Legal Practice Notes

ARCHIVED The Tier 1 ( Investor) category was closed to new applications, without notice, at 16:00 on 17 February 2022 via Statement of Changes in Immigration Rules CP 632. Individuals with existing leave under this route can still extend their permission, including seeking entry clearance from outside the UK if they have held Tier 1 ( Investor) leave during the 12 months before the application date, and may apply for settlement. Extension applications, whether made in the UK or overseas, must be filed by 17 February 2026. Settlement applications must be submitted before 17 February 2028. For further details, see: LNB News 17/02/2022 76. This Practice Note is kept in archived form for historical interest and for those with applications pending when the route was closed. Introduction The UK government actively promotes investment in the UK and introduced a visa route...

This Practice Note considers the eligibility criteria for indefinite leave to remain under the Tier 1 ( Investor) category. The Tier 1 ( Investor) category closed to fresh applications, without notice, from 16.00 on 17 February 2022 through Statement of Changes in Immigration Rules CP 632. Holders of existing leave on this route may still prolong their permission, including applying for entry clearance from outside the UK where they have held Tier 1 ( Investor) leave at any point in the 12-month period before the application date, and may pursue settlement. Requests to extend, whether made inside or outside the UK, must be filed by 17 February 2026. Applications for indefinite leave to remain must be submitted before 17 February 2028. Specific timings for each cohort are outlined below. In line with other...

This Practice Note considers the eligibility criteria for a person who has, or was last granted leave under the Tier 1 ( Investor) category when applying for an extension of leave. Initial applications to the Tier 1 ( Investor) route were halted without notice at 16.00 on 17 February 2022, via the Statement of Changes in Immigration Rules CP 632. People with current leave on this route may continue to prolong their stay, including seeking entry clearance from overseas where they have held Tier 1 ( Investor) leave within the 12 months before the application date, and can pursue settlement. Requests to extend, whether filed in the UK or from abroad, must be received by 17 February 2026. Applications for settlement must be lodged no later than 17 February 2028. Further guidance on timelines for each cohort appears below. As part of the...

The Creative Worker route The Creative Worker route allows individuals in the creative industries to perform or take up work in the UK on a temporary basis. To sponsor talent under this pathway, an organisation must hold a Temporary Worker sponsor licence that specifically covers the Creative Worker route. Sponsors may, on an annual basis, request the number of undefined Certificates of Sponsorship ( Co S) they expect to need, and they can also apply for further undefined Co S as necessary throughout the year. Creative artists, entertainers, and their entourage can be admitted initially for up to 12 months, with the possibility, in defined circumstances, of extending their permission up to a maximum total of 24 months. For matters relating to the applicant—such as financial, suitability and validity requirements, the period and conditions of permission, dependants, and other relevant...

Temporary non-residence—statutory anti-avoidance rule The statutory test for non-residence contains a general anti-avoidance provision intended to remove tax advantages that could otherwise be secured if an individual is non- UK resident only for a short spell. This rule is set out in paragraphs 109–144 of Schedule 45 to the Finance Act 2013 ( FA 2013). As the statutory test applies separately to each tax year, it is feasible for someone to be non- UK resident for one, or a small number, of tax years even though they are UK resident both beforehand and afterwards. The rule aims to stop individuals engineering a brief period of non- UK residence and, in that window, realising sizeable income or gains that would not be taxed in the UK because of their residence status. It therefore targets sources where the emigrating individual can control the timing of receipts, and income and gains that...

This Practice Note offers practical guidance on the security duties that apply to communications providers in the UK. It covers the Telecommunications ( Security) Act 2021 ( T( S) A 2021), secondary legislation such as the Electronic Communications ( Security Measures) Regulations 2022 (the Security Regulations), SI 2022/933, and the Telecommunications Security Code of Practice. It also outlines Ofcom’s role in supervising and enforcing these obligations. For a broader overview of the UK regulatory landscape, see Practice Note: The UK regulatory framework for telecommunications. Background and legislative framework T( S) A 2021 establishes the mechanism for the UK’s telecoms security regime. Using powers under that Act, the government may make regulations imposing targeted security requirements on providers of public electronic communications networks ( ECNs) and public electronic communications services ( ECSs). In essence, those duties require providers to: reduce the likelihood of security...

Tax elected fund ( TEF) A ‘tax elected fund’ ( TEF) is an authorised investment fund ( AIF) that has obtained TEF status by applying successfully to HMRC. Mirroring the PAIF framework (available to certain AIFs that hold property), a dedicated set of tax rules for TEFs aims to shift the incidence of taxation from the fund vehicle to the investor in practice. Consequently, TEF investors are taxed as if they had owned the underlying assets outright themselves. Apart from particular provisions found in the TEF rules, TEFs otherwise remain subject to the tax treatment that generally applies to AIFs in general terms. Brought in during 2009, the TEF regime sought to enhance the tax efficiency of funds investing in a mixed portfolio of assets—this is achieved as the TEF structure allows different categories of income to be streamed to investors in effect. The TEF...

