Most Gracious Sovereign We , Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty’s public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Income tax, capital gains tax and corporate taxes
Income tax charge, rates etc
Income tax is charged for the tax year 2025-26.
For the tax year 2025-26 the main rates of income tax are as follows—
the basic rate is 20%,
the higher rate is 40%, and
the additional rate is 45%.
For the tax year 2025-26 the default rates of income tax are as follows—
the default basic rate is 20%,
the default higher rate is 40%, and
the default additional rate is 45%.
For the tax year 2025-26 the savings rates of income tax are as follows—
the savings basic rate is 20%,
the savings higher rate is 40%, and
the savings additional rate is 45%.
For the tax year 2025-26 the amount specified in section 12(3) of ITA 2007 (the starting rate limit for savings) is “£5,000”.
Accordingly, section 21 of that Act (indexation) does not apply in relation to the starting rate limit for savings for the tax year 2025-26.
Income tax provisions relating to cars
Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars, vans etc) is amended as follows.
In section 139 (cars with a CO 2 emissions figure: the appropriate percentage), in subsection (1), for the table (as substituted by section 11(7) of FA 2023) substitute— .
In subsection (3) of section 139 (as amended by section 11(3) of FA 2023)—
in paragraph (a), for “21%” substitute “22%”, and
in paragraph (b), for “37%” substitute “38%”.
In section 140 (cars without a CO 2 emissions figure: the appropriate percentage), in subsection (2), for the table substitute— .
In subsection (3) of section 140—
in paragraph (a), for “2%” substitute “7%”, and
in paragraph (b), for “37%” substitute “38%”.
In section 141 (diesel cars: the appropriate percentage), in subsection (2), in Step 3, for “37%” substitute “38%”.
In section 142 (cars first registered before 1 January 1998: the appropriate percentage), in subsection (2), for the table substitute— .
In subsection (3) of section 142, for “37%” substitute “38%”.
The amendments made by subsections (2) to (8) have effect for the tax year 2028-29.
In consequence of the amendments made by this section, in section 139, omit—
in subsection (2), paragraph (b) together with the “and” before it, and
subsections (5) to (5B).
The amendments made by subsection (10) have effect for the for the tax year 2028-29 and subsequent tax years.
Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars, vans etc), as amended by section 5, is amended as follows.
In section 139 of ITEPA 2003, in subsection (1), for the table substitute— .
In subsection (3) of that section—
in paragraph (a), for “22%” substitute “23%”, and
in paragraph (b), for “38%” substitute “39%”.
In section 140 (cars without a CO 2 emissions figure: the appropriate percentage), in subsection (2), for the table substitute— .
In subsection (3) of section 140—
in paragraph (a), for “7%” substitute “9%”, and
in paragraph (b), for “38%” substitute “39%”.
In section 141 (diesel cars: the appropriate percentage), in subsection (2), in Step 3, for “38%” substitute “39%”.
In section 142 (cars first registered before 1 January 1998: the appropriate percentage), in subsection (2), for the table substitute— .
In subsection (3) of section 142, for “38%” substitute “39%”.
The amendments made by this section have effect for the tax year 2029-30 and subsequent tax years.
Capital gains tax rates and reliefs
In section 1H of TCGA 1992 (the main rates of CGT)—
omit subsection (1A) (which sets out the rates for residential property gains accruing to individuals),
in subsection (3) (which sets out the rates for gains accruing to individuals that are not residential property gains or carried interest gains)—
for “10%” substitute “18%”, and
for “20%” substitute “24%”,
omit subsection (4A) (which sets out the rates for residential property gains accruing to personal representatives),
in subsection (6) (which sets out the rates for gains accruing to personal representatives that are not residential property gains or carried interest gains), for “20%” substitute “24%”,
omit subsection (7) (which sets out the rates for residential property gains accruing to trustees), and
in subsection (8) (which sets out the rates for gains accruing to trustees that are not residential property gains or carried interest gains)—
omit “Other”, and
for “20%” substitute “24%”.
Schedule 1 contains amendments in consequence of the provision made by this section.
The amendments made by this section and that Schedule have effect in relation to disposals made on or after 30 October 2024.
In section 169N of TCGA 1992 (business asset disposal relief), in subsection (3) (which specifies the rate of CGT for the relief), for “10%” substitute “14%”.
In consequence of the amendment made by subsection (1), in section 1H(1)(a) of TCGA 1992 (which refers to the rate for business asset disposal relief), for “10%” substitute “14%”.
The amendments made by subsections (1) and (2) have effect in relation to disposals made on or after 6 April 2025.
In section 169N(3) of TCGA 1992 (as amended by subsection (1)), for “14%” substitute “18%”.
In consequence of the amendment made by subsection (4), in section 1H(1)(a) of TCGA 1992 (as amended by subsection (2)), for “14%” substitute “18%”.
The amendments made by subsections (4) and (5) have effect in relation to disposals made on or after 6 April 2026.
In section 169VC(2) of TCGA 1992 (which specifies the rate of CGT for the relief), for “10%” substitute “14%”.
In consequence of the amendment made by subsection (1), in section 1H(1)(b) of TCGA 1992 (which refers to the rate for investors’ relief), for “10%” substitute “14%”.
In consequence of the amendments made by subsection (1) and section 8(1), in section 1I of TCGA 1992 (income taxed at higher rates or gains exceeding unused basic rate band), in subsection (4)(a) (which refers to the rate for business asset disposal relief and investors’ relief), for “10%” substitute “14%”.
The amendments made by subsections (1) to (3) have effect in relation to disposals made on or after 6 April 2025.
In section 169VC(2) of TCGA 1992 (as amended by subsection (1)), for “14%” substitute “18%”.
In consequence of the amendment made by subsection (5), in section 1H(1)(b) of TCGA 1992 (as amended by subsection (2)), for “14%” substitute “18%”.
In consequence of the amendments made by subsection (5) and section 8(4), in section 1I(4)(a) of TCGA 1992 (as amended by subsection (3)), for “14%” substitute “18%”.
The amendments made by subsections (5) to (7) have effect in relation to disposals made on or after 6 April 2026.
In— for “£10 million” substitute “£1 million”.
section 169VK(1) and (2) of TCGA 1992 (which specify the amount of gains qualifying for the relief in the case of disposals by individuals), and
section 169VL(2) and (3) of that Act (which specify the amount of gains qualifying for the relief in the case of disposals by trustees),
The amendments made by this section have effect in relation to disposals made on or after 30 October 2024.
In section 1H of TCGA 1992 (which sets out the main rates of CGT)—
omit subsection (2) (which provides for rates of 18% or 28% on carried interest gains accruing to individuals),
in subsection (3), for “Other chargeable gains” substitute “Chargeable gains other than carried interest gains (see subsections (4B) and (9) to (11))”,
before subsection (5) insert— , and
in subsection (5) (which provides for the rate of CGT on carried interest gains accruing to personal representatives of a deceased individual), for “28%” substitute “32%”.
In section 1I of that Act (income taxed at higher rates or gains exceeding unused basic rate band), as amended by paragraph 2 of Schedule 1—
before subsection (1) insert— ,
in subsection (1), for the words from “charged—” to the end substitute “charged at the rate of 24%.”,
in subsection (2), in the words after paragraph (b), for the words from “is charged at” to the end substitute “is charged at the rate of 24%.”,
in subsection (5), for the words from “are then charged—” to the end substitute “are then charged at the rate of 24%.”,
in subsection (7), for the words from “as then remains” to the end substitute “as then remains to gains other than entrepreneur or investor gains.”, and
in subsection (9), for the words from “charged—” to the end substitute “charged at the rate of 24%.”
The amendments made by this section have effect in relation to carried interest arising on or after 6 April 2025.
Corporation tax charge and rates
Corporation tax is charged for the financial year 2026.
The main rate of corporation tax for that year is 25%.
For the purposes of Part 3A of CTA 2010, for the financial year 2026—
the standard small profits rate is 19%, and
the standard marginal relief fraction is 3/200ths.
Oil and gas
In section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 (charge to tax), in subsection (1), for “35%” substitute “38%”.
The amendment made by subsection (1) has effect for accounting periods beginning on or after 1 November 2024.
In the case of an accounting period (a “straddling period”) beginning before 1 November 2024 and ending on or after that date—
the Energy (Oil and Gas) Profits Levy Act 2022 is to apply as if so much of the straddling period as falls before that date, and so much of the straddling period as falls on or after that date, were separate accounting periods, and
the company’s levy profits or loss determined for the straddling period (on the assumption that the whole of that period were a qualifying period) are apportioned to the two separate accounting periods in accordance with section 17 of that Act, which is to apply for the purposes of this section as it applies for the purposes of sections 15 and 16 of that Act.
In the case of a straddling period, the Instalment Payments Regulations 1998 are to apply separately—
in relation to the levy, and
in relation to any other tax chargeable on the company.
In their application as a result of subsection (4)(a), the Instalment Payments Regulations 1998 are to have effect in relation to the levy—
as if the two separate accounting periods deemed to arise under subsection (3)(a) were accounting periods for the purposes of those Regulations and as if the levy were chargeable for those deemed accounting periods, but
as if the final instalment payment for the deemed accounting period ending on 31 October 2024 became due and payable on the date on which the next instalment payment after 31 October 2024 would have become due and payable for the straddling period in the absence of this section.
Any reference in the Instalment Payments Regulations 1998 to the total liability of a company is accordingly to be read—
in their application as a result of subsection (4)(a), as a reference to the levy, and
in their application as a result of subsection (4)(b), as a reference to the amount that would be the company’s total liability for the straddling period if the levy were left out of account.
For the purposes of the Instalment Payments Regulations 1998—
a company is to be regarded as a large company as respects the deemed accounting periods under subsection (3)(a) only if it is a large company for those purposes as respects the straddling period, and
any question whether a company is a large company as respects the straddling period is to be determined as it would have been determined apart from section 1 of the Energy (Oil and Gas) Profits Levy Act 2022.
In this section “the Instalment Payment Regulations 1998” means the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175).
The Energy (Oil and Gas) Profits Levy Act 2022 is amended as follows.
For section 2 substitute—
In section 7(1) (when investment expenditure is incurred)—
in paragraph (a), omit “in the case of capital expenditure,”, and
omit paragraph (b).
In section 18(1) (interpretation), omit the definitions of “leasing expenditure” and “operating expenditure”.
The amendments made by this section have effect in relation to expenditure incurred on or after 1 November 2024 (and section 7 of the Energy (Oil and Gas) Profits Levy Act 2022 applies for the purposes of this section as it applies for the purposes of that Act).
In section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 (charge to tax), in subsection (3) (which sets out the accounting periods by reference to which the tax is charged), in paragraph (b), for “2028” substitute “2030”.
In consequence of the amendment made by subsection (1)—
in section 7(2) of that Act (when investment expenditure is incurred), for “2028” substitute “2030”, and
in section 16 of that Act (transitional provision for accounting periods straddling 31 March 2028), for “2028”, in each place (including the heading), substitute “2030”.
Schedule 3 makes provision for certain payments into a decommissioning fund to be treated as decommissioning expenditure for the purposes of corporation tax, income tax and petroleum revenue tax.
International matters
Schedule 4—
makes provision about the UTPR, and
makes other amendments to Parts 3 and 4 of F(No. 2)A 2023.
ITTOIA 2005 is amended as follows.
In section 574 (overview of Part 5)—
in subsection (1) omit paragraph (aa);
in subsection (2) omit “(but see section 608X)”.
Omit Chapter 2A (offshore receipts in respect of intangible property) of Part 5.
In section 576 (priority between Chapters within Part 5) omit subsection (1).
In section 873(3) (procedure for orders and regulations) omit paragraph (ba).
TIOPA 2010 is amended as follows.
In section 157(1) (direct participation)—
at the end of paragraph (d) insert “, and”;
omit paragraph (f) and the “and” preceding it.
In section 159(1) (indirect participation: potential direct participant)—
at the end of paragraph (d) insert “, and”;
omit paragraph (f) and the “and” preceding it.
In section 160(1) (indirect participation: one of several major participants) omit paragraph (f) and the “and” preceding it.
In consequence of subsections (1) to (9), omit Schedule 3 to FA 2019 (offshore receipts in respect of intangible property).
Omit section 981A of ITA 2007 (offshore receipts in respect of intangible property: exception from duties to deduct).
The amendments made by this section have effect in relation to income arising on or after 31 December 2024.
For section 690 of ITEPA 2003 (employee non-resident etc) substitute—
The amendments made by this section have effect for the tax year 2025-26 and subsequent tax years.
Any direction given by an officer of Revenue and Customs under section 690 of ITEPA 2003 (employee non-resident etc) has no effect in relation to tax year 2025-2026 or any subsequent tax year.
In section 158 of TIOPA 2010 (which sets out how to read references to indirect participation for the purposes of, among other provisions, provisions relating to advance pricing agreements under Part 5 of that Act)—
in subsection (4), omit paragraph (c) (but not the “and” at the end of that paragraph), and
after that subsection insert—
In section 161 of that Act (indirect participation in financing cases)—
in subsection (1), at the end insert “and, in Part 5, section 219(2)”, and
in the heading, for “and 175” substitute “, 175 and 219(2)”.
In section 162 of that Act (indirect participation in further financing cases)—
in subsection (1), at the end insert “and, in Part 5, section 219(2)”, and
in the heading, for “and 175” substitute “, 175 and 219(2)”.
In section 219(4) of that Act (which sets out how to interpret references to associates by referring to, among other provisions, provisions in Part 4 of that Act that explain the meaning of indirect participation), for “and 160(1)” substitute “, 160(1), 161(1) and 162(1)”.
The amendments made by this section are treated as always having had effect.
Reliefs for businesses
Section 45D of CAA 2001 (expenditure on zero-emission cars) is amended as follows.
In subsection (1)(a), for the words from “the period” to the end substitute “the relevant period,”.
Omit subsection (1A).
After that subsection insert—
In section 45EA of CAA 2001 (expenditure on plant or machinery for electric vehicle charging point), in subsection (3)(a) and (b) (which specify the date on or before which expenditure must be incurred to qualify for a first-year allowance), for “2025” substitute “2026”.
Schedule 5 contains provision abolishing the special rules relating to the commercial letting of furnished holiday accommodation.
In Part 14A of CTA 2009 (films, television programmes and video games), after section 1179EB insert—
The amendment made by subsection (1) has effect only in relation to expenditure incurred on or after 1 January 2025.
A claim for audiovisual expenditure credit may not be made in reliance on that amendment before 1 April 2025.
In section 1179AA(7) of CTA 2009 (qualifying companies)—
after “for” insert “—”;
the words from “a production” to the end become paragraph (a);
at the end, insert
Section 1179DJ of CTA 2009 (British certification condition: films and television programmes) is amended as set out in subsections (3) to (6).
In subsection (2), omit paragraphs (a) and (b) (including the dash before paragraph (a)) and insert “the production company’s company tax return for the period is accompanied by a valid interim certificate.”
In subsection (3), omit paragraphs (a) and (b) and insert—
In subsection (6), for the words from the beginning to “that period” substitute “If a certificate is revoked after the production company’s company tax return for a period is submitted”.
For subsections (7) and (8) substitute—
Section 1179FC of CTA 2009 (British certification condition: video games) is amended as set out in subsections (8) to (11).
In subsection (2), omit paragraphs (a) and (b) (including the dash before paragraph (a)) and insert “the production company’s company tax return for the period is accompanied by a valid interim certificate.”
In subsection (3), omit paragraphs (a) and (b) and insert—
In subsection (6), for the words from the beginning to “that period” substitute “If a certificate is revoked after the production company’s company tax return for a period is submitted”.
For subsections (7) and (8) substitute—
In section 1179DJA(9) of CTA 2009 (certification as a low-budget film), for the words “a low-budget certificate” to the end substitute “the production company’s company tax return for the period is accompanied by a low-budget certificate which has effect on that day the return is submitted”.
In section 15 of the F(No.2)A 2024 (certification as a low-budget film: transitional), omit subsection (8).
The amendments made by this section have effect in relation to claims made on or after the day on which this Act is passed.
In relation to an accounting period beginning on or before 30 October 2024, sections 1179DJ(8) and 1179FC(8) of CTA 2009 (as inserted by subsections (6) and (11)) have effect as if they read as follows—
CTA 2009 is amended as follows.
In section 1179DT (excluded expenditure)—
in the section heading, at the end insert “and unpaid amounts”;
the existing provision becomes subsection (1);
at the end, as a new subsection, insert—
Omit section 1179DX(3).
In section 1179FL (excluded expenditure)—
in the section heading, at the end insert “and unpaid amounts”;
the existing provision becomes subsection (1);
at the end, as a new subsection, insert—
Omit section 1179FP(3).
The amendments in this section have effect in relation to claims made on or after the day on which this Act is passed.
CTA 2009 is amended as set out in subsections (2) to (5).
In section 1112A (overview), for subsection (6) substitute—
For section 1112J and the heading above substitute—
In subsection 1138A(1) (research and development undertaken abroad)—
for subsection (1)(b) substitute—
after subsection (4) insert—
In section 1142E(b) (orders and regulations: ancillary provision), omit “or areas”.
The Research and Development (Chapter 2 Relief) Regulations 2024 are revoked.
The Relief for Research and Development (Content of Claim Notifications, Additional Information Requirements and Miscellaneous Amendments) Regulations 2023 are amended as follows—
in regulation 3(4), omit the definition for “the Chapter 2 Regulations”;
in paragraph 1(2)(b) of Schedule 2, for “regulation 2(3) of the Chapter 2 Regulations” substitute “section 1112J(4) of CTA 2009”;
in paragraph 10 of Schedule 2 omit sub-paragraphs (1)(a) and (b) and (2) and insert—
The Income and Corporation Taxes (Electronic Communications) Regulations 2003 are amended as follows—
in regulation 2(1)(a)(xi) for “regulation 2(3)(b) of the Research and Development (Chapter 2 Relief) Regulations 2024” substitute “section 1112J(4)(b) of CTA 2009”;
in regulation 3(2AA)(c) for “regulation 2(3)(b) of the Research and Development (Chapter 2 Relief) Regulations 2024” substitute “section 1112J(4)(b) of CTA 2009”.
The amendments and revocation made by this section have effect in relation to claims made on or after 30 October 2024.
In paragraph 21 of Schedule 1 to FA 2024 (higher rate of payable credit for R&D-intensive SMEs between 1 April 2023 and 1 April 2024), for sub-paragraph (4) substitute—
The amendment made by this section is to be treated as always having had effect.
Employee-ownership trusts
Schedule 6 makes provision about employee ownership trusts.
Miscellaneous measures
In Part 4 of FA 2004 (pensions) omit section 244C (exclusion from overseas transfer charge where receiving scheme in EEA state or Gibraltar, and member resident in UK or EEA state).
Subsections (3) to (5) contain amendments consequential on the repeal made by subsection (1).
In Part 4 of FA 2004—
in section 244J (persons liable to charge), in subsection (4) omit “or 244C”;
in section 244K (meaning of “transferred value”), in subsection (6) omit “or 244C”.
