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Introduction to statutory interpretation The aim of statutory interpretation is to determine the legal meaning of a statute, that is, the sense that expresses the legislator’s intention. The clearest guide to that intention is the statutory wording itself, read in its context and with its overall purpose in mind, and its broader legislative setting. Courts should seek to fulfil the purpose of legislation by construing its language, so far as they can, in the manner that most effectively serves that purpose. Put differently, the courts’ default method is purposive, and every enactment is to be construed with that end in view. There is a starting presumption that the grammatical and ordinary sense of an enactment reflects the meaning intended by the legislator. Where an enactment reasonably bears only a single meaning, and no other interpretative tools or
This Practice Note addresses identifying a fiduciary, fiduciary duties and obligations, the no conflict rule, the no profit rule, a fiduciary's duty of confidence, and the remedies available for breach of fiduciary duty. Who is a fiduciary? There is no definitive catalogue of relationships that give rise to fiduciary obligations at common law in every situation universally. Certain relationships are inherently fiduciary, eg trustee and beneficiary, solicitor and client, principal and agent, business partner and co-partners, together with mortgagor and mortgagee. The obligations of some fiduciaries have been set out in statute; for instance, trustees owe a statutory duty of skill and care under section 1 of the Trustee Act 2000 (TrA 2000), and directors' relationships with their companies are addressed in the Companies Act 2006 too. For guidance on directors' fiduciary duties, see Practice Note: of directors for further detailed
Definition of ADR Alternative dispute resolution (ADR) is defined in the CPR Glossary as a collective label for methods of settling disputes other than through the usual trial process. Some courts adopt the term ‘negotiated dispute resolution’ (NDR) to describe resolution by alternative means; for ease, this Practice Note uses ADR. For guidance on how ADR is addressed in the various court guides, see Practice Note: ADR and NDR in the court guides. In essence, ADR is a means of resolving a dispute outside the court system. It typically involves a neutral third party who either helps the parties reach a negotiated outcome, or issues a determination of the dispute that is legally binding. A binding result can follow where the agreement to refer the dispute to ADR so provides. There are multiple forms of ADR processes. For an outline of the different types and their
In brief The British constitution is uncodified, meaning it does not spring from a single constitutional document or code. It draws on a wide range of written and unwritten sources. Alongside the principal written sources of law in England and Wales—legislation (which has also introduced international and human rights principles into our constitution) and the common law—the constitution also rests on two further unwritten bases within this system: the prerogative, and non-legal constitutional conventions. In addition, on one view the basic or prevailing principle of our constitution, Parliamentary sovereignty, is ultimately grounded in political fact rather than in law. Legislation Legislation is the foremost source of constitutional law. Acts of Parliament may set out detailed constitutional rules, or even pass authority to create them to ministers or to others. Under the doctrine of Parliamentary sovereignty, legislation is traditionally regarded as taking precedence over any other form or kind of
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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...
This Practice Note was initially prepared by Owen Clutton of Macfarlanes LLP and is now overseen by Lexis®PSL Private Client. Why does the residence of trusts matter? As with the residence of individuals, income tax and capital gains tax operate within territorial boundaries. In broad terms, UK-resident trustees are taxed on worldwide income and gains, whereas non-resident trustees are taxed solely on UK-source income and gains linked to the UK—see Practice Note: UK taxation of offshore trusts—income tax and capital gains tax. In addition, particular anti-avoidance frameworks—such as the transfer of assets abroad code and the charging rules under sections 86 and 87 of the Taxation of Chargeable Gains Act 1992 ( TCGA 1992)—apply only to trusts that are non-resident—see Anti-avoidance (and international private client)—overview and Practice Notes: Taxation of UK resident settlors of offshore trusts from 6 April 2025 and Taxation of UK resident...
Finance Act 2025 ( FA 2025) It signalled a major change to the UK national tax framework by scrapping the remittance basis and introducing a new approach that, in broad and general terms, excludes an individual’s non‑ UK income and capital gains from UK taxation during their first four years of UK residence, informally referred to as the ‘foreign income and gains’ ( FIG) regime. See Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and Foreign income and gains regime from 6 April 2025. Overseas workday relief, previously available, in practice, to people in their initial three years of UK residence who performed employment duties both in the UK and abroad under a single employment contract, ended on 5 April 2025 and was subsequently superseded by a comparable relief named relief for foreign employment income within the FIG regime. See......