New starter guide This new starter guide introduces the technology, media and telecoms ( TMT) practice area and the kinds of transactions lawyers in this field routinely handle. It is aimed at trainee solicitors and anyone unfamiliar with any of the topics within TMT. What technology lawyers do What media lawyers do What telecoms lawyers do Key TMT topics Q& As Further reading materials Essential external links for TMT lawyers Key resources tab This guide helps you make the most of Lexis Nexis® TMT materials by showing how to locate them, sign up for email alerts, access Q& As and send a query to the Lexis Ask team. If a point is not covered here, use the Topics tab on the TMT homepage, or the Topics dropdown on any page, to explore further practice area...

This Practice Note is about: the anti-avoidance rule in section 137 of the Taxation of Chargeable Gains Act 1992 ( TCGA 1992), which: prevents a shareholder from obtaining relief under TCGA 1992, s 135, that is, where the shareholder exchanges shares or loan notes in company A for shares or loan notes issued by company B. For more detail on the relief available under TCGA 1992, s 135, see Practice Note: Share for share exchanges and qualifying corporate bonds ( QCBs); and prevents a shareholder from obtaining relief under TCGA 1992, s 136, that is, where, as part of a scheme of reconstruction, the shareholder’s shares in company A are retained, cancelled or extinguished and company B issues shares or loan notes to the...

This Practice Note was first created in collaboration with Tolley. When a person dies, their estate is responsible for income tax on income arising from 6 April before death up to the date of death. There is also liability to capital gains tax ( CGT) on any gain from disposals by the deceased of their property in that period, ie in the tax year in which they died up to the date of death. The deceased’s personal representatives ( PRs) will often need to liaise with HMRC to finalise the deceased’s tax affairs, both for the year in which death occurred and the previous tax year if a self‑assessment return was due and had not yet been submitted. This Practice Note sets out how to quantify the income and calculate the tax due on any income or gains in the tax year up to the date of...

This Practice Note outlines the principal practical applications of unauthorised unit trusts ( UUTs) and highlights recurring tax considerations in those settings. Unit trusts chiefly operate as investment fund vehicles. As set out in Practice Note: Taxation of unauthorised unit trusts, a UUT is a unit trust that has not been approved by the Financial Conduct Authority under the Financial Services and Markets Act 2000 ( FSMA 2000). UUTs are most frequently deployed as property fund vehicles, though they can also serve as trading funds and as ‘pension fund pooling schemes’. This Practice Note covers: the use of UUTs as property fund vehicles UUTs contrasted with other non- or lightly regulated property fund vehicles the use of UUTs as trading funds, and a short overview of UUTs as pension fund pooling schemes For the tax position of UUTs and their...

This Practice Note outlines key aspects of the taxation of investment income that apply specifically to discretionary trusts and interest in possession trusts. Interest Since 6 April 2016, interest is generally paid gross, without tax deducted at source. Trustees do not benefit from the savings allowance created by section 4 of the Finance Act 2016, which allows individuals to receive up to £1,000 of gross interest taxed at the nil rate. Accordingly, after the end of deduction at source, trustees may need to file a tax return to settle liabilities arising on very small amounts of interest. HMRC acknowledged the added administrative and financial burden. As a temporary measure, initially for 2016–2017 only, HMRC confirmed that trustees need not declare or pay tax on interest where savings interest is the sole income and the liability is under £100. This easement was extended to later tax years and...

This Practice Note explains the UK tax position for investors in a standard UK private equity fund in relation to their share of the fund’s profits. Summary of tax treatment A key reason limited partnerships are the preferred vehicle for private equity funds is their tax transparency. English and Scottish limited partnerships are transparent for income tax, capital gains tax ( CGT) and corporation tax. This look-through approach allows investors, as limited partners, to pool capital without creating an additional layer of tax. Accordingly, income and capital gains (and, where relevant, losses) arising within the fund are treated as accruing to the partners as though they held the underlying investments themselves. This is significant because, as with any collective investment vehicle, the objective is for an investor’s post-tax return to mirror, as closely as possible, the after-tax outcome they would have achieved by investing directly in the...