In the Pension Schemes (Information Requirements for Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) Regulations 2006 (S.I. 2006/208)—
in regulation 3 (information to be provided to QROPS) in paragraph (2C)—
for “neither” substitute “not”;
omit paragraph (b) and the “nor” before it;
in regulation 3AF (information provided by member to QROPS: inward and outward transfers), in paragraph (1)(b)(ii) omit “or 244C”;
in regulation 3AG (provision of information about liability for overseas transfer charge), in paragraph (2)(d) omit “or 244C”;
in regulation 3AH (accounting for overseas transfer charge where change of circumstances), in paragraph (1)(a)(ii) omit “or 244C(3)”.
In the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567)—
in regulation 11BB (information provided by members to scheme administrators), in paragraph (1)(b)(ii) omit “or 244C”;
in regulation 12A (information provided by scheme administrators to members), in paragraph (2)(d) omit “or 244C”.
Subject to subsections (7) and (8), the amendments made by this section have effect in relation to transfers made on or after 30 October 2024.
The amendments do not have effect in relation to a transfer that is made—
in execution of a request made before 30 October 2024, and
before 30 April 2025.
Where— the tax consequences of the earlier transfer are to be determined as if the repeal did not have effect in relation to the later transfer.
the repeal made by subsection (1) does not have effect in relation to a transfer, but
the tax consequences of that transfer depend on the tax consequences of a later transfer in relation to which the repeal does have effect,
The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006 (S.I. 2006/206) are amended as follows.
In regulation 2 (requirements of an overseas pension scheme), in paragraph (2), for sub-paragraphs (a) to (d) substitute—
In regulation 3 (recognised overseas pension schemes: prescribed countries or territories and prescribed requirements), in paragraph (2) (prescribed countries) omit sub-paragraphs (a) and (b).
Subsections (1) to (3) come into force on 6 April 2025.
In Part 4 of FA 2004 (pensions), section 270 (meaning of “scheme administrator”) is amended as follows.
In subsection (2)—
in the opening words—
for “cannot be” substitute “is not”;
for “unless” substitute “at any time unless, at that time,”;
in paragraph (a) omit the words from “or another” to the end.
In subsection (3)(b) omit the words from “, whether resident” to the end;
Omit subsection (4).
Subsections (1) to (4) come into force on 6 April 2026.
Schedule 7 makes provision about diminishing shared ownership refinancing arrangements.
ITEPA 2003 is amended as follows.
In section 660 (taxable UK benefits)—
in Table A in subsection (1), after the entry relating to statutory parental bereavement pay insert— ;
in subsection (2), after the entry relating to statutory parental bereavement pay insert— .
In paragraph 48 of Schedule 2 (notice of possible effect of deductions under SIP partnership share agreement on employee’s benefit entitlement), in sub-paragraph (2) after “statutory sick pay” insert “, statutory neonatal care pay”.
In regulation 2 of the Employee Share Ownership Plans (Partnership Shares—Notice of Effects on Benefits, Statutory Sick Pay and Statutory Maternity Pay) Regulations 2000 (S.I. 2000/2090)—
after “statutory maternity pay” (in the first place it appears) insert “, statutory neonatal care pay”;
after “statutory sick pay” (in the second place it appears) insert “, statutory neonatal care pay”.
Subsection (4) comes into force on 6 April 2025.
Replacement of special rules relating to domicile
In Part 8 of ITTOIA 2005 (foreign income: special rules), after Chapter 4 insert—
In ITA 2007—
in section 24 (reliefs deductible at Step 2), in subsection (1)(a)—
at the end insert— , and
at the end of the entry for section 193(4) of FA 2004, omit the “and”,
in section 34 (personal allowance and blind person’s allowance) for subsection (3) substitute— ,
in section 55A (transferable tax allowance for married couples and civil partners) for subsection (3) substitute— ,
in section 460 (residence of claimants for relief under section 457 or 458) for subsection (4) substitute— ,
in section 809EZA (disguised investment management fees: charge to income tax)—
in subsection (2A), for paragraphs (d) and (e) substitute— , and
in subsection (2C), for “before the end of the period of non-residence” substitute , and
in section 989 (the definitions), at the appropriate places insert— ;
In paragraph 46 of Schedule 2 to FA 2022 (qualifying asset holding companies)—
in the heading for “applies” substitute “applied or who makes a foreign income claim”,
in sub-paragraph (1)—
in the words before paragraph (a), for “This paragraph applies” substitute “Sub-paragraphs (2) and (3) apply”, and
in paragraph (a), for “applies” substitute “applied”, and
after sub-paragraph (6) insert—
The amendments made by this section have effect for the tax year 2025-26 and subsequent tax years.
In Part 2 of ITEPA 2003 (employment income: charge to tax), after Chapter 5B insert—
In Schedule 8—
Part 1 makes general consequential amendments;
Part 2 makes consequential amendments relating to the operation of PAYE;
Part 3 contains transitional provision.
The amendments made by this section and the provision made by Schedule 8 have effect for the tax year 2025-2026 and subsequent tax years.
TCGA 1992 is amended as follows.
Before Schedule 1 insert—
In section 1A (territorial scope), in subsection (2), before paragraph (a) insert— .
In section 1E (losses deductible only when within scope of tax), in subsection (6), for “Schedule 1 (UK resident individuals not domiciled in the UK)” substitute “paragraph 5 of Schedule D1 (relief for new residents on foreign gains).”
In section 1K (annual exempt amount), in subsection (6)—
the words from “section” to the end become paragraph (a) of that subsection, and
after that paragraph insert
In section 16 (computation of losses), at the end insert—
In section 288 (interpretation), in subsection (1) at the appropriate places insert— ; ; ; .
In Schedule 1A, in paragraph 1, after “2B(4)(b)” insert “or paragraph 6 of Schedule D1”.
In Schedule 1C (annual exempt amount in cases involving settled property), in paragraph 1(4), for the words from “who” to the end substitute “to whom subsection (6) of that section does not apply.”
In Schedule 2 to FA 2022 (qualifying asset holding companies), in paragraph 46—
in the heading (as amended by section 37(3)(a)), after “income” insert “or gain”, and
in sub-paragraph (6A) (as inserted by section 37(3)(c)), after “claim)” insert “and paragraph (c) of the definition of “qualifying foreign gain” in paragraph 6 of Schedule D1 to TCGA 1992 (foreign gain claims)”.
The amendments made by this section have effect for the tax year 2025-26 and subsequent tax years.
Amendments made by paragraph 1 of Schedule 9 have the effect that the remittance basis is not available for tax year 2025-26, or for subsequent tax years.
But provisions relating to the remittance of income and gains will continue to have effect in relation to income and gains subject to the remittance basis in previous tax years.
Other provision is made by that Schedule (including provision amending the Income Tax Acts and TCGA 1992)—
in consequence of ending the availability of the remittance basis,
clarifying the circumstances in which amounts are remitted (see paragraph 5), and
in connection with otherwise ending the relevance of domicile to income tax and capital gains tax.
Subject to subsections (5) and (6), the provision made by that Schedule has effect for the tax year 2025-26 and subsequent tax years.
Paragraph 6 of Schedule 9 (relief for amounts remitted again on becoming UK resident) is to be treated as having always had effect.
The amendments made by paragraphs 9 and 10 of Schedule 9 (residence of personal representatives) have effect where the deceased person died on or after 6 April 2025.
Schedule 10 makes provision for a “temporary repatriation facility” for individuals who have been subject to the remittance basis.
Schedule 11 makes provision about the rebasing of assets for individuals who have been subject to the remittance basis.
Schedule 12 amends legislation relating to the taxation of income and gains arising within trusts and similar structures, and in particular—
contains amendments connected with the introduction of relief for qualifying new residents and the abolition of the remittance basis of taxation (see Chapters 1 and 2), and
removes certain protections for foreign-source income and gains that have been available since the tax year 2017-18 while making transitional provision in respect of income that arose in past tax years.
In that Schedule— Part 1 amends Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor or family); Part 2 amends Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad); Part 3 amends Chapter 2 of Part 3 of TCGA 1992 (settlements: chargeable gains) and other provisions of TCGA 1992 relating to trusts and similar structures; Part 4 contains provision about commencement and transitional provision.
IHTA 1984 is amended as follows.
In section 6 (excluded property), in subsections (1) and (1A), for “domiciled outside the United Kingdom” substitute “who is not a long-term UK resident”.
After section 6 insert—
This section comes into force on 6 April 2025.
IHTA 1984 is amended as follows.
In section 48 (excluded property)—
in the heading, at the end insert “: reversionary interests and Treasury securities”;
omit subsections (3) to (3F).
After section 48 insert—
This section comes into force on 6 April 2025.
Other taxes
Value added tax
VATA 1994 is amended as follows.
In Schedule 9 (exemptions)—
in Group 6 (education)—
in item 3(b)(i), after “5A” insert “(or would be so exempt but for item 1 or 2 of Part 3)”;
in item 4, after “item 1” insert “(whether or not that supply also falls within item 1 or 2 of Part 3)”;
after Part 2 (the groups) insert—
In section 43 (groups of companies), in subsection (2A)—
in paragraph (b), for “Schedule 9” substitute “Part 2 of Schedule 9 or are within any of the descriptions specified in Part 3 of that Schedule”;
in paragraph (c) for “Schedule 9” substitute “Part 2 of Schedule 9 or which do fall within any of the descriptions specified in Part 3 of that Schedule”.
Subsection (2) applies to the provision of education services during a school term if a payment in respect of the services was received by the person providing the services on or after 29 July 2024 and before 30 October 2024.
That provision is treated for the purposes of the charge to VAT as a supply taking place on the later of— Accordingly, that provision is not to be regarded (as a result of provision made by or under VATA 1994) as a supply taking place at any other time.
1 January 2025, and
the first day of that term.
But subsection (2) does not apply to the provision of education services by a school if the school is approved under section 342 of the Education Act 1996 (approval of non-maintained special schools).
In this section “the provision of education services” means a provision of education, vocational training or board and lodging falling within Part 3 of Schedule 9 (exceptions).
This section is to be read as if it were contained in VATA 1994.
Stamp duty land tax
Section 1 of the Stamp Duty Land Tax (Temporary Relief) Act 2023 (which provides for reduced rates of stamp duty land tax for transactions before 1 April 2025) is amended as follows.
In subsection (3) (which deals with purchases of additional dwellings), for the Table A mentioned there substitute— .
The amendment made by this section has effect in relation to land transactions the effective date of which falls on or after 31 October 2024 but before 1 April 2025.
But the amendment made by this section does not have effect in relation to a land transaction which—
is effected in pursuance of a contract entered into before 31 October 2024, and
is not excluded.
For this purpose a land transaction is excluded if—
there is any variation of the contract, or assignment of rights under the contract, on or after 31 October 2024,
the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, or
on or after that date, there is an assignment, subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.
This section also needs to be read with section 52 (which deals with cases where a contract has been substantially performed before the change in rates made by this section etc).
In Schedule 4ZA to FA 2003 (higher rates of stamp duty land tax for additional dwellings etc), for the Table A in section 55(1B) mentioned in paragraph 1(2) substitute— .
The amendment made by this section has effect in relation to land transactions the effective date of which falls on or after 1 April 2025.
But the amendment made by this section does not have effect in relation to a land transaction which—
is effected in pursuance of a contract entered into before 31 October 2024, and
is not excluded.
For this purpose a land transaction is excluded if—
there is any variation of the contract, or assignment of rights under the contract, on or after 31 October 2024,
the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, or
on or after that date, there is an assignment, subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.
This section also needs to be read with section 52 (which deals with cases where a contract has been substantially performed before the change in rates made by this section etc).
The Stamp Duty Land Tax (Temporary Relief) Act 2020 is amended as follows.
In section 1 (reduced rates of SDLT in relation to land transactions the effective date of which falls in the period beginning with 8 July 2020 and ending with 30 June 2021)—
in subsection (6) (which provides an exception from section 44(8) of FA 2003 where the contract is completed after 30 June 2021), for the words from “that the modifications” to the end substitute “the reason given by subsection (6A)”, and
after subsection (6) insert—
In section 1A (reduced rates of SDLT in relation to land transactions the effective date of which falls in the period beginning with 1 July 2021 and ending with 30 September 2021)—
in subsection (5) (which provides an exception from section 44(8) of FA 2003 where the contract is completed after 30 September 2021), for the words from “that the modifications” to the end substitute “the reason given by subsection (5A)”, and
after subsection (5) insert—
In section 1 of the Stamp Duty Land Tax (Temporary Relief) Act 2023 (reduced rates of SDLT in relation to land transactions the effective date of which falls in the period beginning with 23 September 2022 and ending with 31 March 2025)—
in subsection (6) (which provides an exception from section 44(8) of FA 2003 where the contract is completed after 31 March 2025), for the words from “that the modifications” to the end substitute “the reason given by subsection (6A)”, and
after subsection (6) insert—
as a result of section 44(4) of FA 2003 the effective date of a land transaction is before 31 October 2024, and
the contract concerned is completed by a conveyance on or after that date,
Section 44(10) of FA 2003 applies for the purposes of subsection (5).
In— for “15%” substitute “17%”.
paragraph 3(1)(a) of Schedule 4A to FA 2003 (higher rate of SDLT for purchases by companies etc), and
step 4 in section 74(1A) of FA 2003 (exercise of collective rights by tenants of flats where condition in paragraph 3(3) of that Schedule is met),
The amendments made by this section have effect in relation to land transactions the effective date of which falls on or after 31 October 2024.
But the amendments made by this section do not have effect in relation to a land transaction which—
is effected in pursuance of a contract entered into before that date, and
is not excluded.
For this purpose a land transaction is excluded if—
there is any variation of the contract, or assignment of rights under the contract, on or after 31 October 2024,
the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, or
on or after that date, there is an assignment, subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.
In a case where— section 44(8) of that Act is not to apply in relation to that conveyance if the sole reason that (but for this subsection) it would have applied is that the increased rates provided for by this section would have had effect in relation to that conveyance.
as a result of section 44(4) of FA 2003 the effective date of a land transaction is before 31 October 2024, and
the contract concerned is completed by a conveyance on or after that date,
Section 44(10) of FA 2003 applies for the purposes of subsection (5).
Annual tax on enveloped dwellings
In section 157 of FA 2013 (land in England or Northern Ireland sold to financial institution and leased to person under alternative finance arrangements)—
in subsection (2), for “If the lessee is a company, this Part” substitute “This Part”;
in subsection (4), after “company” (in each place it appears) insert “or individual”;
in subsection (9), after “subsections” insert “(2), (3),”.
In section 157A of FA 2013 (land in Scotland sold to financial institution and leased to person under alternative finance arrangements)—
in subsection (4), for “If the lessee is a company, this Part” substitute “This Part”;
in subsection (6), after “company” (in each place it appears) insert “or individual”;
in subsection (11), after “subsections” insert “(4), (5),”.
The amendments made by this section are treated as having come into force on 30 October 2024.
In section 157 of FA 2013, in the heading and subsection (1)(b), omit “, Wales”.
After section 157A of FA 2013 insert—
The amendments made by this section are treated as having come into force on 30 October 2024.
Stamp duty and stamp duty reserve tax
The Treasury may by regulations make provision about stamp duty or stamp duty reserve tax in connection with regulations made under section 13 of the Financial Services and Markets Act 2023 (testing of FMI technologies or practices).
Regulations under subsection (1) may— but may not amend or repeal an Act.
disapply, or modify the application of, an Act;
apply an Act with or without modifications,
Regulations under subsection (1) must be made by statutory instrument.
A statutory instrument containing provision (whether alone or with other provision) that has the effect of increasing the amount of duty or tax that is chargeable in respect of any instrument, transfer or agreement to transfer above the amount that would have been chargeable in the absence of regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by resolution of, the House of Commons.
A statutory instrument that does not contain such provision is subject to annulment in pursuance of a resolution of the House of Commons.
Inheritance tax
In section 86 of FA 2021 (no indexation of rate bands, residential enhancement and taper threshold for tax years up to 2027-28)—
for “or 2026” substitute “, 2026, 2027 or 2028”, and
in the heading, for “2027-28” substitute “2029-30”.
IHTA 1984 is amended as follows.
In section 13 (dispositions by close companies for benefit of employees), in subsection (2)—
in paragraph (a), after “who is” insert “, at the time of the disposition,”;
in paragraph (b), after “who is” insert “, at the time of the disposition,”;
in paragraph (c), for “has been” substitute “is”;
in paragraph (d), after “who is” insert “, at the time of the disposition or any later time,”.
In section 28 (employee trusts), in subsection (4)—
for paragraph (a) substitute— ;
in paragraph (b), after “who is” insert “, at the time of the transfer of value mentioned in subsection (1),”;
in paragraph (c), for “has been” substitute “is”;
for paragraph (d) substitute— .
IHTA 1984 is amended as follows.
In section 13 (dispositions by close companies for benefit of employees), after subsection (4) insert— .
In section 28 (employee trusts), after subsection (6) insert— .
This section is treated as having come into force on 30 October 2024.
IHTA 1984 is amended as follows.
In section 28 (employee trusts)—
in subsection (1), after paragraph (b) insert ;
after subsection (7) insert— .
in subsection (2), after paragraph (c) insert ;
after subsection (3) insert— .
This section is treated as having come into force on 30 October 2024.
In Chapter 2 of Part 5 of IHTA 1984 (agricultural property relief), omit section 124C (application of agricultural property relief to land in habitat schemes) and insert—
The amendments made by this section have effect—
in relation to transfers of value made on or after 6 April 2025, and
in relation to occasions on or after that date on which tax falls to be charged under Chapter 3 of Part 3 of IHTA 1984.
In the National Savings Regulations 2015 (S.I. 2015/623), omit regulation 55 (inheritance tax chargeable on death of depositors).
In the National Savings (No. 2) Regulations 2015 (S.I. 2015/624), omit regulation 90 (inheritance tax chargeable on death of holders of stock or certificates).
Alcohol duty
Part 2 of F(No.2)A 2023 (alcohol duty) is amended as follows.
For Schedule 7 (main rates) substitute— .
For Schedule 8 (reduced rates for qualifying draught products) substitute— .
For Schedule 9 (duty discount for small producer alcoholic products)— .
In consequence of the amendments made by the preceding subsections of this section, in Schedule 2 to the Travellers’ Allowances Order 1994 (which provides in certain circumstances for a simplified calculation of excise duty on goods brought into Great Britain)—
in the entry relating to beer, in the second column, for “£0.88” substitute “£0.91”,
in the entry relating to still wine, in the second column, for “£3.28” substitute “£3.40”,
in the entry relating to sparkling wine, in the second column, for “£3.28” substitute “£3.40”,
in the entry relating to cider, in the second column, for “£0.44” substitute “£0.46”,
in the entry relating to sparkling cider of an alcoholic strength not exceeding 5.5% by volume, in the second column, for “£0.44” substitute “£0.46”,
in the entry relating to sparkling cider of an alcoholic strength exceeding 5.5% but less than 8.5% by volume, in the second column, for “£1.73” substitute “£1.80”,
in the entry relating to other fermented products, in the second column, for “£3.28” substitute “£3.40”, and
in the entry relating to spirits, in the second column, for “£11.88” substitute “£12.30”.
The amendments made by this section are treated as having come into force on 1 February 2025.
Section 112 of, and Schedule 12 to, F(No.2)A 2023 (which make provision about duty stamps for retail containers of alcoholic products) are repealed.