Transfers of IP in M& A—taxation issues IP can be moved in corporate transactions either via a share sale in the company that owns the rights, or as part of a transfer of a business’s trade and assets (whether out of a company, or by individual sellers where the business was unincorporated). The tax position will differ based on the nature of both the seller and the buyer. For tax, IP has a defined scope. For guidance on what does or does not qualify as IP for tax, see Practice Notes: What is an intangible fixed asset? and Excluded intangible fixed assets. The UK broadly adopts two approaches to taxing IP deals: the corporate intangibles tax rules: these apply to IP created or acquired by a company on or after 1 April 2002 (unless the asset was acquired before 1 July 2020 from a related party that held the...
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...
FORTHCOMING CHANGE relating to abolition of the non-dom regime and introduction of a residence-based regime: In the Autumn Budget 2024, the government signalled it will advance the previous administration’s proposal to scrap the remittance basis of taxation for non‑ UK domiciled individuals and bring in a residence‑based regime, taking effect from 6 April 2025. For details on these changes, see Practice Note: The abolition of the remittance basis of taxation from 2025–26 and News Analyses: Autumn Budget 2024— Private Client analysis— International and Autumn Budget 2024—reforming the taxation of non-doms. This Practice Note considers how UK income tax applies to investors in open‑ended investment companies ( OEICs) and authorised unit trusts ( AUTs). Throughout, these investors are termed ‘individual investors’. Be aware that distinct provisions, not covered here, can apply to investors acting as financial traders. Non‑ UK residents might be taxed on income and gains in their own...
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...
The company establishing a SIP The company setting up a share incentive plan ( SIP) does not need to be the same entity whose shares are allocated. However, both: the shares to be granted, and the connection between the SIP-establishing entity and the company whose shares are issued must satisfy the relevant legislative conditions. A SIP can be created either: solely for employees of the company that establishes it; or for those employees and for employees of other companies it controls (a group plan)—see Constituent companies below. In a group where the parent company’s shares are to be awarded, there are two options: the parent company may establish the SIP and extend it to the appropriate subsidiaries; or each subsidiary may establish its own SIP, provided the other statutory requirements concerning the shares under award are met—see...
If a company undertakes a share buyback itself, or via an intermediary acting as the company’s agent, the usual tax position for a UK-resident shareholder is that the transaction is regarded, for UK tax purposes at the time of repurchase, as both: a disposal of their shares for chargeable gains purposes, and the receipt of an income distribution Beyond that, the precise treatment differs slightly according to whether the shareholder is an individual or a corporate owner. For further detail on these differences, see Practice Notes: Tax consequences of share buybacks—main rules and Tax consequences of share buybacks—calculating the income capital split. However, special provisions can apply to repurchases by certain unquoted companies. These rules can prevent any of the consideration from being treated as a distribution in the hands of a particular UK-resident shareholder. Under those provisions, the whole sum received by that...
ARCHIVED: This Practice Note is archived and no longer maintained. Abolition of non-dom regime and introduction of residence-based IHT regime from 6 April 2025 Prior to 6 April 2025, the tests of residence, domicile and deemed domicile determined the scope of an individual’s exposure to UK income tax, capital gains tax ( CGT) and inheritance tax ( IHT). Someone both UK resident and UK domiciled had the strongest ties to the UK and was typically chargeable to income tax, CGT and IHT on their worldwide earnings, gains and holdings. By comparison, a person who was neither UK tax resident nor UK domiciled faced only restricted UK tax liabilities on UK situs assets. UK tax residents who were not UK domiciled could elect for the remittance basis on overseas income and gains, and could also keep non- UK situs assets outside the IHT net. The Finance Act 2025 ( FA...
Capital allowances Capital allowances can provide a deduction for capital spending on acquiring two specified categories of intangible fixed asset ( IFA): patents (addressed in this Practice Note), and know-how (see Practice Note: Know-how allowances) Typically, these reliefs are mainly available to individuals and other unincorporated businesses for new acquisitions. They are not available to anyone carrying on a trade that uses the cash basis. For companies, patent allowances arise only for qualifying capital expenditure where the acquirer is not within the corporate IFA tax regime for the patent concerned. Broadly, a company’s acquisition of a patent from an unconnected party on or after 1 April 2002, or from a connected party on or after 1 July 2020, will generally not result in a patent allowance. For further detail on when a patent falls within the corporate IFA tax regime, see the Practice Notes What is an...