Stop Press Section 49 and Schedule 7 of the Finance Act 2026 update the UK’s domestic rules on UK permanent establishments of non‑ UK companies, applying for accounting periods (for corporation tax) and tax years (for income tax) that begin on or after 1 January 2026. The provisions refine what counts as a UK permanent establishment and the framework for attributing profits to such an establishment so that, in both respects, they more closely reflect the OECD Model Tax Convention. They also revise how the investment manager exemption applies. For further detail, see News Analysis: Budget 2025— Tax analysis — International. A company that is not UK‑resident but trades in the UK through a permanent establishment ( PE) will be within the charge to corporation tax on the profits referable to its UK activities. This Practice Note explains the method by which the PE’s...

Introduction This Practice Note considers the taxation of benefits paid from a pension scheme on the death of a member. The outcome chiefly depends on whether the person belonged to a defined benefit (final salary) scheme or a defined contribution arrangement, such as a SIPP or a personal pension plan. It also turns on whether the scheme member: dies before taking retirement benefits; or dies while receiving retirement benefits, whether as a secured pension, a life annuity or income drawdown, and, in either situation, the age at death (that is, death before age 75 or death on or after age 75). Defined benefit ( DB) schemes When a member of a defined benefit ( DB) scheme dies, the benefits due will vary according to whether death occurs before or after retirement. Death before drawing benefits On death prior to retirement, any lump sum...

Restrictive covenants or undertakings These are promises employees make during employment or on leaving, limiting their behaviour or activities. Following historic debate over whether payments for such covenants or undertakings fell within general earnings under the relevant income tax legislation, a dedicated charging provision ensures that any sums connected with current, future, or past employments or offices are treated as taxable earnings... Tax treatment Section 225 of the Income Tax ( Earnings and Pensions) Act 2003 ( ITEPA 2003) brings into charge payments made to an individual for agreeing to restrictive covenants......

For UK tax, an overseas vehicle can be treated as either transparent or opaque. This Practice Note sets out how that characterisation affects the taxation of the entity itself and of its members. The classification directly shapes how tax applies to both the entity and its members. UK legislation gives limited guidance on whether an overseas entity should be viewed as transparent or opaque. For the relevant case law and HMRC’s position on classification, see Practice Note: Entity classification case law and HMRC’s interpretation, and Classifying overseas entities for UK tax purposes—checklist. Taxation of overseas entities and their members Transparent overseas entities Where an overseas entity is treated as transparent, UK‑resident members (for example, shareholders, beneficiaries and partners) are charged to tax as the entity’s profits or gains arise. Consequently, from a direct tax standpoint, transparent entities generally operate as tax‑neutral conduits for members: the entity is not...

FORTHCOMING CHANGES: At Budget 2025 on 26 November 2025, the government outlined minor corrective changes to the residence-based tax system introduced by the Finance Act 2025. Key measures cover: eligibility for new arrivals under the foreign income and gains ( FIG) regime, who must be at least 10 years old at the start of the tax year restricting FIG relief claims so they can be set only against the specific foreign income, foreign employment income, or foreign gains to which they correspond aligning the qualifying asset holding company ( QAHC) rules so that carried-interest-style returns tied to services provided to a QAHC qualify for relief under the FIG regime a correction to the capital gains tax ( CGT) residence test for personal representatives, ensuring they are not UK resident where the deceased was UK non-resident but was a long-term UK resident for inheritance tax purposes a...

This Practice Note offers a concise overview of the principal UK taxes that can affect individuals who are not UK resident, namely: income tax capital gains tax ( CGT) inheritance tax ( IHT) value added tax ( VAT) national insurance contributions ( NICs) the annual tax on enveloped dwellings ( ATED) stamp duty land tax ( SDLT) As a general rule, UK tax law operates within territorial boundaries, meaning either the item taxed must arise from a UK source, or the person charged is resident in the UK. Unlike many countries, the UK tax year does not follow the calendar year; it runs from 6 April to 5 April. Non-residence for tax purposes An individual is treated as non-resident for UK tax purposes if they meet the non-resident conditions of the statutory residence test for periods after 5 April 2013 (see Practice Note: Residence after 5 April 2013). For the position before 6 April 2013, see...

Stop Press: Section 49 and Schedule 7 of the Finance Act 2026 amend the UK’s domestic legislation concerning UK permanent establishments of non- UK companies, taking effect for accounting periods (in respect of corporation tax) or tax years (for income tax) that begin on or after 1 January 2026, respectively. In each case, the measures adjust both the definition of a UK permanent establishment and the rules for attributing profits to a UK permanent establishment, so as to bring them nearer into line with the OECD Model Tax Convention, from that date and thereafter in UK law. Section 46 and Schedule 5 of the Finance Act 2026 provide for the abolition of the DPT regime and its replacement by the ‘unassessed transfer pricing profits’ ( UTPP) rules, effective for accounting periods commencing on or after 1 January 2026. HMRC has inserted a new chapter within the HMRC...