In consequence of the repeals made by subsection (1)—
in section 12(2) of FA 1994, omit paragraph (ca),
in section 13A(2) of that Act—
in paragraph (ea), omit sub-paragraph (ii) and the “or” before it, and
omit paragraphs (f) and (g),
in paragraph 1 of Schedule 41 to FA 2008, in the Table, omit the entry relating to alcohol duty and duty stamps,
in section 119 of F(No.2)A 2023—
omit subsection (4), and
in subsections (5) and (8)(a), omit “or subsection (4)”,
in Schedule 11 to that Act, omit paragraph 1(4),
in Schedule 13 to that Act, omit paragraph 9,
in the form of United Kingdom Internal Accompanying Document, set out in Schedule 4 to the Excise Warehousing (Etc.) Regulations 1988 (S.I. 1988/809), in the explanatory note to Box 18a, omit the sentence beginning “If alcohol or alcoholic beverages are stamped”,
the Duty Stamps Regulations 2006 (S.I. 2006/202) are revoked.
In consequence of the revocation of the Duty Stamps Regulations 2006 the following are revoked—
paragraphs 3 and 4 of Schedule 2 to the Finance Act 2008, Schedule 40 (Appointed Day, Transitional Provisions and Consequential Amendments) Order 2009 (S.I. 2009/571),
paragraphs 20 and 21 of Schedule 2 to the Excise Goods (Holding, Movement and Duty Point) Regulations 2010 (S.I. 2010/593),
paragraph 49 of Schedule 3 to the Tribunals, Courts and Enforcement Act 2007 (Consequential Amendments) Order 2012 (S.I. 2012/2404),
regulation 4 of the Spirits (Amendment) Regulations 2013 (S.I. 2013/1229),
regulations 8 to 18 and 23 of the Excise Duties (Miscellaneous Amendments) (EU Exit) (No. 2) Regulations 2019 (S.I. 2019/15),
regulations 95 and 97 of the Excise Duties (Northern Ireland Miscellaneous Modifications and Amendments) (EU Exit) Regulations 2020 (S.I. 2020/1559),
regulations 13, 17 and 26 of the Travellers’ Allowances and Miscellaneous Provisions (EU Exit) Regulations 2020 (S.I. 2020/1412),
regulation 7 of the Excise Duties (Removal of Alcoholic Liquor to Northern Ireland and Miscellaneous Amendments) Regulations 2021 (S.I. 2021/1282),
Part 2 of Schedule 2 to the Excise Duties and Value Added Tax (Northern Ireland) (Miscellaneous Modifications and Amendments) Regulations 2023 (S.I. 2023/64), and
paragraph 10 of the Schedule to the Finance (No. 2) Act 2023, Part 2 (Alcohol Duty) (Appointed Day, Savings, Consequential Amendments and Transitional Provisions) Regulations 2023 (S.I. 2023/884).
The amendments made by this section come into force on 1 May 2025.
Where before that date a person incurs an obligation under the Duty Stamps Regulations 2006 (S.I. 2006/202) to take any steps, no requirement to take those steps continues on or after that date (despite section 16 of the Interpretation Act 1978).
But subsection (5) does not apply to any obligation to preserve records made for the purposes of those regulations.
Tobacco products duty
In Schedule 1 to TPDA 1979 (table of rates of tobacco products duty), for the Table substitute— .
In consequence of the provision made by subsection (1), in Schedule 2 to the Travellers’ Allowances Order 1994 (which provides in certain circumstances for a simplified calculation of excise duty on goods brought into Great Britain)—
in the entry relating to cigarettes, for “£422.80” substitute “£446.67”,
in the entry relating to hand rolling tobacco, for “£412.32” substitute “£476.83”,
in the entry relating to other smoking tobacco and chewing tobacco, for “£173.68” substitute “£183.49”,
in the entry relating to cigars, for “£395.03” substitute “£417.33”,
in the entry relating to cigarillos, for “£395.03” substitute “£417.33”, and
in the entry relating to tobacco for heating, for “£97.66” substitute “£103.17”.
The amendments made by this section are treated as having come into force at 6pm on 30 October 2024.
Taxes relating to vehicles
Schedule 1 to VERA 1994 (annual rates of vehicle excise duty) is amended as follows.
In paragraph 1 (general rate)—
in sub-paragraph (2) (vehicle not covered elsewhere in Schedule with engine cylinder capacity exceeding 1,549cc), for “£345” substitute “£360”, and
in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc etc), for “£210” substitute “£220”.
In paragraph 1B (graduated rates for light passenger vehicles registered before 1 April 2017), omit paragraph (b) together with the “and” before that paragraph.
In paragraph 1B, for the Table substitute— .
In the sentence immediately following the Table in that paragraph, for the words from “as if” to the end substitute “as if, in column (3), in the last two rows, “430” were substituted for “735” and “760”.”
Omit paragraphs 1C to 1F together with the italic heading before paragraph 1C (which provide for a reduced rate).
In paragraph 1GA (vehicles to which Part 1AA applies), in sub-paragraph (3), omit paragraph (c).
In paragraph 1GC (graduated rates for first licence for light passenger vehicles registered on or after 1 April 2017), in sub-paragraph (2), omit paragraph (b) together with the “and” before that paragraph.
In paragraph 1GC, for Table 1 (vehicles other than higher rate diesel vehicles) substitute— .
In that paragraph, for Table 2 (higher rate diesel vehicles) substitute— .
In paragraph 1GD(1)(rates for any other licence for light passenger vehicles registered on or after 1 April 2017), for the words from “applicable to the vehicle is—” to the end substitute “applicable to the vehicle is £195.”
In paragraph 1GE(2) (rates for light passenger vehicles registered on or after 1 April 2017 with a price exceeding £40,000), for the words from “applicable to the vehicle is—” to the end substitute “applicable to the vehicle is £620.”
In paragraph 1J(a) (rates for light goods vehicles that are not pre-2007, post-2008 lower emission vans or pre-2011 electric vans), for “£335” substitute “£345”.
In paragraph 1N (which defines “pre-electric van” for the purposes of paragraph 1J), for “2003 and” insert “2003 but before 1 January 2007 or on or after 1 January 2009 but”.
In paragraph 2(1) (rates for motorcycles)—
in paragraph (a) (engine cylinder capacity not exceeding 150cc etc), for “£25” substitute “£26”,
in paragraph (b) (motorbicycles with engine cylinder capacity exceeding 150cc but not exceeding 400cc), for “£55” substitute “£57”,
in paragraph (c) (motorbicycles with engine cylinder capacity exceeding 400cc but not exceeding 600cc), for “£84” substitute “£87”, and
in paragraph (d) (other cases), for “£117” substitute “£121”.
In consequence of the amendments made by the preceding provisions of this section, in section 10 of FA 2023, omit subsection (5)(b) and (c).
The amendments made by this section have effect in relation to licences taken out on or after 1 April 2025.
Schedule 1 to VERA 1994 (annual rates of vehicle excise duty) is amended as follows.
In paragraph 9 (rigid goods vehicles exceeding 3,500 kgs revenue weight), for the table in sub-paragraph (1) substitute—
In paragraph 11(1) (tractive units), for Table 1 and Table 2 substitute—
The amendments made by this section have effect in relation to licences taken out on or after 1 April 2025.
In paragraph 10 of Schedule 1 to VERA 1994 (supplement to annual rate of duty for rigid goods vehicles with trailers), in sub-paragraph (6), for the Tables 1 to 6 substitute—
In that paragraph, in sub-paragraph (7), for “£609” substitute “£631”.
The amendments made by this section have effect in relation to licences taken out on or after 1 April 2025.
In— for “£1,585” substitute “£1,643”.
paragraph 6(2A)(a) of Schedule 1 to VERA 1994 (vehicles with exceptional loads),
paragraph 9(3) of that Schedule (rigid goods vehicle which has weight exceeding 44,000 kg and is not an island goods vehicle), and
paragraph 11(3) of that Schedule (tractive unit vehicle which has weight exceeding 44,000 kg and is not an island goods vehicle),
The amendments made by this section have effect in relation to licences taken out on or after 1 April 2025.
In paragraph 7(3A) of Schedule 1 to VERA 1994 (which specifies the rate of vehicle excise duty applicable to haulage vehicles other than showman’s vehicles), for “£350” substitute “£365”.
The amendment made by this section has effect in relation to licences taken out on or after 1 April 2025.
VERA 1994 is amended as follows.
In section 62 (other definitions), after subsection (1A) insert—
In Schedule 1 (annual rates of duty)—
in paragraph 1—
in sub-paragraph (2), after “propelled” insert “, or zero-emission,”;
in sub-paragraph (2A), after “propelled” insert “, or zero-emission,”;
in paragraph 1A (vehicles to which Part 1A applies), after sub-paragraph (1) insert—
in paragraph 1GA (vehicles to which Part 1AA applies), after sub-paragraph (1A) insert—
in paragraph 1N, in sub-paragraph (b), at the end insert “or a zero-emission vehicle”;
in paragraph 2 (motorcycles)—
in sub-paragraph (1)(a), after “propelled” insert “or a zero-emission vehicle”;
in sub-paragraph (3), in the definition of “motorcycle”, after “propelled” insert “, or zero-emission,”.
In Schedule 2 (exempt vehicles)—
in the italic heading before paragraph 20G, at the end insert “etc”;
in paragraph 20G (electrically propelled vehicles), after sub-paragraph (1) insert—
The amendments made by this section have effect in relation to licences taken out on or after 1 April 2025.
Schedule 1 to the HGV Road User Levy Act 2013 (rates of the levy) is amended as follows.
In paragraph 5, for Table 1 substitute—.
In paragraph 5, for Table 1A substitute—.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The amendments made by this section come into force on 1 April 2025.
Section 30 of FA 1994 (air passenger duty: rates) is amended as follows.
In subsection (2) (short-haul journeys), in paragraph (b), for “£26” substitute “£28”.
In subsection (2A) (long-haul journeys)—
in paragraph (a), for “£88” substitute “£90”, and
in paragraph (b), for “£194” substitute “£216”.
In subsection (4A) (ultra-long haul journeys)—
in paragraph (a), for “£92” substitute “£94”, and
in paragraph (b), for “£202” substitute “£224”.
In subsection (4E) (journeys on aircraft equipped to carry fewer than 19 passengers)—
in paragraph (za), for “£78” substitute “£84”,
in paragraph (a), for “£78” substitute “£84”,
in paragraph (aa), for “£581” substitute “£647”, and
in paragraph (d), for “£607” substitute “£673”.
The amendments made by this section have effect in relation to the carriage of passengers beginning on or after 1 April 2025 but before 1 April 2026.
In subsection (1B) (journeys ending in the United Kingdom)—
in paragraph (a), for “£7” substitute “£8”, and
in paragraph (b), for “£14” substitute “£16”.
In subsection (2) (short-haul journeys)—
in paragraph (a), for “£13” substitute “£15”, and
in paragraph (b), for “£28” substitute “£32”.
In subsection (2A) (long-haul journeys)—
in paragraph (a), for “£90” substitute “£102”, and
in paragraph (b), for “£216” substitute “£244”.
In subsection (4A) (ultra-long haul journeys)—
in paragraph (a), for “£94” substitute “£106”, and
in paragraph (b), for “£224” substitute “£253”.
In subsection (4E) (journeys on aircraft equipped to carry fewer than 19 passengers)—
in paragraph (za), for “£84” substitute “£142”,
in paragraph (a), for “£84” substitute “£142”,
in paragraph (aa), for “£647” substitute “£1,097”, and
in paragraph (d), for “£673” substitute “£1,141”.
The amendments made by this section have effect in relation to the carriage of passengers beginning on or after 1 April 2026.
Environmental taxes
In paragraph 42(1) of Schedule 6 to FA 2000 (climate change levy: amount payable by way of levy), for the table substitute— .
The amendment made by this section has effect in relation to supplies treated as taking place on or after 1 April 2026.
Section 42 of FA 1996 (amount of landfill tax) is amended as follows.
In subsection (1)(a) (standard rate), for “£103.70” substitute “£126.15”.
In subsection (2) (reduced rate for certain disposals), in the words after paragraph (b)—
for “£103.70” substitute “£126.15”, and
for “£3.30” substitute “£4.05”.
The amendments made by this section have effect in relation to disposals made (or treated as made) on or after 1 April 2025.
In section 16(4) of FA 2001 (rate of aggregates levy), for “£2.03” substitute “£2.08”.
The amendment made by this section has effect in relation to aggregate subjected to commercial exploitation on or after 1 April 2025.
In section 45(1) of FA 2021 (rate of plastic packaging tax), for “£217.85” substitute “£223.69”.
The amendment made by this section has effect in relation to packaging components produced in, or imported into, the United Kingdom on or after 1 April 2025.
Soft drinks industry levy
In section 36(1) of FA 2017 (rates of soft drinks industry levy)—
in paragraph (a) (soft drinks that meet higher sugar threshold), for “at the rate of £0.24 per litre” substitute “at the rate of £2.59 per 10 litres”, and
in paragraph (b) (other soft drinks), for “at the rate of £0.18 per litre” substitute “at the rate of £1.94 per 10 litres”.
The amendments made by this section have effect in relation to chargeable events occurring on or after 1 April 2025.
Miscellaneous and final
Avoidance
After section 59A of TCGA 1992 (limited liability partnerships) insert—
The amendment made by this section has effect from 30 October 2024, but does not apply where section 59A(1) of TCGA 1992 ceased to apply in relation to the limited liability partnership before that date.
In CTA 2010, omit section 464B (relief in case of return payment to company).
The repeal made by subsection (1) has effect in relation to payments made on or after 30 October 2024.
In consequence of the repeal made by subsection (1), Part 10 of CTA 2010 is amended as follows—
after section 464 insert— ,
omit Chapter 3B (which contained only provisions that are replaced by those inserted by paragraph (a)),
in section 438, (overview of Part 10) omit subsection (2B), and
in section 459(2) (loan treated as made to participator), for “464C and 464D” substitute “464ZA and 464ZB”.
The amendments made by subsection (3) are treated as having come into force on 30 October 2024.
Crytpo-asset reporting framework
In section 349(2) of F(No.2)A 2023 (international arrangements for exchanging information)—
after paragraph (f) insert— , and
in paragraph (g), for “(f)” substitute “(fa)”.
Preparing for new taxes and information sharing
The Commissioners for His Majesty’s Revenue and Customs may prepare for the introduction of a new duty to be charged in respect of vaping products.
The Commissioners for His Majesty’s Revenue and Customs may prepare for the introduction of a new tax to be charged in respect of emissions embodied in imported goods.
The Treasury or the Commissioners for His Majesty’s Revenue and Customs may request in writing information from the UK ETS authority or a national authority for any purpose connected with the tax.
If a request is made to an authority under subsection (2), the authority must provide the requested information if the authority holds it.
Subsection (3) does not require the disclosure of personal data (within the meaning of section 3(2) of the Data Protection Act 2018).
In this section— “national authority” has the meaning given by section 95 of the Climate Change Act 2008; “UK ETS authority” has the meaning given by Article 14 of the Greenhouse Gas Emissions Trading Scheme Order 2020 (S.I. 2020/1265).
Wrong cross-reference etc
In section 151I(1) of TCGA 1992, for paragraph (d) substitute— .
In section 1179AE(2) of CTA 2009, for “either House of Parliament” substitute “the House of Commons”.
Final
In this Act the following abbreviations are references to the following Acts—
This Act may be cited as the Finance Act 2025.
Consequential provision in connection with section 7
TCGA 1992 is amended as follows.
In section 1I (income taxed at higher rates or gains exceeding unused basic rate band)—
in subsection (1)—
omit paragraph (za), and
in paragraph (b), for “20%” substitute “24%”,
in subsection (2), in the closing words—
omit “at the rate of 24% (so far as comprising residential property gains),”, and
for “20%” substitute “24%”,
in subsection (5)—
omit paragraph (za), and
in paragraph (b), for “20%” substitute “24%”, and
for subsections (7) to (9) substitute—
In section 222A (determination of main residence: non-resident CGT disposals), in subsection (1)(b)(i), for “a residential property gain (as defined by Schedule 1B)” substitute “a gain”.
In section 223 (amount of relief), in subsection (7)(b), for “a residential property gain (as defined by Schedule 1B)” substitute “a gain”.
Omit Schedule 1B (residential property gains).
Schedule 4AA (re-basing for non-residents in respect of UK land etc held on 5 April 2019) is amended as follows.
Omit paragraphs 5, 10, 11 and 15.
In paragraph 22(3), for “Schedule 1B” substitute “paragraphs 16E to 16H of Schedule 2 to the Finance Act 2019”.
In paragraph 8(3) of Schedule A1 to IHTA 1984 (non-excluded overseas property), for “Schedule 1B to the 1992 Act” substitute “paragraphs 16B to 16H of Schedule 2 to the Finance Act 2019”.
In Schedule 1 to FA 2019, omit paragraph 15.
Schedule 2 to that Act (returns and payments on account: disposals of UK land etc) is amended as follows.
After paragraph 16 insert— .
For the italic heading before paragraph 17 substitute “Other interpretation”.
In paragraph 17(1), omit the definition of “residential property gains” (but not the “and” at the end of that definition).
In section 6 of F(No.2)A 2024, omit—
subsection (1)(a), (c) and (e), and
subsection (2)(a)(i), (b)(i), (c)(i) and (d)(i).
Gains or losses treated as accruing to an individual under section 1M of TCGA 1992 (temporary non-residents) in the tax year 2024-25 are to be treated as accruing before 30 October 2024.
Foreign chargeable gains under section 809J of ITA 2007 (section 809I: order of remittances) in the tax year 2024-25 are to be treated for the purposes of paragraph 1(2) of Schedule 1 to TCGA 1992 (UK resident individuals not domiciled in UK) as remitted before 30 October 2024.
Chargeable gains treated as accruing to a settlor under section 86(4)(a) of TCGA 1992 (attribution of gains to settlors with interest in non-resident or dual resident settlements) in the tax year 2024-25 are to be treated as accruing before 30 October 2024.
This paragraph makes provision in relation to—
chargeable gains treated as accruing to a beneficiary of a settlement under section 87(2) of TCGA 1992 (non-UK resident settlements: attribution of gains to beneficiaries) in the tax year 2024-25,
chargeable gains treated as accruing to a beneficiary of a settlement under section 89(2) of that Act (migrant settlements etc) in that tax year, and
chargeable gains treated as accruing to a beneficiary of a relevant settlement under paragraph 8(1) of Schedule 4C to that Act (attribution of Schedule 4C gains to beneficiaries) in that tax year.
Such of the chargeable gains within sub-paragraph (1)(a), (b) or (c) as result from the matching of capital payments received before 30 October 2024 are to be treated as accruing before that date.
Such of the chargeable gains within sub-paragraph (1)(a), (b) or (c) as result from the matching of capital payments received on or after that date are to be treated as accruing on or after that date.
The reference in sub-paragraph (1)(b) to section 89(2) of TCGA 1992 is to be read as including a reference to that section as applied by section 90(6)(a) of that Act (transfers between settlements).
If an asset is transferred on or after 30 October 2024 under an unconditional contract made before that date, the disposal is, despite section 28(1) of TCGA 1992, to be treated as taking place at the time the asset is transferred (rather than at the time the contract is made) unless the contract is an excluded contract.
A contract is an excluded contract if—
obtaining an advantage by reason of the application of section 28(1) of TCGA 1992 was no purpose of entering into the contract, and
where the parties to the contract are connected persons, the contract was entered into wholly for commercial reasons.
