, is expected to provide a more comprehensive deterrent to the multinational tax-planning arrangements that ORIP was designed to tackle. HMRC’s guidance at INTM620710 confirms that, for the 2024–25 tax year, entities within ORIP’s scope need only report ‘ UK-derived amounts’ arising before 31 December 2024. For further detail on the UTPR, see: Multinational top-up tax and domestic top–up tax—overview......

The onshore employment intermediaries legislation generally applies where an onshore intermediary is engaged to arrange the supply of a worker’s services. Its purpose is to prevent real employment being misrepresented as self-employment to cut employment taxes—especially National Insurance contributions ( NICs)—and to avoid costs linked to statutory employment rights. For a fuller explanation, see Practice Note: Onshore employment intermediaries—income tax provisions. That Practice Note focuses on the practical aspects of the rules. Onshore employment intermediaries The consultation leading up to the 2014 launch of the onshore intermediaries rules exposed a range of issues with the definition and application of ‘supervision, direction or control’ within the amended legislation. Following that feedback, HMRC made limited revisions while the provisions were in draft and has also released guidance on the crucial phrase ‘supervision, direction or control’......

Onshore employment intermediaries—income tax provisions This Practice Note outlines the income tax rules relevant to onshore employment intermediaries. For further details of the practical considerations, refer to Practice Note: Onshore employment intermediaries—key practical considerations. These onshore employment intermediary provisions broadly apply where an onshore intermediary entity is interposed to arrange the supply of a worker’s services under the legislation. The regime is broadly designed to prevent genuine employment being artificially presented as self-employment to cut employment taxes, in particular National Insurance contributions ( NICs). For the income tax framework that applies to offshore employment intermediaries, see Practice Note: Offshore employment intermediaries—income tax provisions and key practical considerations......

Background to the UK’s offshore funds rules Targeted tax legislation for offshore funds first appeared in 1984. Up to that point, UK investors in non‑ UK investment vehicles could accumulate income offshore and, when their holdings were realised (for example on a sale of their interest), the proceeds were charged at capital gains rates rather than income tax rates. The 1984 'offshore funds' regime addressed this position by treating as income any gains arising on disposals of material interests in 'offshore funds'. For tax purposes, the notion of an 'offshore fund' was anchored to a regulatory definition for the sector. Certain provisions offered an exception from that treatment where a particular offshore fund distributed at least 85% of its income and UK‑equivalent profits to investors each period. Where a fund made such distributions, an investor's disposal of their interest continued to receive capital gains tax...

Reporting fund regime UK holders in ‘reporting’ offshore funds are assessed to tax each year on their share of the fund’s ‘reported income’, whether this is distributed or retained. This permits them to obtain capital gains treatment when they dispose of their holding. By contrast, when UK investors in ‘non-reporting’ offshore funds realise gains on disposals of their interests, those gains are taxed as income rather than as capital gains; such amounts are termed ‘offshore income gains’. Offshore funds must apply for, and be granted, reporting fund status. For who is eligible and how to apply for reporting fund status, see Practice Note: Tax and offshore funds—the reporting fund regime. For details on non-reporting offshore funds and how their investors are taxed, see Practice Note: Tax and offshore funds—non-reporting funds. For an outline of what constitutes an offshore fund, see Practice Note: Tax and offshore...

This Practice Note sets out when charges to National Insurance contributions ( NICs)—namely primary and secondary Class 1 NICs and Class 1A NICs—arise in the context of employment-related securities and securities options. For more information about NICs generally, see Practice Note: National Insurance contributions—introduction. For current rates and thresholds applicable to NICs, see Practice Note: Key UK tax rates, thresholds and allowances. For details about PAYE and employment-related securities and securities options, see Practice Notes: PAYE implications of employment-related securities, PAYE implications of securities options and PAYE—readily convertible assets, intermediaries and jurisdictional scope. For details of an employer's reporting obligations in relation to employment-related securities and securities options, see Practice Note: Employment-related securities—reporting obligations. For details of the NICs (and tax) implications where an internationally mobile employee has employment-related securities or securities options, including the regimes that were introduced with effect from 6 April 2025 as part of the...