ARCHIVED: This Practice Note is archived and is no longer maintained. Up to 5 April 2013, ordinary residence remained one of three principal considerations when determining whether, and to what degree, an individual was liable to tax in the UK. The other two were residence and domicile. Residence describes a person’s tax standing on a year-by-year basis; ordinary residence addresses the position over a longer period; domicile denotes the place a person regards as their true home. For more detail, see the Practice Notes Residence before 6 April 2013 [ Archived] and Domicile for UK tax purposes before 6 April 2025 [ Archived]. The notion of ordinary residence is set out in the Ordinary residence before 6 April 2013 [ Archived] Practice Note. This Note sets out why ordinary residence matters and considers how the pre–6 April 2013 ordinary residence rules applied to...
ARCHIVED: This Practice Note has been archived and is not maintained. This Practice Note was first prepared by Simon Goldring and Ben Harle and is now overseen by Lexis®PSL Private Client. Until 6 April 2013, “ordinary residence” existed as a separate notion from residence and domicile for UK tax. It lacked a statutory definition; its scope derived from everyday usage and judicial authority, rather than any express statutory wording. Broadly, a person was ordinarily resident in the UK where their presence here was habitual rather than incidental. The Finance Act 2013 ( FA 2013) abolished the ordinary residence concept, substituting references to residence with effect from 6 April 2013, as part of the Government’s drive to streamline the tax regime and reduce uncertainty within the system. For more information, see the Abolition of ordinary residence from 6 April 2013 and...
ARCHIVED : This Practice Note has been archived and is not maintained. This Practice Note brings together detailed analysis of the principal milestones in the 2015/16 Budget and Finance Bill process. It also offers commentary on Autumn Statement 2015, the draft Finance Bill 2016, Budget 2016 and Finance Bill 2016. For a detailed explanation of the annual Budget and Finance Bill process, including procedural aspects of enacting a Finance Act, see: Practice Note: The Budget and Finance Bill process. Finance Act 2016 Royal Assent to the Finance Act 2016 was formally granted on 15 September 2016, after its passage through the House of Lords concluded on 13 September 2016. Finance Bill 2016 Finance Bill 2016 (formally, Finance ( No.2) Bill 2015–16) was issued, along with explanatory notes, on Thursday, 24 March 2016. For comprehensive tracking of the Finance Bill measures, including summaries and analysis of the principal tax...
ARCHIVED: This Practice Note has been archived and is not maintained. Up to 5 April 2013, ordinary residence was one of three principal factors to be carefully weighed when deciding whether, or to what extent, an individual was liable to tax in the UK. The other factors were residence and domicile. For tax years 2013/14 onwards, the concept of ordinary residence was abolished, subject to transitional provisions that applied at the time. For an explanation of the concept of ordinary residence, see the Ordinary residence before 6 April 2013 [ Archived] Practice Note, and for guidance on the tax implications of ordinary residence before 6 April 2013, see the Tax implications of ordinary residence before 6 April 2013 [ Archived] Practice Note. In most cases, the abolition of ordinary residence took effect on 6 April 2013. It applies to income tax, capital gains tax ( CGT),...
ARCHIVED : This Archived Practice Note sets out the pre‑6 April 2018 tax treatment of payments in lieu of notice. For the tax position applying to such payments where employment ends on or after 6 April 2018, see Practice Note: Taxation of payments in lieu of notice ( PILONs) and post‑employment notice pay ( PENP). Historically, the tax (and National Insurance contributions ( NICs)) treatment of payments in lieu of notice ( PILONs) has been a particularly intricate area. These are payments made in place of the amounts due for an employee’s or a director’s period of notice. Because of the complexity and the resulting uncertainty, the tax treatment of PILONs changed fundamentally from 6 April 2018. In broad terms, from that date all PILONs, whether paid under an implied or express contractual PILON provision, or not, are fully taxable and subject to...
This Practice Note examines the UK tax implications of forming a joint venture structured as a limited liability company ( JVCo), which is a distinct legal person from the joint venture parties. In particular, it covers: reasons a corporate joint venture vehicle is often selected tax charges arising for a joint venture party on transferring assets to a JVCo tax charges that fall on the JVCo when assets are transferred to it further points where the JVCo is, or later becomes, within the group of one joint venture party, and availability of merger relief when subsidiaries are moved into the JVCo For commentary on the tax aspects of running and winding up joint ventures using a JVCo, see Practice Note: Tax implications of operating and terminating a joint venture company. For the purposes of this Practice Note, it is assumed the joint...
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When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...
This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...
Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...
I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...
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