A contract is not to be regarded as an excluded contract unless the person making the transfer makes a claim which includes a statement that the contract meets the conditions to be an excluded contract.
But no claim is required if the total amount of— does not exceed £100,000.
the chargeable gain accruing on the disposal, and
the chargeable gains accruing on all other disposals made under excluded contracts (including contracts which are excluded contracts for the purposes of paragraphs 11 to 13),
For this purpose the amount of any gain accruing on a qualifying business disposal is to be taken to be the amount of the gain under section 169N(2) of TCGA 1992.
If the person making the transfer makes— section 169M(2) and (3) of that Act, or (as the case may be) section 169VM(1) and (2) of that Act, apply to a claim under sub-paragraph (3) in relation to the disposal as they apply to a claim under the section concerned.
a claim under section 169M of TCGA 1992 in relation to a qualifying business disposal (business asset disposal relief), or
a claim under section 169VM of that Act (investors’ relief) in relation to a disposal,
In this paragraph “qualifying business disposal” has the meaning given by Chapter 3 of Part 5 of TCGA 1992.
In this paragraph any reference to the transfer of an asset includes its conveyance.
This paragraph applies for the purposes of an election under section 169VT of TCGA 1992 in relation to a reorganisation of a company where—
the reorganisation takes place on or after 6 April 2023 but before 30 October 2024, and
the election is made on or after 30 October 2024.
If, as at 30 October 2024, a relevant individual holds qualifying shares or potentially qualifying shares, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
For this purpose “a relevant individual” means—
where a claim under section 169VM of TCGA 1992 is made jointly by the trustees of a settlement and an eligible beneficiary, an eligible beneficiary, and
where a claim under that section is made by an individual, the individual.
References in this paragraph to a reorganisation are to a reorganisation within the meaning of section 126 of TCGA 1992 or an exchange of shares or securities which is treated as such a reorganisation by virtue of section 135 or 136 of that Act, applying for the purposes of this paragraph the provision made by sections 169VN to 169VS of that Act.
In this paragraph “qualifying shares” and “potentially qualifying shares” have the meaning given by section 169VB of that Act.
This Part of this Schedule is to be read as if it were contained in TCGA 1992.
This Part of this Schedule applies—
If an asset is transferred on or after 6 April 2025 under an unconditional contract made before 30 October 2024, the disposal is, despite section 28(1) of TCGA 1992, to be treated as taking place at the time the asset is transferred (rather than at the time the contract is made) unless the contract is an excluded contract.
If an asset is transferred on or after 6 April 2025 under an unconditional contract made on or after 30 October 2024 but before 6 April 2025, the disposal is, despite section 28(1) of TCGA 1992, to be treated as taking place at the time the asset is transferred (rather than at the time the contract is made) unless the contract is an excluded contract.
If an asset is transferred on or after 6 April 2026 under an unconditional contract made at any time in the tax year 2025-26, the disposal is, despite section 28(1) of TCGA 1992, to be treated as taking place at the time the asset is transferred (rather than at the time the contract is made) unless the contract is an excluded contract.
A contract is an excluded contract for the purposes of paragraphs 11 to 13 if—
obtaining an advantage by reason of the application of section 28(1) of TCGA 1992 was no purpose of entering into the contract, and
where the parties to the contract are connected persons, the contract was entered into wholly for commercial reasons.
A contract is not to be regarded as an excluded contract for the purposes of paragraphs 11 to 13 unless the person making the transfer makes a claim which includes a statement that the contract meets the conditions to be an excluded contract.
But no claim is required if the total amount of— does not exceed £100,000.
the chargeable gain accruing on the disposal, and
the chargeable gains accruing on all other disposals made under excluded contracts (including contracts which are excluded contracts for the purposes of paragraph 7),
For this purpose the amount of any gain accruing on a qualifying business disposal is to be taken to be the amount of the gain under section 169N(2) of TCGA 1992.
If the person making the transfer referred to in paragraphs 11 to 13 makes— section 169M(2) and (3) of that Act, or (as the case may be) section 169VM(1) and (2) of that Act, apply to a claim under sub-paragraph (2) in relation to the disposal as they apply to a claim under the section concerned.
a claim under section 169M of TCGA 1992 in relation to a qualifying business disposal (business asset disposal relief), or
a claim under section 169VM of that Act (investors’ relief) in relation to a disposal,
Any reference in paragraphs 11 to 13 (or this paragraph) to the transfer of an asset includes its conveyance.
In this paragraph “qualifying business disposal” has the meaning given by Chapter 3 of Part 5 of TCGA 1992.
This paragraph applies for the purposes of an election under 169Q of TCGA 1992 in relation to a reorganisation of a company where—
the reorganisation takes place on or after 6 April 2023 but before 30 October 2024, and
the election is made on or after 30 October 2024.
If, as at 30 October 2024— the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
the company is the relevant individual’s personal company and is either a trading company or the holding company of a trading group, and
the relevant individual is an officer or employee of the company or (if the company is a member of a trading group) of one or more companies which are members of the trading group,
For this purpose “the relevant individual” means—
where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary, and
where a claim under that section is made by an individual, the individual.
In this paragraph— “holding company” has the same meaning as in section 165 of TCGA 1992 (see section 165A), “the original shares” has the meaning given by section 126 of TCGA 1992, “reorganisation” has the meaning given by that section, and “trading company” and “trading group” have the meaning given by paragraph 1 of Schedule 7ZA to TCGA 1992.
References in this paragraph to a reorganisation do not include an exchange of shares or securities which is treated as a reorganisation by virtue of section 135 or 136 of TCGA 1992 (but see instead paragraph 17).
This paragraph applies for the purposes of an election under 169Q of TCGA 1992 in relation to a reorganisation of a company where—
the reorganisation takes place on or after 30 October 2024 but before 6 April 2026, and
the election is made on or after 30 October 2024.
If, when the election is made— the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
the company is the relevant individual’s personal company and is either a trading company or the holding company of a trading group, and
the relevant individual is an officer or employee of the company or (if the company is a member of a trading group) of one or more companies which are members of the trading group,
If, at any time (“the relevant time”) before the making of the election, anything mentioned in sub-paragraph (2)(a) or (b) ceases to be as mentioned there, the disposal of the original shares is to be treated as taking place immediately before the relevant time and not at the time of the reorganisation.
For the purposes of this paragraph “the relevant individual” means—
where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary, and
where a claim under that section is made by an individual, the individual.
In this paragraph— “holding company” has the same meaning as in section 165 of TCGA 1992 (see section 165A), “the original shares” has the meaning given by section 126 of TCGA 1992, “reorganisation” has the meaning given by that section, and “trading company” and “trading group” have the meaning given by paragraph 1 of Schedule 7ZA to TCGA 1992.
References in this paragraph to a reorganisation do not include an exchange of shares or securities which is treated as a reorganisation by virtue of section 135 or 136 of TCGA 1992 (but see instead paragraph 18).
This paragraph does not apply if both the reorganisation and the election occur in the same tax year.
This paragraph applies for the purposes of an election under section 169Q of TCGA 1992 in relation to an exchange of shares or securities within section 135(1) of TCGA 1992 where—
the exchange takes place on or after 6 April 2023 but before 30 October 2024, and
the election is made on or after 30 October 2024.
If condition A or B is met, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the exchange.
Condition A is that— and, for the purposes of paragraph (a), connected persons are to be treated as the same person.
the persons who hold shares or securities in company B immediately after the exchange are substantially the same as those who held shares or securities in company A immediately before the exchange, or
the persons who have control of company B immediately after the exchange are substantially the same as those who had control of company A immediately before the exchange,
Condition B is that—
the shareholders who, immediately before and after the exchange, hold shares or securities in company A and company B respectively hold a greater percentage of the ordinary share capital in company B immediately after the exchange than they held in company A immediately before the exchange, and
as at 30 October 2024—
company B is the relevant individual’s personal company and is either a trading company or the holding company of a trading group, and
the relevant individual is an officer or employee of company B or (if company B is a member of a trading group) of one or more companies which are members of the trading group.
For this purpose “the relevant individual” means—
where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary, and
where a claim under that section is made by an individual, the individual.
If, before the exchange, the Commissioners for His Majesty's Revenue and Customs have issued a notification in respect of it under section 138(1) of TCGA 1992 (advance clearance procedure)—
sections 127 to 131 of that Act apply with the necessary adaptations as if—
company A and company B were the same company, and
the exchange were a reorganisation, and
section 169Q of that Act applies as if the exchange were treated as a reorganisation by virtue of section 135 of that Act.
In this paragraph— “company A” and “company B” have the same meanings as in section 135 of TCGA 1992, “holding company” has the same meaning as in section 165 of TCGA 1992 (see section 165A), “the original shares” has the meaning given by section 126 of TCGA 1992, and “trading company” and “trading group” have the meaning given by paragraph 1 of Schedule 7ZA to TCGA 1992.
This paragraph applies for the purposes of an election under section 169Q of TCGA 1992 in relation to an exchange of shares or securities within section 135(1) of TCGA 1992 where—
the exchange takes place on or after 30 October 2024 but before 6 April 2026, and
the election is made on or after 30 October 2024.
If the following condition is met, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the exchange.
The condition is that— and, for the purposes of paragraph (a), connected persons are to be treated as the same person.
the persons who hold shares or securities in company B immediately after the exchange are substantially the same as those who held shares or securities in company A immediately before the exchange, or
the persons who have control of company B immediately after the exchange are substantially the same as those who had control of company A immediately before the exchange,
If— the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the exchange.
the shareholders who, immediately before and after the exchange, hold shares or securities in company A and company B respectively hold a greater percentage of the ordinary share capital in company B immediately after the exchange than they held in company A immediately before the exchange, and
the relief conditions are met when the election is made,
If— the disposal of the original shares is to be treated as taking place immediately before the relevant time and not at the time of the exchange.
the shareholders who, immediately before and after the exchange, hold shares or securities in company A and company B respectively hold a greater percentage of the ordinary share capital in company B immediately after the exchange than they held in company A immediately before the exchange, and
at any time (“the relevant time”) before the making of the election, the relief conditions cease to be met,
For the purposes of this paragraph “the relief conditions” are met if—
company B is the relevant individual’s personal company and is either a trading company or the holding company of a trading group, and
the relevant individual is an officer or employee of company B or (if company B is a member of a trading group) of one or more companies which are members of the trading group.
For the purposes of this paragraph “the relevant individual” means—
where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary, and
where a claim under that section is made by an individual, the individual.
If, before the exchange, the Commissioners for His Majesty's Revenue and Customs have issued a notification in respect of it under section 138(1) of TCGA 1992 (advance clearance procedure)—
sections 127 to 131 of that Act apply with the necessary adaptations as if—
company A and company B were the same company, and
the exchange were a reorganisation, and
section 169Q of that Act applies as if the exchange were treated as a reorganisation by virtue of section 135 of that Act.
In this paragraph— “company A” and “company B” have the same meanings as in section 135 of TCGA 1992, “holding company” has the same meaning as in section 165 of TCGA 1992 (see section 165A), “the original shares” has the meaning given by section 126 of TCGA 1992, and “trading company” and “trading group” have the meaning given by paragraph 1 of Schedule 7ZA to TCGA 1992.
This paragraph does not apply if both the exchange and the election occur in the same tax year.
This paragraph applies for the purposes of an election under section 169VT of TCGA 1992 in relation to a reorganisation of a company where—
the reorganisation takes place on or after 6 April 2023 but before 30 October 2024, and
the election is made on or after 30 October 2024.
If, as at 30 October 2024, a relevant individual holds qualifying shares or potentially qualifying shares, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
For this purpose “a relevant individual” means—
where a claim under section 169VM of TCGA 1992 is made jointly by the trustees of a settlement and an eligible beneficiary, an eligible beneficiary, and
where a claim under that section is made by an individual, the individual.
References in this paragraph to a reorganisation are to a reorganisation within the meaning of section 126 of TCGA 1992 or an exchange of shares or securities which is treated as such a reorganisation by virtue of section 135 or 136 of that Act, applying for the purposes of this paragraph the provision made by sections 169VN to 169VS of that Act.
In this paragraph “qualifying shares” and “potentially qualifying shares” have the meaning given by section 169VB of that Act.
This paragraph does not apply if both the reorganisation and the election occur in the same tax year.
This paragraph applies for the purposes of an election under section 169VT of TCGA 1992 in relation to a reorganisation of a company where—
the reorganisation takes place on or after 30 October 2024 but before 6 April 2026, and
the election is made on or after 30 October 2024.
If, when the election is made, a relevant individual holds qualifying shares or potentially qualifying shares, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
If, at any time (“the relevant time”) before the making of the election, a relevant individual ceases to hold qualifying shares or potentially qualifying shares, the disposal of the original shares is to be treated as taking place immediately before the relevant time and not at the time of the reorganisation.
For the purposes of this paragraph “a relevant individual” means—
where a claim under section 169VM of TCGA 1992 is made jointly by the trustees of a settlement and an eligible beneficiary, an eligible beneficiary, and
where a claim under that section is made by an individual, the individual.
References in this paragraph to a reorganisation are to a reorganisation within the meaning of section 126 of TCGA 1992 or an exchange of shares or securities which is treated as such a reorganisation by virtue of section 135 or 136 of that Act, applying for the purposes of this paragraph the provision made by sections 169VN to 169VS of that Act.
In this paragraph “qualifying shares” and “potentially qualifying shares” have the meaning given by section 169VB of that Act.
This paragraph does not apply if both the reorganisation and the election occur in the same tax year.
This Part of this Schedule is to be read as if it were contained in TCGA 1992.
Payments into decommissioning funds
A qualifying payment into a decommissioning fund is treated for tax purposes as—
expenditure incurred in decommissioning a qualifying asset falling within section 3(1)(i) of the Oil Taxation Act 1975 (allowance of expenditure),
general decommissioning expenditure falling within section 163 of CAA 2001 (allowances for decommissioning expenditure),
decommissioning expenditure falling within section 330C of CTA 2010 (decommissioning expenditure taken into account in calculating ring fence profits), and
decommissioning expenditure falling within section 9(3) of the Energy (Oil and Gas) Profits Levy Act 2022 (meaning of decommissioning costs).
A payment into a decommissioning fund is qualifying if—
the relevant transferred plant or machinery to which the payment relates is—
an eligible CCS installation which qualifies for change of use relief under section 30A of the Energy Act 2008 (change of use relief for certain installations), or
an eligible carbon storage network pipeline which qualifies for change of use relief under section 30B of that Act (change of use relief for carbon storage network pipelines), and
the payment has been certified in an approval notice given under section 30A(5)(b) or 30B(3)(b) of that Act.
For the purposes of sub-paragraph (2), a payment to a licensed company under an agreement to pay a required amount for the purposes of payment into the decommissioning fund is to be regarded as a payment into that fund.
But the onward payment into the fund by that licensed company is not a qualifying payment.
In this Schedule— “decommissioning fund” is to be interpreted in accordance with section 92(7)(a) of the Energy Act 2023 (financing costs of decommissioning etc); “licensed company” means a person who holds a licence under section 7 of the Energy Act 2023 (licences for carbon dioxide transport and storage); “relevant transferred plant or machinery” is to be construed in accordance with paragraph 2; “required amount” means an amount determined by the Secretary of State in accordance with regulations made under section 30A(5A)(b) or 30B(3A)(b) (as the case may be) of the Energy Act 2008 (amount required to be paid into a decommissioning fund); “ring fence trade” means activities which— fall within the definition of “oil-related activities” in section 16(2) of ITTOIA 2005 or section 274 of CTA 2010, and constitute a separate trade (whether as a result of section 16(1) of ITTOIA 2005 or section 279 of CTA 2010 or otherwise); “tax purposes” means for the purposes of— corporation tax (including for the purposes of the supplementary charge in respect of ring fence trades and the energy (oil and gas) profits levy); income tax; petroleum revenue tax.
Plant or machinery is “relevant transferred plant or machinery” if it meets—
the conditions in sub-paragraphs (2), (5) and (6), or
the conditions in sub-paragraphs (3), (5) and (6).
The condition in this sub-paragraph is met if the plant or machinery—
has been brought into use wholly or partly for the purposes of a ring fence trade, and
is plant or machinery which—
is, or forms part of, an offshore installation or a submarine pipeline, or
when last in use for the purposes of a ring fence trade, was, or formed part of, such an installation or pipeline.
The condition in this sub-paragraph is met if the plant or machinery—
has been brought into use wholly or partly for the purposes of a ring fence trade, and
is plant or machinery which—
is, or forms part of, a relevant onshore installation, or
when last in use for the purposes of a ring fence trade, was, or formed part of, such an installation.
In sub-paragraph (3) “relevant onshore installation” means any building or structure which—
falls within any of sub-paragraphs (ii) to (iv) of section 3(4)(c) of the Oil Taxation Act 1975,
is not an offshore installation, and
is or has been used for purposes connected with the winning of oil from an oil field any part of which lies within—
the boundaries of the territorial sea of the United Kingdom, or
an area designated under section 1(7) of the Continental Shelf Act 1964.
The condition in this sub-paragraph is met if ownership of the plant or machinery has been transferred to a licensed company under an agreement to pay a required amount.
The condition in this sub-paragraph is met if the agreement to pay a relevant required amount provides that the plant or machinery—
will be reused by the licensed company, and
will not be replaced by the transferor of the plant or machinery.
Terms used in this paragraph and in section 163 of CAA 2001 have the same meanings as in that section.
Section 164 of CAA 2001 (election for special allowance) has effect in relation to general decommissioning expenditure that is a qualifying payment into a decommissioning fund as if—
for subsection (1A) there were substituted—
in subsection (3)—
in paragraph (ab), after “decommissioning” there were inserted “fund”, and
paragraphs (ac) and (b) were omitted, and
subsections (5A) to (7) were omitted.
Section 165 of CAA 2001 (general decommissioning expenditure after ceasing ring fence trade) has effect in relation to general decommissioning expenditure that is a qualifying payment into a decommissioning fund as if—
for subsection (1A) there were substituted—
in subsection (2), for paragraph (b) there were substituted— ,
subsections (2A) to (2C) were omitted,
in subsection (4), in the definition of “relevant decommissioning cost”, “paragraph (a), (b) or (c) of” were omitted,
subsections (4A) to (4D) and (6) were omitted, and
in subsection (7), at the appropriate places there were inserted— ; .
No allowance under CAA 2001 is to be made to a person in respect of expenditure paid out of a qualifying payment made into a decommissioning fund where a claim for an allowance in relation to that payment under that Act has been made (whoever made the claim).
Section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 has effect in relation to a company that has transferred relevant transferred plant or machinery to a licensed company as if in subsection (5) (assumptions in determining levy profits or loss), after paragraph (c) there were inserted— .
This Schedule has effect in relation to qualifying payments into a decommissioning fund made on or after the day on which this Act is passed.
Pillar two
Introduction
F(No.2)A 2023 is amended in accordance with—
Part 2 of this Schedule (which contains amendments designed to implement the UTPR within the meaning of the Pillar Two rules), and
Part 3 of this Schedule (which contains other amendments in relation to multinational top-up tax and amendments in relation to domestic top-up tax).
Undertaxed profits rule
Section 121 (introduction to multinational top-up tax) is amended as follows.
In subsection (1), for the words from “IIR” to the end substitute “IIR and UTPR (within the meaning of the Pillar Two rules).”
In subsection (5), omit paragraph (e).