This Practice Note offers an introduction to National Insurance contributions ( NICs), outlining the classes of NICs and providing further detail on Classes 1 and 1A, being those most pertinent to employment situations. The stated aim of National Insurance contributions is to finance and confer eligibility for certain state benefits, such as the state pension, as well as other social security benefits, for example Jobseeker's Allowance and Maternity Allowance. NICs are administered by the National Insurance Contributions Office ( NICO), which forms part of HMRC. Individuals are required to possess a National Insurance number, which ensures that any contributions paid by them are correctly recorded against their own name only. The number is lifelong and is made up of two letters, followed by six numbers and a final letter. People are sent their National Insurance number shortly before their 16th birthday. This number will...

This Practice Note explains the anti-avoidance rules relating to ‘mixed member partnerships’, ie partnerships with a mix of individual and non-individual partners. ‘ Mixed member partnerships’ are those with both individual and non-individual members, the latter being, for instance, a company or an individual serving as a trustee. Such a firm may take the form of a general partnership, a limited partnership, or a limited liability partnership ( LLP). In the ordinary course, both profits and losses are allocated in accordance with the profit-sharing terms agreed by the partners. Arrangements can nevertheless be crafted to take advantage of the fact that individuals typically face higher tax rates than other entities. A common approach is for the individual partners to form a company to join as a corporate partner. The individuals then occupy two positions: partners in the firm and...

OECD’s Model Mandatory Disclosure Rules The Organisation for Economic Co-operation and Development ( OECD) released its model Mandatory Disclosure Rules ( MDR) covering Common Reporting Standard ( CRS) Avoidance Arrangements and Offshore Structures in March 2018, with the objective of achieving country-by-country alignment in applying disclosure and transparency to combat aggressive tax planning worldwide. The model MDR are described as ‘the model rules’ in The International Tax Enforcement ( Disclosable Arrangements) Regulations 2023, SI 2023/38 (the MDR regulations), which bring the MDR into effect in the UK. In this Practice Note, references to the model rules and the model MDR are to the OECD’s model MDR. References to the MDR and MDR regulations denote the rules in SI 2023/38 that implement the model MDR domestically. Under the model rules, taxpayers and their advisers must provide tax authorities with information on specified...

What are managed service companies? Many individuals deliver their services to clients not as self-employed people directly, but through an intermediary—most commonly a personal service company ( PSC). This set-up can offer potential tax and National Insurance contributions ( NICs) advantages; for further detail, see Practice Note: Personal service companies—the key benefits and key tax considerations. Where the PSC is owned by the worker, it will generally fall within the scope of the anti-avoidance intermediaries legislation, widely known as ‘ IR35’ (so called after the HMRC press release reference announcing the rules in Budget 1999). For more information, see Practice Notes: IR35—the small client off-payroll regime and IR35—the large and public client off-payroll regime. In the years after those rules were introduced, a range of providers started supplying PSCs to large numbers of individuals. Typically, they placed workers under contracts containing provisions intended to keep...

This Practice Note explains the tax details that must be revealed in a rights issue prospectus when the issuer’s existing shares, and the shares obtained through the rights issue, are, or will be, listed on the Financial Conduct Authority’s ( FCA) official list and admitted to trading on the main market of the London Stock Exchange ( LSE). It also outlines the degree of tax disclosure regarded as market standard for a UK issuer to include in a rights issue prospectus. In this Practice Note, CGT is used as an abbreviation for both capital gains tax and corporation tax on chargeable gains. For a precedent UK tax section to adapt and insert into a rights issue prospectus, see Precedent: Tax disclosure—rights issue prospectus— Main Market. What tax information is required to be disclosed in a rights issue...