Section 122 (chargeable persons) is amended as follows.
In subsection (1), omit “responsible” in both places.
In subsection (2), omit “responsible” in each place.
In subsection (3)(a), omit “responsible”.
In subsection (7), omit “responsible”.
For section 123 substitute—
In section 124 (how to calculate top-up amounts etc)—
in the heading, for “and attribute them” substitute “etc”, and
after subsection (8) insert—
In section 254 (use of currency), in subsection (4), for “step 4 in” substitute “subsection (3) of”.
After Chapter 9 insert—
Schedule 16 (transitional provision) is amended as follows.
In Chapter 1 of Part 2, in the Chapter heading, for “Transitional” substitute “General transitional”.
In Chapter 2 of Part 2, in the Chapter heading, after “Application” insert “of Chapter 1”.
After Part 2 insert—
In Schedule 16A at the end insert—
In section 128 (responsible members)—
in subsection (7)(b)(i), after “equivalent to” insert “the IIR provisions of”, and
after subsection (7) insert—
In section 257 (meaning of qualifying undertaxed profits tax), in subsection (1), after “it is” insert “— .
In section 241 (Pillar Two territories), in subsection (2), for “equivalent to this Part—” substitute “which implement the provisions of the Pillar Two rules relating to top-up tax under the IIR (within the meaning of those rules)—”.
In Schedule 17 (index of defined expressions), in the table, at the appropriate place insert—
In Schedule 15 (elections), in paragraph 2(1), after paragraph (h) insert— .
In section 272 (domestic top-up tax for members of groups), in subsection (4), after paragraph (b) insert—
In section 273 (domestic top-up tax for single entities), in subsection (4), after paragraph (z) insert—
The amendments made by this Part of this Schedule have effect in relation to accounting periods commencing on or after 31 December 2024.
Others
In section 127 (excluded entities), in each of subsections (5), (6) and (7), in paragraph (a), for “it” substitute “the entity or, in the case of a permanent establishment, the main entity”.
After section 137 insert—
In section 197 (eligible tangible asset amount), in subsection (3)—
after “means” insert “values”, and
after “parent” insert “(and not values as substituted as a result of any other provision of this Part)”.
Section 168 (underlying profits of transparent and reverse hybrid entities) is amended as follows.
In the heading omit “and reverse hybrid”.
After subsection (2) insert—
In subsection (3) for the words from “each” to the end substitute “any member of the group (“R”)—
In subsection (4)—
in each place, for “O” substitute “R”;
for “proportional” substitute “percentage”;
omit “(subject to subsection (7))”.
For subsections (5) and (6) substitute—
Omit subsection (7).
For subsection (9) substitute—
In subsection (10) omit “or an individual”.
After subsection (10) insert—
Omit subsections (11) and (12).
In section 169 (certain non tax resident entities to be treated as flow-through entities), in subsection (2)—
in the words before paragraph (a), after “created” insert “in”;
in paragraph (a)—
after “is” insert “regarded as”;
for “its owners” substitute “holders of direct ownership interests in the member”.
In section 170 (adjustments for ultimate parent that is a flow-through entity), in subsection (2A) omit “and reverse hybrid”.
Section 178 (reallocation of tax expense) is amended as follows.
In subsection (1), for “hybrid, transparent and reverse hybrid” substitute “hybrid and transparent”.
After subsection (1B) insert—
In subsection (2), after “(1A))” insert “or to M (under subsection (1D))”.
In section 240 (location of flow-through entities and permanent establishments), in subsection (1)—
before “would” insert “is the ultimate parent of a multinational group, or”;
for “it is located in that territory” substitute “the entity is treated as located in the territory in which it is created”.
In section 174 (amount of covered tax balance), in subsection (1), in Step 4, for “covered tax balance expense” substitute “qualifying current tax expense”.
In sections 175 and 176, in the headings, for “covered tax balance” substitute “qualifying current tax expense”.
Section 176D (tax credits etc allocated under tax equity partnerships) is amended as follows.
In subsection (1), for “covered tax balance” substitute “qualifying current tax expense”.
For subsection (2) substitute—
In subsection (3)(b)—
for “176D” substitute “176E”;
at the end insert “and the arrangement”.
In subsection (7), for “covered tax balance” substitute “qualifying current tax expense”.
For subsection (11) substitute—
Where a person became an investor in a tax equity partnership arrangement in an accounting period that began before 31 December 2024, section 176D(11) of F(No.2)A 2023 (as inserted by sub-paragraph (6)) has effect in relation to the arrangement as if “the first relevant period” were the first accounting period beginning on or after that date.
In sub-paragraph (7), “investor in a tax equity partnership arrangement” has the same meaning as in section 176D of F(No.2)A 2023.
Section 176E (flow-through tax benefits: proportional amortisation method) is amended as follows.
In subsection (1), in Step 2—
for “flow-through through tax benefits” substitute “flow-through tax benefits”;
after “expected” insert “(as at the end of the accounting period)”.
Also in subsection (1), in Step 7, for “flow-through benefits” substitute “flow-through tax benefits”.
In subsection (2), for “covered tax balance” substitute “qualifying current tax expense”.
At the end insert—
Section 176F (flow-through tax benefits: subtraction method) is amended as follows.
In Step 2, in paragraph (a), for the words from “other than” to the end substitute .
In Step 3, for “under arrangement” substitute “under the arrangement”.
After section 176F insert—
In Schedule 15 (elections), in paragraph 2(1) (annual elections), omit paragraph (za).
Section 180 (blended CFC regimes) is amended as follows.
In subsection (8)—
in paragraph (a), for “the effective tax rate of” substitute “a single effective tax rate of all”;
after paragraph (a) insert— ;
in paragraph (b)—
for “where it is not located in such a territory,” substitute “where no applicable effective tax rate can be determined under paragraphs (a) to (ab)”, and
at the end insert—
After section 180 insert—
In section 180 (blended CFC regimes), in subsection (3), in the words before paragraph (a), for “tax charged to C under” substitute “C’s current tax expense so far as relating to”.
After section 181 insert—
After section 181A (as inserted by paragraph 27) insert—
In section 183 (qualifying foreign tax credits (substitute loss carry forward assets))—
in subsection (5)—
the words from “income”, in the second place it occurs, to the end become paragraph (a), and
after that paragraph insert
after that subsection insert—
In section 184 (recaptured deferred tax liabilities) after subsection (4) insert—
In section 185 (inclusion of existing deferred tax assets and liabilities on entry into regime), after subsection (7) insert—
In section 195 (substance based income exclusion), for subsection (8) substitute—
For section 198 (eligible payroll costs and eligible tangible asset amount: permanent establishments and flow-through entities) substitute—
In section 196 (eligible payroll costs), after subsection (6) insert—
In section 197 (eligible tangible asset amount), after subsection (9) insert—
In section 196 (eligible payroll costs)—
in subsection (1) omit paragraph (b);
in subsection (b) of subsection (3), for the words from “acting” to “group” substitute “participating in the ordinary operating activities of the member”.
In section 203 (additional top-up amounts where covered taxes less than expected), in subsections (4)(b), (5)(b), (6)(b) and (7)(b), for “reduction by relevant QDT credit” substitute “any reduction”.
Section 206 (additional top-up amounts where recalculations required) is amended as follows.
In subsection (1)—
in the words before paragraph (a), after “members” insert “(“the current members”)”, and
in paragraph (b), before “members” insert “current”.
In subsection (2)—
in paragraph (a), for “those members would have for a prior period” substitute “the standard members of the group in the territory in a prior period would have for that period”, and
in the words after paragraph (b), before “members” insert “current”.
In subsection (3)—
in Step 1, for “those members would have had for the prior period” substitute “the standard members of the group in the territory for the prior period would have had for that period”,
in Step 3, after “nil” insert “(and if there are no such results, the result of this step is nil)”, and
in Step 4—
before “members” insert “current”, and
for “Step 2” substitute “Step 3”.
In subsection (4)—
for “those members” substitute “the current members”, and
for “in accordance with subsections (5) to (8)” substitute “as follows”.
In subsection (5)—
in paragraph (a)—
for “standard” substitute “current”, and
before “period” insert “current”,
in paragraph (b), for “members for the members’ territory” substitute “current members”, and
in paragraph (c), for “reduction by relevant QDT credit” substitute “any reduction”.
In subsection (6)—
in paragraph (a)—
for “standard” substitute “current”, and
before “period” insert “current”,
in paragraph (b), for “standard members in the territory” substitute “current members”, and
in paragraph (c), for “reduction by relevant QDT credit” substitute “any reduction”.
In subsection (7)—
in paragraph (a)—
for “standard” substitute “current”,
before “period”, in the first place it occurs, insert “current”, and
for “members for the members’ territory” substitute “the current members”, and
in paragraph (b)—
for “reduction by relevant QDT credit” substitute “any reduction”, and
for “members for the member’s territory” substitute “current members”.
In subsection (8)—
in paragraph (a)—
for “standard” substitute “current”, and
for “members for the members’ territory” substitute “the current members”,
in paragraph (b)—
for “reduction by relevant QDT credit” substitute “any reduction”, and
for “members for the member’s territory” substitute “current members”, and
in the words after paragraph (b) for the words from “amount”, in the second place it occurs, to the end substitute “relevant amount.”
After subsection (8) insert—
In section 226 (joint venture group), in subsection (2)—
in the words before paragraph (a), after “group” insert “for an accounting period of that entity”,
in paragraph (a), after “entity” insert “for all or any part of that period”,
in paragraph (b), after “entity” insert “at any time in that period”,
in paragraph (c), for “qualifying multinational group” substitute “multinational group that meets condition A in section 129(2) for that accounting period (revenue threshold exceeded in at least 2 of previous 4 accounting periods)”, and
in paragraph (f), for “of which the entity is a member” substitute “referred to in paragraph (a)”.
Section 227 (application of Part to joint venture groups) is amended as follows.
In subsection (1)—
in the words before paragraph (a)—
after “but” insert “in their application by virtue of this subsection”,
after “Part”, in the second place it occurs, insert “, this Chapter other than this section and section 226”, and
for “apply” substitute “have effect”;
in paragraph (c), for “the multinational” substitute “each respective multinational”.
In subsection (2), for “Part,” substitute “Part (in its application by virtue of subsection (1)),”
In subsection (3)—
after “But” insert “(in the application of this Part by virtue of subsection (1))”;
for “that” substitute “the joint venture”.
Section 266 (qualifying entities) is amended as follows.
In subsection (1), after “An entity” insert “which is not a member of a joint venture group”.
After subsection (1) insert—
Section 270 (amount charged) is amended as follows.
Before subsection (1) insert—
In subsection (1)—
in the words before Step 1, for “as a qualifying entity or in respect of a qualifying entity” substitute “as or in respect of a qualifying entity which is not a member of a group”;
in Step 1, after “Determine” insert “(in accordance with section 273)”.
Section 272 (determining top-up amounts of entity that is a member of a group) is amended as follows.
After subsection (3) insert—
In subsection (8) omit paragraph (e).
In section 267 (DTT excluded entities), after subsection (3) insert—
In section 199 (election to treat total top-up amount as nil)—
in subsection (1)—
for “total top-up amount” substitute “top-up amounts of the relevant members”, and
for “is” substitute “are”;
in subsections (2)(a), (3), (4), (6)(a) and (6)(b), for “standard” substitute “relevant”;
after subsection (2) insert— ;
in the heading, for “total top-up amount” substitute “certain top-up amounts”.
In section 228 (minority owned members), after subsection (4) insert—
Part 2 of Schedule 16 (transitional safe harbour) is amended as follows.
In paragraph 3 (election)—
in sub-paragraph (1), after “election” insert “under this paragraph”,
in sub-paragraph (2)(c), for “the election” substitute “a transitional safe harbour election”,
in sub-paragraph (7), for “the information” substitute “all relevant information”,
after that sub-paragraph insert— , and
after sub-paragraph (9) insert—
In paragraph 4 (qualified financial statements), in sub-paragraph (1)—
in paragraph (a)—
for “statement” substitute “statements”, and
after “parent” insert “provided the statements are prepared in accordance with acceptable accounting standards or an authorised accounting standard”, and
for paragraph (b) substitute—
In paragraph 4, after sub-paragraph (1) insert—
In paragraph 4, in sub-paragraph (3), in paragraph (d), after “income” insert “exclusion”.
After paragraph 4 insert—
In paragraph 5 (qualifying income tax expense)—
the existing text becomes sub-paragraph (1), and
after that sub-paragraph insert—
In Schedule 16, after paragraph 6 insert—
The amendment made by sub-paragraph (1) has effect in relation to—
disqualified expense accruing on or after 14 March 2024, and
disqualified tax expense attributable to profits accruing on or after 14 March 2024.
In paragraph 4 (qualified financial statements and basis of calculations), in sub-paragraph (4), in the words after paragraph (b) for “paragraph 6” substitute “paragraphs 6 to 6B”.
In section 155 (qualifying tier one capital), in subsection (3), for “section” substitute “Part”.
In Schedule 17, in the table, at the appropriate place insert—
In section 195 (substance based income exclusion) omit subsections (2) and (3).
Accordingly, in paragraph 2 (annual elections) of Schedule 15 (multinational top-up tax: elections), omit paragraph (e).
Section 201 (inclusion ratio) is amended as follows.
In subsection (1), in Step 2, at the end insert “, but excluding ownership interests in respect of which an amount has been excluded from the relevant member’s adjusted profits.”
Omit subsection (4).
Section 223 (adjustments) is amended as follows.
In subsection (7)—
in paragraph (a), after “group,” insert “, other than ownership interests in respect of which an amount has been excluded from the adjusted profits of the entity,”;
in paragraph (b), before “profits” insert “adjusted”;
at the end insert—
In subsection (8)—
in paragraph (a), after “made,” insert “, other than ownership interests in respect of which an amount has been excluded from the adjusted profits of the entity,”;
at the end insert—
In subsection (9), after “201(2)” insert “and (3)”.
In section 241 (Pillar Two territories)—
in subsection (1), before “regulations” insert “, or in accordance with,”,
after that subsection insert— ,
in subsection (2)—
after “Regulations” insert “, or a notice,”, and
for “Treasury consider” substitute “appropriate authority considers”,
after that subsection insert— ,
in subsection (3)—
for “that”, in the first place it occurs, substitute “for”,
omit “is”,
for “the regulations are made”, in the first place it occurs, substitute “the territory was specified”, and
for “that the specification of a territory previously specified ceases to have effect” substitute “for the specification of a territory to cease to have effect in relation to accounting periods commencing”, and
after that subsection insert—
In section 256 (qualifying domestic top-up tax)—
in subsection (1)(b), for “a” substitute “, or in accordance with,”,
after that subsection insert— ,
in subsection (2)—
after “regulations” insert “, or a notice,”, and
for “Treasury consider” substitute “appropriate authority considers”,
after that subsection insert— ,
in subsection (4)—
for “that”, in the first place it occurs, substitute “for”,
omit “is”,
for “the regulations are made”, in the first place it occurs, substitute “the tax was specified”, and
for “that the specification of a tax previously specified ceases to have effect” substitute “for the specification of a tax to cease to have effect in relation to accounting periods commencing”, and
after that subsection insert—
In Schedule 16A (qualifying domestic top-up tax safe harbour election)—
in paragraph 1(3)—
in the words before paragraph (a), for “may only be made” substitute “is only valid”,
omit the “and” after paragraph (b), and
after that sub-paragraph insert— , and
in paragraph 2—
the existing text becomes sub-paragraph (1),
in that sub-paragraph, before “regulations” insert “, or in accordance with,”,
after that sub-paragraph insert— , and
at the end insert—
The amendments made by sub-paragraphs (1)(f), (2)(f) and (3)(b)(i) and (iv) are treated as having come into force on 7 November 2024.
Schedule 14 (administration) is amended as follows.
In paragraph 10, after sub-paragraph (11) insert—
In paragraph 13, after sub-paragraph (10) insert—
In paragraph 32, after sub-paragraph (3) insert—
In section 141 (general exclusion of dividends), in subsection (9) omit paragraph (b) and the “or” preceding it.
In section 148A (transferable tax credits), in subsection (5)(a)—
in sub-paragraph (i), for “before the end of 15 months” substitute “in the period beginning with the day on which the credit was granted and ending 15 months after the end”, and
in sub-paragraph (ii), for “before the end of 15 months of the accounting period in which they are granted” substitute “in that period”.
In section 170 (adjustments for ultimate parent that is a flow-through entity), in subsection (9)(b), for the words from “the ultimate parent’s“ to the end substitute
In section 171 (ultimate parent subject to qualifying dividend regime)—
in subsection (2)(b), omit “adjusted”, and
in subsection (6), for “underlying”, in each place it occurs, substitute “adjusted”
In section 176B (value of non-marketable transferable tax credits: originator), in subsection (3), after “the”, in the fourth place it occurs, insert “end of the”.
In section 176C (value of non-marketable transferable tax credits: purchaser)—
in subsection (4)(b), for “underlying” substitute “adjusted”;
in subsection (5)(a)(ii) omit “reflected”;
in subsection (6) for “underlying” substitute “adjusted”.
In section 176D (tax credits etc allocated under tax equity partnerships), in subsection (10), for “the amount multiplied” substitute “that amount”.
In section 211 (transfer of assets or liabilities to a member of a multinational group)—
in subsection (2)—
omit the “and” after paragraph (b), and
after that paragraph insert— , and
after subsection (4) insert—
In section 212 (meaning of “qualifying reorganisation”), in subsection (4), after “is”, in the third place it occurs, insert “no greater than”.
In section 215 (undistributed income amount), in subsection (2)(c) omit “the made a loss”.
In section 216 (election where assets and liabilities adjusted to fair value for tax purposes), in subsection (7)(a), before “immediately after” insert “or liability”.
In section 217 (post filing adjustments of covered taxes), after subsection (1) insert—
In section 217(8), for paragraph (a) substitute— .
In section 220 (top-up amount of investment entity)—
in subsection (1)—
in Step 8, after “entity” insert “, unless the entity has a positive undistributed income amount (see sections 214 and 215) for the period (in which case proceed to Step 9), and
after that Step insert— , and
omit subsection (2).
In section 222 (investment entity effective tax rate), in Step 9 for “Step 1” substitute “Step 2”.
In section 242 (ownership interests and controlling interests), in subsection (5)(a) omit “financial”.
In section 255 (Pillar Two rules), in subsection (6), for “3(1)” substitute “3 of Schedule 16”.
In Schedule 14 (administration of multinational top-up tax)—
in paragraph 2(12), for “entity” substitute “member”;
in paragraph 7(6), for “or Revenue” substitute “of Revenue”.
In Schedule 16A (multinational top-up tax: safe harbours), in paragraph 4(1)(b) omit “members of the group that are”.
The following provisions of this Part of this Schedule have effect in relation to accounting periods commencing on or after 31 December 2023—
paragraph 11 (permanent establishments as excluded entities);
paragraph 39(d) (joint venture conditions);
paragraph 48 (removal of requirement for SBIE election);
paragraph 51 (specification of territories and taxes);
paragraph 52 (filing etc not required before 30 June 2026);
paragraph 66 (top-up amount of investment entity).
Paragraph 47 has effect in relation to relation to accounting periods commencing on or after 31 December 2023, subject to sub-paragraph (2) of that paragraph.
The following provisions of this Part of this Schedule have effect in relation to accounting periods commencing on or after 31 December 2024—
paragraphs 18 to 24 (tax equity partnerships);
paragraphs (a) to (c) of paragraph 39.
The other provisions of this Part of this Schedule have effect in relation to—
where a retrospection election has been made in relation to a multinational group, a group, or a qualifying entity that is not a member of a group, accounting periods of that multinational group, group or entity commencing on or after 31 December 2023, or
otherwise, accounting periods commencing on or after 31 December 2024.
A retrospection election—
is to be made—
in the case of a multinational group or group, by the filing member, or
in the case of a qualifying entity that is not a member of a group, by that entity,
must be made on or before the day on which the self-assessment return or below-threshold notification for the first accounting period of the multinational group, group or entity commencing on or after 31 December 2023 is made, and
may not be revoked.
But sub-paragraph (7) applies where any member, or former member, of a multinational group or group is, or would be on either or both of the relevant assumptions—
a person chargeable to domestic top-up tax that has top-up amounts or additional top-up amounts for any accounting period commencing before 31 December 2024 as a result of the person’s membership of the multinational group or group, or
a qualifying entity that has top-up amounts or additional top-up amounts for any accounting period commencing before 31 December 2024 as a result of the entity’s membership of the multinational group or group in respect of which a person is chargeable to domestic top-up tax.
Where this sub-paragraph applies, a retrospection election may not be made without the written consent of each such person.
For the purposes of sub-paragraph (6), the relevant assumptions are—
that the retrospection election had been made, and
that no election under section 271 of F(No.2)A 2023 had been made.
Where— a retrospection election may not be made without the written consent of each responsible member.
the filing member of a multinational group is not a responsible member of that multinational group, or
there is more than one responsible member of that multinational group,
Sub-paragraph (11) applies where—
the filing member of a multinational group or group has made a retrospection election,
at the time the election was made it was reasonable for the filing member to consider that the consent of a person was not required,
that consent was not given,
the filing member becomes aware that the consent of that person was, or may have been, required, and
the written consent of that person is given within the period of 60 days beginning with the day on which the condition in paragraph (d) is first met.
The consent of that person is to be treated as having been given before the election was made.
References in this paragraph to a “group”, other than in the expression “multinational group”, are to a group for the purposes of Part 4 of F(No.2)A 2023 (domestic top-up tax).
Furnished holiday lettings
Amendments relating to income tax
Section 189 of FA 2004 (tax reliefs and exemptions in connection with registered pension schemes: meaning of relevant UK earnings) is amended as follows—
in subsection (2) omit—
paragraph (ba), and
paragraph (bb) (but not the “and” after it);
omit subsections (5) to (6B).
ITTOIA 2005 is amended as follows.
In section 270 (charge on profits of property businesses), in subsection (5)—
in the definition of “CAA allowances” omit “or 250A”;
in the definition of “CAA charges”, for “either of those sections” substitute “that section”.
In section 272B (meaning of “costs of a dwelling-related loan”)—
in subsection (2) for “subsections (3) and (4)” substitute “subsection (3)”;
omit subsection (4).
In section 307B (cash basis: capital expenditure)—
in subsections (6) and (7), omit “ordinary”;
in subsection (8), for paragraph (a) substitute— ;
omit subsections (9) and (19).
In section 307E (cash basis: capital receipts)—
in subsection (20)(a) for “sections 248 to 250A” substitute “sections 248 and 250”;
in subsection (22)(a), for “section 15(1)(b) to (da)” substitute “section 15(1)(b) or (d)”.
In section 311A (replacement domestic items relief)—
in subsection (6), for “subsections (7) and (8)” substitute “subsection (8)”;
omit subsection (7).
In section 313 (restrictions on relief), omit subsection (3).
Omit Chapter 6 of Part 3 (which defines “the commercial letting of furnished holiday accommodation”).
In section 334C (unrelieved qualifying expenditure)—
in subsection (1)(b), for “a relevant property business activity” substitute “the property business”;
in subsection (3), for “each relevant property business activity” substitute “the property business”;
in subsection (6), omit the definition of “relevant property business activity”.
In Part 2 of Schedule 4 (index of defined expressions), omit the entry for “commercial letting of furnished holiday accommodation (for purposes of Chapter 6 of Part 3)”.
ITA 2007 is amended as follows.
In section 117 (overview of Chapter 4 of Part 4) omit subsections (2) and (2A).
Omit—
section 127 (UK furnished holiday lettings business treated as trade),
section 127ZA (EEA furnished holiday lettings business treated as trade), and
the italic heading before those sections.
In section 388 (loan to buy plant or machinery for partnership use)—
in subsection (2)(a) omit “ordinary”;
in subsection (4), for ““ordinary property business”” substitute ““property business””.
In section 389 (eligibility requirements for interest on loans), in subsection (4) omit “ordinary”.
In section 399A (property partnerships: restriction of relief for investment loan interest) omit subsection (9).
In section 836 (jointly held property), in subsection (3) omit exceptions D and DA.
The following provisions (which insert or amend provision relating to the commercial letting of furnished holiday accommodation) are repealed—
in ITTOIA 2005—
paragraph 196 of Schedule 1, and
paragraphs 74 and 75 of Schedule 2;
in Schedule 1 to ITA 2007—
paragraph 473(2)(a) and (b), and
paragraphs 508, 509 and 510;
in FA 2011, Part 1 of Schedule 14;
in FA 2016, section 73(5);
in F(No.2)A 2017, paragraph 26 of Schedule 2.
Amendments relating to corporation tax
CTA 2009 is amended as follows.
In section 202 (overview of Part 4) omit subsection (5).
In section 250A (replacement domestic items relief) omit subsection (7).
In section 252 (restrictions on relief) omit subsection (3).
Omit Chapter 6 of Part 4 (which defines “the commercial letting of furnished holiday accommodation”).
In section 748 (assets held for purposes of property business)—
for subsection (4) substitute— ;
omit subsection (5).
In Schedule 4 (index of defined expressions) omit the entry for “commercial letting of furnished holiday accommodation (in Chapter 6 of Part 4)”.
CTA 2010 is amended as follows.
Omit section 65 (UK furnished holiday lettings business treated as trade).
Omit section 67A (EEA furnished holiday lettings business treated as trade).
In section 188DD (limitations on relief under section 188CB: determination of claimant’s relevant maximum), in subsection (2)(a) omit sub-paragraph (vii).
In section 188ED (limitations on relief under section 188CC: determination of claimant’s relevant maximum), in subsection (2)(a) omit sub-paragraph (vii).
In section 269ZF (restriction of certain deductions: determination of company’s qualifying trading profits), in subsection (4)(e) omit sub-paragraph (vii).
The following provisions (which insert or amend provision relating to the commercial letting of furnished holiday accommodation) are repealed—
in CTA 2009, paragraphs 172 and 173 of Schedule 1;
in CTA 2010, paragraphs 602 and 603 of Schedule 1;
in FA 2011, Part 2 of Schedule 14;
in FA 2016, section 73(7);
in F(No.2)A 2017, paragraph 155 of Schedule 4.
Amendments relating to capital allowances
CAA 2001 is amended as follows.
Omit section 13B (use for other purposes of plant or machinery: property businesses).
In section 15 (qualifying activities)—
in subsection (1)—
in paragraph (b), for “an ordinary” substitute “a”;
omit paragraph (c);
in paragraph (d) omit “ordinary”;
omit paragraph (da);
in subsection (3)—
in paragraph (a), for “an ordinary” substitute “a”;
in paragraph (b) omit “ordinary”.
Omit sections 16 to 17B (which define ordinary UK, or overseas, property business and UK, or EEA, furnished holiday lettings business).
In section 28 (qualifying expenditure: thermal insulation of buildings), in subsections (1) and (2)—
for “an ordinary UK”, in each subsection, substitute “a UK”;
for “an ordinary overseas”, in each subsection, substitute “an overseas”.
In section 33 (qualifying expenditure: personal security), in subsection (8)—
in paragraph (b), for “an ordinary” substitute “a”;
omit paragraph (c);
in paragraph (d) omit “ordinary”;
omit paragraph (da).
In section 35 (exclusion of certain expenditure on plant or machinery for use in a dwelling-house), in subsection (1)—
in paragraph (a), for “an ordinary” substitute “a”;
in paragraph (b) omit “ordinary”.
In section 59 (unrelieved qualifying expenditure)—
in subsection (4A), for “a relevant qualifying activity” substitute “the property business”;
omit subsection (7A).
In section 63 (cases in which disposal value of plant or machinery is nil), in subsection (3)—
in paragraph (b), for “an ordinary” substitute “a”;
omit paragraph (c);
in paragraph (d) omit “ordinary”;
omit paragraph (da) (but not the “or” after it).
In section 248 (treatment of allowances or charges in relation to UK property businesses)—
in the heading omit “Ordinary”;
in the words before paragraph (a), for “an ordinary” substitute “a”.
Omit section 249 (giving effect to allowances and charges: UK furnished holiday lettings businesses).
In section 250 (treatment of allowances or charges in relation to overseas property businesses)—
in the heading omit “Ordinary”;
in the words before paragraph (a) omit “Ordinary”.
Omit section 250A (giving effect to allowances and charges: EEA furnished holiday lettings businesses).
In section 270CA (qualifying activities)—
in paragraph (b), for “an ordinary” substitute “a”;
in paragraph (c) omit “ordinary”.
Omit section 270CB (meaning of ordinary UK or overseas property business).
In section 270CG (use for the purposes of a property business), in subsection (1)—
for “an ordinary UK” substitute “a UK”;
for “an ordinary overseas” substitute “an overseas”.
In section 270HB (allowances to be treated as expense of property businesses)—
in the heading omit “ordinary” in both places;
in paragraph (a), for “an ordinary” substitute “a”;
in paragraph (b) omit “ordinary”.
In section 536 (contributions not made by public bodies and not eligible for tax relief), in subsection (5)(a)—
in sub-paragraph (i), for “an ordinary” substitute “a”;
omit sub-paragraph (ii);
in sub-paragraph (iii) omit “ordinary”;
omit sub-paragraph (iiia).
In Part 2 of Schedule 1 (defined expressions) omit the entries for—
“EEA furnished holiday lettings business”;
“ordinary overseas property business”;
“ordinary UK property business”;
“UK furnished holiday lettings business”.
The following provisions (which insert or amend provision relating to the commercial letting of furnished holiday accommodation) are repealed—
in CAA 2001, paragraph 13 of Schedule 2;
in ITTOIA 2005, paragraphs 527 and 528 of Schedule 1;
in CTA 2009, paragraphs 477 and 478 of Schedule 1;
in CTA 2010, paragraph 347 of Schedule 1;
in FA 2011, Part 3 of Schedule 14.
Amendments relating to chargeable gains
TCGA 1992 is amended as follows.
In section 3A (gains connected to avoidance or foreign activities etc) omit subsections (3) to (5).
In section 165A (meaning of “trading company” and “trading group”), in subsection (14), in the definition of “trade” omit “(subject to section 241(3))”.
Omit—
section 241 (UK furnished holiday lettings), and
section 241A (EEA furnished holiday lettings).
The following provisions (which insert or amend provision relating to the commercial letting of furnished holiday accommodation) are repealed—
in FA 1996, paragraph 62 of Schedule 20;
in FA 1998—
paragraph 62 of Schedule 5, and
paragraph 8 of Schedule 21;
in FA 2002, paragraph 3 of Schedule 8;
in ITTOIA 2005, paragraph 441 of Schedule 1;
in ITA 2007, paragraph 325 of Schedule 1;
in FA 2008—
paragraph 37 of Schedule 2, and
paragraph 3 of Schedule 3;
in CTA 2009, paragraph 380 of Schedule 1 to CTA 2009;
in FA 2011, Part 4 of Schedule 14.
Commencement and transitional provision
The amendments made by Part 1 have effect for the purposes of income tax in relation to the tax year 2025-26 and subsequent tax years.
The amendments made by Part 2 have effect for the purposes of corporation tax in relation to accounting periods beginning on or after 1 April 2025.
The amendments made by Part 3 have effect—
for the purposes of corporation tax, in relation to accounting periods beginning on or after 1 April 2025, and
for the purposes of income tax, in relation to periods of account beginning on or after 6 April 2025.
The amendments made by Part 4 have effect in relation to disposals made on or after the commencement date.
The amendments made by Part 4 also have effect—
for the purposes of sections 152 to 157 of TCGA 1992 (roll-over relief on replacement of business asset), in relation to acquisitions that take place on or after the commencement date, and
for the purposes of section 253 of TCGA 1992 (relief for loans to traders), in relation to claims for a loss to be treated as accruing to a person on or after the commencement date.
Sub-paragraph (1) is subject to paragraph 19 (business asset disposal relief: disposals relating to pre-commencement businesses).
In this paragraph, “the commencement date” means—
for the purposes of corporation tax, 1 April 2025, and
for the purposes of capital gains tax, 6 April 2025.
Sub-paragraph (2) applies where—
an asset is disposed of under an unconditional contract made during the pre-commencement period,
the asset is conveyed or transferred on or after the commencement date, and
a relevant claim is made in respect of the disposal.
The amendments made by Part 4 have effect in relation to the disposal unless—
no purpose of entering into the contract was to avoid the amendments made by Part 4 having effect in relation to the disposal,
either—
the contract was entered into wholly for commercial reasons, or
the parties to the contract are not connected persons, and
the claim includes a statement that the conditions in paragraphs (a) and (b) are met.
In this paragraph— “the commencement date” means— for the purposes of corporation tax, 1 April 2025; for the purposes of capital gains tax, 6 April 2025; “connected persons” is to be construed in accordance with section 286 of TCGA 1992; “the pre-commencement period” means the period— beginning with 6 March 2024, and ending with the day before the commencement date; “relevant claim” means— a claim under section 152 or 153 of TCGA 1992 (roll-over relief) or a declaration under section 153A of that Act (provisional application of sections 152 and 153), a claim under section 165 of TCGA 1992 (relief for gifts of business assets), or a claim under section 169M of TCGA 1992 (business asset disposal relief).
This paragraph applies where a company has an accounting period beginning before, and ending on or after, 1 April 2025 (“the straddling period”).
For the purposes of this Schedule—
so much of the straddling period as falls before 1 April 2025, and so much of that period as falls on or after 1 April 2025, are treated as separate accounting periods, and
where it is necessary to apportion an amount for the straddling period to the two separate accounting periods, it is to be apportioned—
in accordance with section 1172 of CTA 2010 (time basis), or
if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.
This paragraph applies if—
a person is treated as carrying on in the tax year 2024-25 a single trade by virtue of section 127(3) of ITA 2007 (UK furnished holiday lettings businesses) or section 127ZA(3) of that Act (EEA furnished holiday lettings businesses),
the person has made a loss in that trade in the tax year 2024-25 or a previous tax year,
relief for the loss has not been fully given under Chapter 2 of Part 4 of ITA 2007 (trade losses) or any other provision of the Income Tax Acts, and
the person carries on a corresponding property business in the tax year 2025-26.
So much of the loss as has not been relieved is to be treated for the purposes of section 118 of ITA 2007 (carry forward against subsequent property business profits) as if it had been made in the corresponding property business.
In this paragraph, “corresponding property business” means—
in relation to a loss made in a trade a person is treated as carrying on by virtue of section 127(3) of ITA 2007, a UK property business (within the meaning given by section 264 of ITTOIA 2005) carried on by that person;
in relation to a loss made in a trade a person is treated as carrying on by virtue of section 127ZA(3) of ITA 2007, an overseas property business (within the meaning given by section 265 of ITTOIA 2005) carried on by that person.
This paragraph applies if—
a company is treated as carrying on in its last accounting period to begin before 1 April 2025 a single trade by virtue of—
section 65(3) of CTA 2010 (UK furnished holiday lettings businesses), or
section 67A(3) of that Act (EEA furnished holiday lettings businesses),
the company has made a loss in that trade in that accounting period or a previous one,
but for the provision of this Schedule, all or part of the loss would fall to be carried forward under section 45 of CTA 2010 to an accounting period beginning on or after 1 April 2025, and
the company carries on a corresponding property business in its accounting period beginning on 1 April 2025 (see paragraph 15).
The loss or the part of the loss that would otherwise fall to be carried forward as mentioned in sub-paragraph (1)(c) is to be treated for the purposes of the relevant relieving provision as if it had been made by the company in its corresponding property business.
For the purposes of this paragraph as it applies in relation to a trade a company is treated as carrying on by virtue of section 65(3) of CTA 2010—
“corresponding property business” means a UK property business (within the meaning given by section 205 of CTA 2009), and
“the relevant relieving provision” means section 62(5) of CTA 2010 (relief for losses made in UK property business).
For the purposes of this paragraph as it applies in relation to a trade a company is treated as carrying on by virtue of section 67A(3) of CTA 2010—
“corresponding property business” means an overseas property business (within the meaning given by section 206 of CTA 2009), and
“the relevant relieving provision” means section 66(3) of CTA 2010 (relief for losses made in overseas property business).
This paragraph applies for the purposes of Part 2 of CAA 2001 (plant and machinery allowances) where—
immediately before the end of a person’s pre-commencement chargeable period, the person is carrying on an FHL qualifying activity, and
at the start of the person’s post-commencement chargeable period, the person is carrying on the corresponding property activity.
The amount of any allowance or charge arising in the person’s post-commencement chargeable period or any subsequent chargeable period is to be calculated as if anything done by or to the person in carrying on the FHL qualifying activity had been done by or to the person in carrying on the corresponding property activity.
In particular—
where plant or machinery is in use for the purposes of the FHL qualifying activity immediately before the end of the person’s pre-commencement chargeable period—
the plant or machinery is to be treated as if it had been brought into use for the purposes of the corresponding property activity on the day on which it was brought into use for the purposes of the FHL qualifying activity, and
its use for the purposes of the FHL qualifying activity is to be disregarded.
where the person has unrelieved qualifying expenditure (within the meaning given by section 59 of CAA 2001) to carry forward from the person’s pre-commencement chargeable period in a pool for an FHL qualifying activity, the expenditure is to be—
carried forward to the person’s post-commencement chargeable period, and
allocated to the appropriate pool for the corresponding property activity.
Accordingly, the person is not to be taken, by reason only of the effect of the amendments made by this Schedule, as having—
brought plant or machinery into use, or ceased to use plant or machinery, for the purposes of a qualifying activity, or
permanently discontinued a qualifying activity.
Section 35 of CAA 2001 (expenditure on plant or machinery for use in dwelling-house not qualifying expenditure) does not apply to expenditure carried forward in accordance with sub-paragraph (3)(b)(i).
In this paragraph— “FHL qualifying activity” means a UK furnished holiday lettings business or an EEA furnished holiday lettings business; “the corresponding property activity” means— in relation to a UK furnished holiday lettings business carried on by a person, a UK property business carried on by that person, and in relation to an EEA furnished holiday lettings business carried on by a person, an overseas property business carried on by that person; “pre-commencement chargeable period” means— for corporation tax purposes, a company’s last accounting period to begin before 1 April 2025, and for income tax purposes, the tax year 2024-25; “post-commencement chargeable period” means— for corporation tax purposes, the accounting period beginning on 1 April 2025 (see paragraph 15), and for income tax purposes, the tax year 2025-26.
Expressions used in sub-paragraph (6) have the same meaning as in Part 2 of CAA 2001.