Insured M& A transactions—a tax lawyer's guide This Practice Note considers the practical matters a tax lawyer should assess when advising on a share sale M& A deal where one party plans to obtain either warranty and indemnity ( W& I) insurance or tax risk insurance. W& I cover can be put in place by the buyer or the seller to address losses arising from: breaches of the seller’s warranties, and claims under the indemnities in the acquisition agreement (or warranty deed) and/or the tax covenant (if included). Tax risk insurance is intended to protect the insured against a particular tax exposure connected with the transaction. In broad terms, W& I insurance responds to unknown risks, while tax risk insurance covers a known contingent tax liability. For an outline of the risks each product will cover, and the procedure for arranging a policy to...

This fundamentals note reviews the wide-ranging overhaul of the UK listing regime that came into force on 29 July 2024. It also outlines the core provisions affecting companies seeking, or already holding, a listing as described in the UK Listing Rules sourcebook, including: Equity shares (commercial companies) International commercial companies secondary listing Shell companies Transition category What is the background to the UK listing regime reforms? Post- Brexit, with scope to depart from EU capital markets rules, the government announced an independent review of the UK listing regime in November 2020. Led by Lord Hill, a former EU financial services commissioner, the review aimed to make the UK more attractive for IPOs and improve capital raising on UK markets. The UK Listing Review Report, released in March 2021, set out a series of...

FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares framework: In 2027, stamp duty and stamp duty reserve tax ( SDRT) will be replaced by a single, self-assessed securities tax, the securities transfer charge ( STC), which will be paid and reported via a new online portal. The principal features of the STC are expected to broadly reflect the proposals outlined in the 2023 consultation. Finance Act 2026 provides a power to introduce secondary legislation enabling taxpayers to pilot the new digital service, allowing self-assessment of stamp taxes on securities liabilities and electronic reporting of transactions through that service. For more information on the modernisation of stamp taxes on securities, see: News Analyses: Budget 2025— Tax analysis— Stamp and transfer taxes Tax update spring 2025— Stamp taxes on shares modernisation Tax update spring 2025— Tax analysis— Stamp and transfer taxes TAMD 2023—...

Partnerships are often used as vehicles for holding UK real estate The forms of partnership commonly adopted in practice are limited partnerships ( LPs) and limited liability partnerships ( LLPs). This Practice Note considers how, in a property context, a UK LP is treated for direct taxes—corporation tax, income tax and capital gains tax ( CGT)—together with the annual tax on enveloped dwellings ( ATED). For these purposes, unless stated otherwise, CGT covers both capital gains tax and corporation tax on chargeable gains The direct tax position of an LLP in a property context is addressed in Practice Note: Tax treatment of a UK limited liability partnership. Where contractual arrangements may amount to a partnership, see Practice Note: Property holding structures—direct tax treatment of contractual joint ownership The indirect tax (ie VAT and SDLT) treatment of partnerships differs from the direct tax treatment and...

This Practice Note outlines key tax considerations for businesses in the life sciences industry, including pharmaceutical, medical technology and biotechnology companies. It examines, among other areas, corporation tax topics such as research and development ( R& D) reliefs and the patent box, together with cross-border matters including transfer pricing and investment reliefs... Cross-border framework On 31 January 2020, the UK left EU membership and entered an implementation period during which the EU continued to treat it as a Member State for many purposes. This ended on 31 January 2020, after which EU law and the jurisdiction of the Court of Justice of the European Union largely ceased to apply to the UK. The trading relationship between the UK and the EU is thereafter governed by the EU- UK Trade and Cooperation Agreement... State aid Following the UK’s departure from the EU, the UK is no longer bound by EU...

ARCHIVED : This Practice Note is archived and no longer updated. Prompted by the Office of Tax Simplification’s proposals and an HMRC consultation, the territorial reach of the employment-related securities option regime for internationally mobile workers (and the associated corporation tax relief) was altered with effect from 6 April 2015. From that date, the governing provisions sit in Schedule 9, Part 1 of the Finance Act 2014 ( FA 2014). The rules bite on chargeable events on or after 6 April 2015, and cover options granted both prior to (arguably on a retrospective basis) and after that date; see commencement provisions in FA 2014, Sch 9, Pt 4......