The amendments made by this Schedule do not have effect in relation to a disposal made on or after 6 April 2025 if it is—
a disposal of business assets within section 169I(2)(b) of TCGA 1992 (assets used for purposes of business) where the date on which the business ceases to be carried on is before 6 April 2025;
a disposal of business assets within section 169I(2)(c) of TCGA 1992 (shares in or securities of a company) where—
the disposal is a material disposal by virtue of condition B in section 169I(7) of that Act or condition D in section 169I(7B) of that Act, and
the period of 2 years mentioned in condition B or condition D (as the case may be) ends before 6 April 2025;
a disposal of trust business assets within section 169J(1) of TCGA 1992 where the settlement business assets are—
assets consisting of (or of interests in) shares in or securities of a company in relation to which the period of 2 years mentioned in section 169J(4) of that Act ends before 6 April 2025, or
assets (or interests in assets) used or previously used for the purposes of a business in relation to which the period of 2 years mentioned in section 169J(5) of that Act ends before 6 April 2025;
a disposal associated with a relevant material disposal within section 169K(1) of TCGA 1992, where the date of the material disposal of business assets with which the disposal is associated is before 6 April 2025.
Paragraph 3 of Schedule 7AC to TCGA 1992 (exemptions for disposals by companies with substantial shareholding: main conditions previously met) has effect in relation to a disposal made on or after 1 April 2025 in accordance with sub-paragraph (2).
In determining whether the condition in sub-paragraph (2)(d) of that paragraph of that Schedule is met, sections 241 and 241A of TCGA 1992 (commercial letting of furnished holiday accommodation to be treated as a trade) are to be disregarded.
Employee-ownership trusts
Capital gains tax
TCGA 1992 is amended as follows.
In section 236H(4) (disposals to employee-ownership trusts), before paragraph (a) insert— .
In section 236O(2) (no section 236H relief if disqualifying event in next tax year), before paragraph (a) insert— .
In section 236P (events which trigger deemed disposal and reacquisition by trustees), after subsection (3) insert—
In section 236Q(1)(c) (relief for deemed disposals under section 71), for “236H(4)(a)” substitute “236H(4)(za)”.
The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.
In section 236H(4), after paragraph (b) insert— .
After section 236L insert—
In section 236O(2), after paragraph (b) insert— .
In section 236P(2) (events which trigger deemed disposal and reacquisition by trustees), after paragraph (b) insert— .
The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.
In section 236O, after subsection (2) insert—
In section 236P, after subsection (2) insert—
The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.
In section 236H(4), after paragraph (c) insert— .
In section 236Q, in subsection (1)(c), for “(d)” substitute “(c) and (d)”.
The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.
In section 236O—
in the heading, for “tax year” substitute “four tax years”, and
in subsection (1)(b), for “the tax year” substitute “any of the first four tax years”.
In section 236P(1), after “end of the” insert “fourth”.
In section 236R—
in the heading, for “tax year” substitute “four tax years”, and
in subsection (1)(b), for “the tax year” substitute “any of the first four tax years”.
The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.
In section 236H—
in subsection (7)—
omit the “and” after paragraph (b),
after that paragraph insert— , and
after paragraph (c) insert , and
after that subsection insert—
In section 236Q—
in subsection (6)—
omit the “and” after paragraph (b), and
after that paragraph insert— , and
after that subsection insert—
The amendments made by this paragraph have effect in relation to claims made under those sections on or after 6 April 2025.
Income tax
In section 312C of ITEPA 2003, after subsection (2) insert—
The amendment made by this paragraph has effect in relation to qualifying bonus payments made on or after 30 October 2024.
In ITTOIA 2005, after section 401 insert—
The amendment made by this paragraph has effect in relation to distributions made on or after 30 October 2024.
Diminishing shared ownership refinancing arrangements
Part 10A of ITA 2007 (alternative finance arrangements) is amended as follows.
In section 564A (introduction), in subsection (3)(b) after “section 564D” insert “or 564DA”.
In section 564D (diminishing shared ownership arrangements)—
at the end of the heading insert “: initial acquisition”;
for the “the first owner” (in each place it appears) substitute “the financier”;
for “the eventual owner” (in each place it appears) substitute “the customer”;
for “the first owner’s” (in each place it appears) substitute “the financier’s”;
for “the eventual owner’s” (in each place it appears) substitute “the customer’s”;
in subsection (1A)(d), for “those owners” substitute “the customer and the financier”;
in subsection (6), for “564E” substitute “564DA”.
After section 564D insert—
In section 564K (alternative finance return resulting from diminishing shared ownership arrangements)—
for “the eventual owner” (in each place it appears) substitute “the customer”;
in subsection (2)—
after “section 564D(1)(c)” insert “or 564DA(1)(d) or (2)(c)”;
for “the first owner” substitute “the financier”;
the “the first owner’s” substitute “the financier’s”;
in subsection (4), after “564D” insert “or 564DA”.
In section 564V (exclusion of some alternative finance return from sale consideration), in subsection (2), after “section 564D” insert “or 564DA”.
After section 564W (diminishing shared ownership arrangements not partnerships) insert—
Chapter 6 of Part 6 of CTA 2009 (alternative finance arrangements) is amended as follows.
In section 501 (introduction), in subsection (3)(b) after “section 504” insert “or 504A”.
In section 504 (diminishing shared ownership arrangements)—
at the end of the heading insert “: initial acquisition”;
for the “the first owner” (in each place it appears) substitute “the financier”;
for “the eventual owner” (in each place it appears) substitute “the customer”;
for “the first owner’s” (in each place it appears) substitute “the financier’s”;
for “the eventual owner’s” (in each place it appears) substitute “the customer’s”;
in subsection (1A)(d), for “those owners” substitute “the customer and the financier”;
in subsection (6), for “505” substitute “504A”.
After section 504 insert—
In section 510 (application of Part 5 of CTA 2009 to alternative finance arrangements)—
in subsection (2)(a)—
for “first owner” substitute “financier”;
for the “first owner’s” substitute “financier’s”;
for “eventual owner” substitute “customer”;
in subsection (6)—
omit the definitions of “the eventual owner” and “the first owner”;
before the definition of “the depositor” insert— ;
after the definition of “the depositor” insert— .
In section 512 (alternative finance return resulting from diminishing shared ownership arrangements)—
for “the eventual owner” (in each place it appears) substitute “the customer”;
in subsection (2)—
after “section 504(1)(c)” insert “or 504A(1)(d) or (2)(c)”;
for “the first owner” substitute “the financier”;
the “the first owner’s” substitute “the financier’s”;
in subsection (4), after “504” insert “or 504A”.
In section 514 (exclusion of some alternative finance return from sale consideration), in subsection (2), after “section 504” insert “or 504A”.
In section 515 (diminishing shared ownership arrangements not partnership)—
in the heading, for “not partnerships” substitute “: further provision”;
the existing text becomes subsection (1);
after subsection (1) insert—
After section 515 (diminishing shared ownership arrangements not partnerships) insert—
Chapter 4 of Part 4 of the TCGA 1992 (alternative finance arrangements) is amended as follows.
In section 151H (introduction), in subsection (3)(b) after “section 151K” insert “or 151KA”.
In section 151K (diminishing shared ownership arrangements)—
at the end of the heading insert “: initial acquisition”;
for the “the first owner” (in each place it appears) substitute “the financier”;
for “the eventual owner” (in each place it appears) substitute “the customer”;
for “the first owner’s” (in each place it appears) substitute “the financier’s”;
for “the eventual owner’s” (in each place it appears) substitute “the customer’s”;
in subsection (1A)(d), for “those owners” substitute “the customer and the financier”;
in subsection (7), for “151L” substitute “151KA”.
After section 151K insert—
In section 151R (alternative finance return resulting from diminishing shared ownership arrangements)—
for “the eventual owner” (in each place it appears) substitute “the customer”;
in subsection (2)—
after “section 151K(1)(c)” insert “or 151KA(1)(d) or (2)(c)”;
for “the first owner” substitute “the financier”;
the “the first owner’s” substitute “the financier’s”;
in subsection (4), after “section 151K” insert “or 151KA”.
In section 151X (exclusion of some alternative finance return from sale consideration), in subsection (2), after “section 151K” insert “or 151KA”.
In section 151Y (diminishing shared ownership arrangements not partnership)—
in the heading, for “not partnerships” substitute “: further provision”;
the existing text becomes subsection (1);
after subsection (1) insert—
After section 151Y (diminishing shared ownership arrangements not partnerships) insert—
The amendments made by this Schedule have effect in relation to arrangements entered into on or after 30 October 2024.
Relief on foreign employment income: consequential and transitional provision
General consequential amendments
ITEPA 2003 is amended as follows.
In section 28 (meaning of “general earnings from overseas Crown employment subject to UK tax”), in subsection (2)(b), after “or of” insert “Wales, Scotland or”.
In section 225 (payments for restrictive undertakings), for subsection (6) substitute—
In section 290E (calculation of earnings rate for a tax year), in subsection (4), for “non-domiciled”, in each place it occurs, substitute “non-resident or qualifying new resident”.
In section 333 (scope of this chapter: expenses paid by the employee), in subsection (3)(b), for “non-domiciled” substitute “qualifying new resident”.
In section 341 (travel at start or finish of overseas employment), in subsection (4), for the words from “domiciled” to the end substitute “not a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act).”
In section 342 (travel between employments where duties performed abroad), in subsection (7), for the words from “domiciled” to the end substitute “not a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act).”
In section 355 (deductions for corresponding payments by non-domiciled employees)—
in the heading, for “non-domiciled” substitute “qualifying new resident”;
in subsection (2), for the words from “not domiciled” to the end substitute “a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act).”
In section 360 (disallowance of certain accommodation expenses of MPs), in subsection (1), for “non-domiciled” substitute “non-resident or qualifying new resident”.
In section 370 (travel costs and expenses where duties performed abroad), in subsection (6), for paragraph (b) substitute—
In the italic heading before section 373 for “non-domiciled” substitute “non-resident or qualifying new resident”.
In section 373 (employee’s travel costs and expenses where duties performed in UK)—
in the heading, for “Non-domiciled” substitute “Non-resident or qualifying new resident”;
in subsection (1) for “not domiciled in the United Kingdom” substitute “non-UK resident or a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act)”;
in subsection (4)(a)—
for “the country” substitute “a country”;
after “normally lives” insert “at the time the journey is made”;
in subsection (4)(b), for “that”, in both places it occurs, substitute “such a”;
omit subsection (7).
In section 374 (spouse’s, civil partner’s or child’s travel costs and expenses where duties performed in UK)—
in the heading, for “Non-domiciled” substitute “Non-resident or qualifying new resident”;
in subsection (1) for “not domiciled in the United Kingdom” substitute “non-UK resident or a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act)”;
in subsection (3)(a)—
for “the country” substitute “a country”;
after “normally lives” insert “at the time the journey is made”;
in subsection (5)(c)—
for “the country” substitute “a country”;
after “normally lives” insert “at the time the journey is made”
omit subsection (10).
In section 376 (foreign accommodation and subsistence costs and expenses (overseas employments))—
in subsection (1)(c), for “domiciled in the United Kingdom” substitute “not a qualifying new resident for the purposes of Chapter 5C of Part 2 of this Act or Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act)”;
omit subsection (6).
In section 395C (meaning of “foreign service” in section 395B), for subsection (4) substitute—
In section 413 (exception in certain cases of foreign service), for subsection (3ZA) substitute—
ITA 2007 is amended as follows.
In section 24 (reliefs deductible at Step 2), in subsection (1)(a), after the entry for section 266(7) of ICTA insert— .
In section 989 (the definitions), at the appropriate place insert— .
In Part 8 of Schedule 3 to the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004), in paragraph 5 (travel costs and expenses where duties performed in the United Kingdom) —
in the heading, for “non-domiciled” substitute “non-resident or qualifying new resident”;
in paragraph (a), for “non-domiciled” substitute “non-resident or qualifying new resident”.
Consequential amendments relating to PAYE
After section 690C of ITEPA 2003 (employees who were internationally mobile etc. before 2025-2026) (as inserted by section 21 of this Act) insert—
Transitional provision
If an individual falling within sub-paragraph (2) would otherwise be a qualifying new resident for tax year 2025-26 for the purposes of Chapter 5C of Part 2 of ITEPA 2003 (relief for new residents on foreign employment income), the individual is to be treated as not being a qualifying new resident for that year for the purposes of that Chapter.
An individual falls within this sub-paragraph if—
the individual met the section 26A requirement for tax year 2022-23, and
section 809B, 809D or 809E of ITA 2007 (remittance basis) applied to the individual for that year or for tax year 2023-24 or 2024-25.
If an individual falling within sub-paragraph (2)— the individual is to be treated as a qualifying new resident for that tax year for the purposes of that Chapter.
meets the section 26A requirement for tax year 2025-26 or 2026-27, and
is not a qualifying new resident for that year for the purposes of Chapter 5C of Part 2 of ITEPA 2003,
An individual falls within this sub-paragraph if—
the individual met the section 26A requirement for tax year 2023-24 or tax year 2024-25, and
section 809B, 809D or 809E of ITA 2007 (remittance basis) applied to the individual for that tax year.
Section 41R of ITEPA 2003 (limit on relief) does not apply to a foreign employment relief claim made by an individual for a tax year if the claim falls within sub-paragraph (2) or (3).
A foreign employment relief claim made by an individual for a tax year falls within this sub-paragraph if—
the qualifying year is tax year 2025-26 or 2026-27, and
paragraph 6(1) applies to the individual for that tax year.
A foreign employment relief claim made by an individual for a tax year falls within this sub-paragraph if—
the qualifying year is tax year 2025-26, 2026-27 or 2027-28,
paragraph 6(1) does not apply to the individual for that tax year,
the individual falls within paragraph 6(2), and
the individual meets the section 26A requirement for tax year 2025-26.
For the purposes of this Part of this Schedule— “foreign employment relief claim” and “qualifying year” have the same meanings as in Chapter 5C of Part 2 of ITEPA 2003 (relief for new residents on foreign employment income); “the section 26A requirement” means the requirement of section 26A of ITEPA 2003 (requirement for 3-year period of non-residence).
Income tax and capital gains tax: remittance basis and domicile
Remittance basis
Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.
In section 809B (claim for remittance basis to apply), in subsection (1)—
in the words before paragraph (a) omit “the individual”;
before that paragraph insert— ;
in each of paragraphs (a), (b) and (c), at the beginning insert “the individual”.
In section 809C (claim for remittance basis by long-term UK resident), in subsection (1)—
in the words before paragraph (a) omit “the individual”;
before that paragraph insert— ;
in each of paragraphs (a) and (b), at the beginning insert “the individual”.
In section 809D (application of remittance basis where income and gains under £2000) in subsection (1), before paragraph (a) insert— .
In section 809E (application of remittance basis without claim: other cases) in subsection (1), before paragraph (a) insert— .
In consequence of the amendments made by sub-paragraphs (2) to (5), in section 809A—
for “are” substitute “were”;
after “Kingdom” insert “in tax years before tax year 2025-26”.
TCGA 1992 is amended as follows.
In section 1A (territorial scope), in subsection (2)(a), for “applies” substitute “applied”.
In section 1K (annual exempt amount), omit subsection (3).
In the italic heading before section 3D, for “Non-UK domiciled individuals” substitute “Individuals who were non-UK domiciled”.
In section 3D—
for the heading, substitute “Individuals who were non-UK domiciled”;
in subsection (1)—
for “a tax year” substitute “tax year 2024-25 or an earlier tax year”;
for “is”, in each place it occurs, substitute “was”.
Section 16ZA (losses: non-UK domiciled individuals) is omitted.
In Schedule 1 (UK resident individuals not domiciled in UK)—
in the heading, for “not domiciled in the UK” substitute “to whom the remittance basis applied”;
in paragraph 1(1) for “applies” , in the second place it occurs, substitute “applied”;
omit paragraphs 2, 3 and 4.
ITEPA 2003 (employment income: charge to tax) is amended as follows.
In section 6 (nature of charge to tax on employment income), in subsection (3)—
in paragraph (a), omit “and domicile”;
in paragraph (aa), for “applies” substitute “applied”.
In section 20 (taxable earnings under this Chapter), for subsection (1) substitute—
in the heading and in subsection (1)(a), for “applies” substitute “applied”;
in subsection (1)(b), for “does not” substitute “did not”.
In section 23 (calculation of “chargeable overseas earnings”), in subsection (2)—
in paragraph (a), for “applies” substitute “applied”;
in paragraph (aa) for “does not” substitute “did not”;
in paragraph (b) for “is” substitute “was”;
in paragraph (c) for “are” substitute “were”.
In the italic heading before section 25, for “meet” substitute “met”.
In section 26 (foreign earnings for year when remittance basis applies and employee meets section 26A requirement)—
in the heading, for “applies and employee meets” substitute “applied and employee met”;
in subsection (1), in the opening words—
for “applies”, in the second place it appears, substitute “applied”;
for “meets” substitute “met”.
In section 41F (taxable specific income: internationally mobile employee etc), in subsection (2)(a), for “applies” substitute “applied”.
In section 41H (section 41F: chargeable and unchargeable foreign securities income)—
in subsection (4)—
in paragraph (a), for “applies” substitute “applied”;
in paragraph (b) for “does not” substitute “did not”;
in paragraph (c) for “is” substitute “was”;
in paragraph (d) for “are” substitute “were”;
in subsection (7)—
in paragraph (a), for “applies” substitute “applied”;
in paragraph (b) for “meets” substitute “met”;
in paragraph (c) for “are” substitute “were”.
In section 271 (limited exemption of removal benefits and expenses: general)—
in subsections (2)(a) and (2)(b), for “applies” substitute “applied”;
in subsection (2)(b), for “meets” substitute “met”.
In section 554Z9 (remittance basis: A does not meet section 26A requirement)—
in the heading, for “does not” substitute “did not”;
in subsection (1)—
in paragraph (b) for “applies” substitute “applied”;
in paragraph (c) for “does not” substitute “did not”;
in paragraph (d) for “is” substitute “was”;
in paragraph (e), for “are” substitute “were”.
In section 554Z10 (remittance basis: A meets section 26A requirement)—
in the heading, for “meets” substitute “met”;
in subsection (1)(b), for “applies” substitute “applied”;
in subsection (1)(c), for “meets” substitute “met”.
In section 576A (temporary non-residents), in subsection (5), for “applies” substitute “applied”.
In section 698 (PAYE: special charges on employment-related securities), in subsection (8), for “remittance basis” substitute “internationally mobile employees”.
In section 700 (PAYE: gains from securities options), in subsection (7), for “remittance basis” substitute “internationally mobile employees”.
In section 700A (employment-related securities etc: remittance basis), in the heading, for “remittance basis” substitute “internationally mobile employees”.
In section 832 of ITTOIA 2005 (relevant foreign income charge on remittance basis), in subsection (1)—
for “applies”, in the second place it appears, substitute” applied”;
after “that year” insert “(being a tax year before tax year 2025-26)”.
ITA 2007 is amended as follows.
Section 809L (meaning of “remitted to the United Kingdom”) is amended in accordance with sub-paragraphs to (3) to (8).
In subsection (2)—
omit the “or” at the end of paragraph (a);
at the end of paragraph (b) insert
In subsection (4)—
in paragraph (a), for “is enjoyed by a relevant person” substitute ;
after paragraph (b) (but before the “or” at the end) insert— .
In subsection (5)—
in paragraph (a), for “is enjoyed by a relevant person” substitute ;
after paragraph (b) (but before the “or” at the end) insert— .
In subsection (6)—
for “or (b)”, in each place it occurs, substitute “, (b) or (ba)”;
after “property”, in the second place it occurs, insert “, benefit”.
At the end of subsection (9) insert “and cases where the property is used to secure the debt.”
After subsection (9) insert—
In section 809N (section 809L: gift recipients, qualifying property and enjoyment)—
in subsection (7)(c), after “(b)” insert “, (ba)”;
in subsection (9)—
in the opening words, after “property” insert “, a benefit”;
in paragraph (a), at the beginning insert “in the case of enjoyment of property or a service,”;
after paragraph (a) insert— ;
in paragraph (c), after “property” insert “, benefit”.
In section 809O (section 809L: dealings where there is a connected operation)—
in each of subsections (2), (3), (4) and (5) after “(b)” insert “, (ba)”;
in subsection (6)—
in the opening words, after “property” insert “, a benefit”;
in paragraph (a), at the beginning insert “in the case of enjoyment of property or a service,”;
after paragraph (a) insert— ;
in paragraph (c), after “property” insert “, benefit”.
In section 809P (section 809L: amount remitted)—
in subsections (6) and (8), for “or (b)” substitute “, (b) or (ba)”;
in subsection (12), after “previously remitted”, in each place it occurs, insert “that has been charged to income tax or capital gains tax”.
This paragraph applies where—
income or chargeable gains of an individual have been remitted to the United Kingdom during a period that exceeds 5 years—
that ends before 6 April 2024, and
in which there was no period for which the individual was UK resident, and
after the end of that period, but before 6 April 2025—
the same, or part of the same, income or chargeable gains (“the repeated remitted amount”) were again remitted to the United Kingdom, and
a relevant charge has arisen in relation to that remittance.
A “relevant charge” in relation to a remittance means—
income tax becoming chargeable on that remittance, or
a gain accruing under paragraph 1(2) of Schedule 1 to TCGA 1992 on that remittance.
Any relevant charge that has arisen on the first occasion on which the repeated remitted amount is remitted in circumstances falling within sub-paragraph (1)(b) is to be treated as never having arisen.
But a remittance that is not charged to income tax or capital gains tax as a result of sub-paragraph (3) is to be treated as if it were charged to income tax or capital gains tax (as the case may be) for the purposes of section 809P(12) of ITA 2007.
This paragraph is to be treated as never having applied where—
for either, or each, of the tax years 2024-25 and 2025-26, the individual is not UK resident, or
either, or each, of those tax years is a split year as respects the individual.
References in this paragraph to amounts being remitted to the United Kingdom are to be construed in accordance with Chapter A1 of Part 14 of ITA 2007 (see, in particular, sections 809L to 809O of that Act).
Removal of domicile (primary legislation)
Chapter 1A of Part 14 of ITA 2007 (exemption for persons not domiciled in United Kingdom) is repealed.
In section 55C of ITA 2007 (election to reduce personal allowance), in subsection (3)(b), for “domiciled in the United Kingdom” substitute “not a qualifying new resident”.
Section 834 of ITA 2007 (residence of personal representatives) is amended as follows.
In subsection (3), for “domiciled in the United Kingdom” substitute “a long-term UK resident within the meaning of IHTA 1984”.
Omit subsection (5).
In section 62 of TCGA 1992 (residence of personal representatives), in subsection (3), for the words from “having” to the end substitute “UK resident if the deceased was UK resident or a long-term UK resident within the meaning of IHTA 1984 at the date of death.”
Section 476 of ITA 2007 (residence of trustees: how to work out if settlor meets condition C) is amended as follows.
In subsections (2)(b) and (3)(b), omit “or domiciled in the United Kingdom”.
After subsection (3) insert—
In subsection (3A), for “subsections (2)(b) and (3)(b)” substitute “subsection (3ZA)”.
In subsection (4)(c), for “subsection (2) or (3) or this subsection” substitute “this section”.
Section 69 of TCGA 1992 (trustees of settlements) is amended as follows.
In subsection (2B)(c), omit “or domiciled”.
After subsection (2C) insert—
In subsection (2F), for “(2B)(c)” substitute “(2CA)”.
In the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692), regulation 42 (application of Part 5) is amended as follows.
In paragraph (2)(d)(ii), omit “and domiciled”.
After paragraph (2) insert—
In sections 56, 61G and 61R of ITEPA 2003 (chargeability to tax in respect of deemed employment payment), omit subsections (4) and (5).
Part 4 of FA 2004 (pensions schemes etc.) is amended as follows.
In Chapter 3 (payments by registered pension schemes), in section 185G, in subsection (3)(a) omit “and domiciled”.
In the following provisions of Chapter 5 (registered pension schemes: tax charges) and Chapter 6 (schemes that are not registered pension schemes) omit “or domiciled”—
section 205(3);
section 206(3);
section 207(3);
section 208(4);
section 209(5);
section 237A(2);
section 237B(8);
section 239(4);
section 242(3);
section 244J(6).
In section 7 of F(No.2)A 2005 (social security pension lump sum), in subsection (3) omit “or domiciled”.
In FA 1996 omit section 200 (domicile for tax purposes of overseas electors).
In ITA 2007 omit section 835B (domicile for income tax purposes of overseas electors).
Section 275 of TCGA 1992 (location of assets) is amended as follows.
In subsection (1), omit paragraph (l).
Omit subsection (3A).
Schedule 5A to TCGA 1992 (settlements with foreign element: information) is amended in accordance with sub-paragraphs (2) and (3).
In paragraph 3—
in sub-paragraph (3) omit “is domiciled in the United Kingdom and”;
at the end of sub-paragraph (3) insert “and is not a qualifying new resident within the meaning of Schedule D1”;
omit sub-paragraph (3A).
In paragraph 4—
for sub-paragraph (2)(b) substitute— ;
in sub-paragraph (2)(c)—
for “that condition” substitute “the condition mentioned in sub-paragraph (3A) below”;
for “the commencement day” substitute “6 April 2025”;
in the closing words of sub-paragraph (2), for “the relevant day” substitute “31 January after the end of the tax year in which the relevant day falls”;
after sub-paragraph (3) insert—
Sub-paragraph (5) applies where a settlor fulfils the condition in paragraph 4(3A) of Schedule 5A to TCGA 1992 (settlements with foreign element: information) on 6 April 2025.
For the purposes of paragraph 4(2)(c) of that Schedule, the settlor is to be treated as first fulfilling that condition on 6 April 2025.
FA 2005 is amended as follows.
In section 28 (vulnerable person’s liability: VQTI), in subsection (4)—
at the end of paragraph (a) insert “and”;
omit paragraph (c) and the “and” before it.
In Schedule 1 (non-UK resident vulnerable person), in paragraph 7(1)(a) omit “and domiciled”.
In section 459 of ITTOIA 2005 (application of transfer of assets abroad legislation to disposals of deeply discounted securities), in subsection (1) omit “or domiciled”.
ITA 2007 is amended as follows.
In section 667 (trustees’ accrued income profits treated as settlement income), in subsection (2)—
in paragraph (a) omit “or domiciled outside the United Kingdom”;
in paragraph (b) omit “or domiciled in the United Kingdom”.
In section 680 (interest on securities involving accrued income losses: foreign trustees), in subsection (1)—
in paragraph (a) omit “or domiciled outside the United Kingdom”;
in paragraph (d) omit “, or domiciled in the United Kingdom,”.
In section 22 of F(No.2)A 1931 (Treasury power to issue securities with a FOTRA condition), in subsection (1)(b) for “neither domiciled nor” substitute “not”.
In section 154 of FA 1996 (FOTRA securities), omit subsection (1).
Any security issued with a FOTRA domicile condition is treated in relation to times on or after 6 April 2025 as if—
it were a security issued with the post-1996 Act FOTRA conditions (and with no other FOTRA condition), and
the post-1996 Act FOTRA conditions had been authorised in relation to the issue of that security by virtue of section 22 of F(No.2)A 1931.
In sub-paragraph (3)— “a FOTRA condition” means a condition about exemption from taxation authorised by section 22 of F(No.2)A 1931; “a FOTRA domicile condition”, in relation to a security, means a FOTRA condition requiring the security to be in the beneficial ownership of persons who are not domiciled in the United Kingdom for an exemption from taxation to apply; “the post-1996 Act FOTRA conditions” means the FOTRA conditions with which 7.25% Treasury Stock 2007 was first issued.
In section 614 of the Income and Corporation Taxes Act 1988 (exemptions and reliefs in respect of income from investments etc. of certain pension schemes), in subsections (4) and (5), omit “not domiciled and”.
Removal of domicile (secondary legislation)
In the Appendix to Schedule 1 to the Education (Grants) (Music, Ballet and Choir Schools) (England) Regulations 2001 (S.I. 2001/2743) (aided pupil scheme: computation of income), in paragraph 2, in sub-paragraph (a) omit “, ordinarily resident or domiciled”.
In Part 2 of Schedule 2 to the Education (Student Support) (European University Institute) Regulations 2010 (S.I. 2010/447) (calculation of contribution), in paragraph 4(5)(a), omit “or domiciled” in the first place it appears.
The Education (Student Support) Regulations 2011 (S.I. 2011/1986) are amended in accordance with sub-paragraphs (4) and (5).
In Schedule 4 (financial assessment)—
in paragraph 5(7)(a)—
omit “or domiciled” in the first place it appears;
omit “so”;
in paragraph 7(7)(a)—
omit “or domiciled” in the first place it appears;
omit “so”.
In Schedule 6 (assessment of eligible part-time student’s household income)—
in paragraph 5(6)(a)—
omit “or domiciled” in the first place it appears;
omit “so”;
in paragraph 7(7)(a)—
omit “or domiciled” in the first place it appears;The
omit “so”;
In the Income Tax (Digital Requirements) Regulations 2021 (S.I. 2021/1076) omit regulation 26.
Temporary repatriation facility
Temporary repatriation facility charge
This Part of this Schedule sets out a charge on amounts of qualifying overseas capital of individuals previously subject to the remittance basis.
The charge is to be known as the temporary repatriation facility charge, and is referred to in this Schedule as the “TRF charge”.
Paragraphs 2 to 6 set out when amounts are, or are to be treated, as qualifying overseas capital.
Amounts of qualifying overseas capital of an individual are subject to the TRF charge only if the individual designates them in accordance with this Part of this Schedule.
An individual may only designate qualifying overseas capital if the individual was subject to the remittance basis for at least one tax year (being a tax year before the tax year 2025-26).
An individual designates qualifying overseas capital by making an election (a “designation election”) in a return for the tax year 2025-26, 2026-27 or 2027-28 (see paragraph 8 for further provision about designation elections).
A designation election may only be made in a return if, for the tax year to which the return relates, the individual is UK resident for the purposes of income tax and capital gains tax (see Schedule 45 to FA 2013).
The amount of the TRF charge on qualifying overseas capital designated by an individual is—
in the case of amounts of qualifying overseas capital designated in a return for the tax year 2025-26 or 2026-27, the amount equal to 12% of the amount of that capital, and
in the case of amounts of qualifying overseas capital designated in a return for the tax year 2027-28, the amount equal to 15% of the amount of that capital.
Part 2 of this Schedule sets out exemptions and reliefs from income tax and capital gains tax that apply where amounts of qualifying overseas capital are designated.
Part 3 of this Schedule amends or modifies rules about the remittance of amounts where an individual has designated qualifying overseas capital.
For the purposes of this Part of this Schedule—
an individual is subject to the remittance basis for a tax year—
in relation to the tax years 2008-09 to 2024-25, if any of sections 809B, 809D or 809E of ITA 2007 apply to the individual for that year, or
in relation to any tax year before 2008-2009, if any income or gains of the individual for that year were subject to the remittance basis (including any income or gains that would have been regarded as arising in the tax year but were not as a result of the application of the remittance basis), and
“return” means a return under section 8 of TMA 1970 (personal return for income tax and capital gains tax), and
references to an election being included in a return include an election being so included as a result of an amendment of the return.
An amount of capital is “qualifying overseas capital” of an individual if it falls within sub-paragraph (2), (5) or (8).
An amount of capital falls within this sub-paragraph if—
it is an amount that arose in the tax year 2024-25 or an earlier tax year as income or as a gain,
the amount has not been remitted to the United Kingdom, and
the amount, if remitted to the United Kingdom, would have the effect mentioned in sub-paragraph (3)(a) or (b).
That effect is that—
a gain is treated as accruing to the individual by reference to the amount remitted in accordance with paragraph 1(2) of Schedule 1 to TCGA 1992 (gains charged on remittance basis).
In determining whether an amount of capital falls within sub-paragraph (2) for the purposes of making a designation election for a tax year, the condition in sub-paragraph (2)(b) is to be regarded as met if it was met at the end of that tax year.
An amount of capital falls within this sub-paragraph if—
it is an amount that arose in the tax year 2024-25 or an earlier tax year as income or as a gain,
the amount is remitted to the United Kingdom in the tax year 2025-26, 2026-27 or 2027-28, and
that remittance has the effect mentioned in sub-paragraph (3)(a) or (b).
An amount that is qualifying overseas capital falling within sub-paragraph (5) (and that has not previously been designated as result of the amount falling within sub-paragraph (2)) may only be designated in a designation election for the tax year in which it was remitted.
For the purposes of sub-paragraphs (2)(c) and (5)(c), a remittance is to be treated as having the effect mentioned in sub-paragraph (3)(a) or (b) if it would have that effect ignoring—
Part 2 of this Schedule (exemptions etc for designated qualifying overseas capital),
section 809VA of ITA 2007 (business investment relief), and
section 809X of that Act (exempt property).
An amount of capital falls within this sub-paragraph if—
it does not fall within sub-paragraph (2) or (5),
it was held by the individual immediately before 6 April 2025,
it was situated outside the United Kingdom—
immediately before it was most recently acquired by the individual before that date, and
throughout the period beginning with the time referred to in sub-paragraph (i) and ending with that date.
References in Parts 1 and 2 of this Schedule to amounts being remitted to the United Kingdom are to be construed in accordance with Chapter A1 of Part 14 of ITA 2007 (see, in particular, sections 809L to 809O of that Act).
This paragraph applies for the tax year 2025-26, 2026-27 or 2027-28 in relation to an individual if—
chargeable gains are treated as accruing to the individual in that tax year as a result of section 87(2) or 89(2) of TCGA 1992 in relation to a capital payment from the trustees of a settlement for which the individual is a beneficiary, and
the settlement has a section 1(3) amount that is greater than nil for one or more tax years before 2025-26.
So much of the payment as is matched with section 1(3) amounts for tax years before 2025-26 is qualifying overseas capital.
For the purposes of matching those amounts, apply section 87A of TCGA 1992 as if—
the section 1(3) amount for each tax year after the tax year 2024-25 were nil, and
the reference in Step 2 in subsection (2) of section 87A of that Act to the total amount of capital payments received by the beneficiaries were to the total amount of capital payments—
received by the individual and other beneficiaries that are qualifying individuals for the relevant tax year, and
to which section 87(2) or 89(2) of that Act applies.
For the purposes of this paragraph, ignore any reduction of a section 1(3) amount for the tax year 2024-25 or an earlier tax year resulting from the application of section 87 or 89(2) of TCGA 1992 in the tax year 2025-26 or any subsequent tax year.
Sub-paragraph (6) applies where—
an amount of a capital payment has been matched with a section 1(3) amount under sub-paragraph (2), and
that amount is designated as designated qualifying overseas capital.
The section 1(3) amount is to be taken to have been reduced (but not below nil) by so much of it as matches with the capital payment for the purposes of any subsequent application of this paragraph.
This paragraph is not to be taken as affecting the application of section 87A of TCGA 1992 for any purpose other than for the purposes of this paragraph and paragraph 5 (and no section 1(3) amounts or capital payments are to be taken to have been reduced as a result of the application of this paragraph for any other purpose).
For the purposes of this paragraph—
“section 1(3) amount” has the meaning it has in section 87 of TCGA 1992, and
section 97 of TCGA 1992 (supplementary provisions) applies as it applies for the purposes of sections 86A to 96 of that Act.
For the purposes of this paragraph, and paragraph 5, an individual is a qualifying individual in a tax year if the individual—
is UK resident for the purposes of income tax and capital gains tax for that tax year, and
was subject to the remittance basis for at least one tax year (being a tax year before the tax year 2025-26).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This paragraph applies for the tax year 2025-26, 2026-27 or 2027-28 in relation to an individual if—
chargeable gains are treated as accruing to the individual in that tax year as a result of paragraph 8(1) of Schedule 4C to TCGA 1992 in relation to a capital payment from the trustees of a relevant settlement for which the individual is a beneficiary, and
the section 1(3) amount in the Schedule 4C pool is greater than nil for one or more tax years before 2025-26.
So much of the payment as is matched with section 1(3) amounts in the Schedule 4C pool for tax years before 2025-26 is qualifying overseas capital.
For the purposes of matching those amounts, apply section 87A of TCGA 1992 as if—
the section 1(3) amount in the Schedule 4C pool for each tax year after the tax year 2024-25 were nil, and
the reference in Step 2 in subsection (2) of section 87A of that Act to the total amount of capital payments received by the beneficiaries were to the total amount of capital payments—
received by the individual and other beneficiaries that are qualifying individuals for the relevant tax year, and
to which paragraph 8(1) of Schedule 4C to that Act applies in relation to section 1(3) amounts in the Schedule 4C pool.
For the purposes of this paragraph, ignore any reduction of a section 1(3) amount in the Schedule 4C pool for the tax year 2024-25 or an earlier tax year resulting from the application of paragraph 8(1) of Schedule 4C to TCGA 1992 in the tax year 2025-26 or any subsequent tax year.
Sub-paragraph (6) applies where—
an amount of a capital payment has been matched with a section 1(3) amount in the Schedule 4C pool under sub-paragraph (2), and
that amount is designated as designated qualifying overseas capital.
The section 1(3) amount in the Schedule 4C pool is to be taken to have been reduced (but not below nil) by so much of it as matches with the capital payment for the purposes of any subsequent application of this paragraph.
This paragraph is not to be taken as affecting the application of section 87A of TCGA 1992 for any purpose other than for the purposes of this paragraph and paragraph 3 (and no section 1(3) amount in the Schedule 4C pool or capital payments are to be taken to have been reduced as a result of the application of this paragraph for any other purpose).
For the purposes of this paragraph—
“section 1(3) amount in the Schedule 4C pool” and “relevant settlement” are to be construed in accordance with Schedule 4C to TCGA 1992, and
section 97 of TCGA 1992 (supplementary provisions) applies as it applies for the purposes of sections 86A to 96 of that Act.
This paragraph applies—
where an individual is treated as having an amount of income as a result of section 643A of ITTOIA 2005 (benefits paid out of protected foreign-source income or transitional trust income) for any of the tax years 2025-26, 2026-27 or 2027-28,
where an individual would have been treated as having an amount of income as a result of any other provision of Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor or family) in the tax year 2024-25 or an earlier tax year but was not only as a result of the application of section 648(3) of that Act (relevant foreign income treated as arising under settlement only if and when remitted), or
where—
an individual is treated as having an amount of income for any of the tax years 2025-26, 2026-27 or 2027-28 as a result of section 732 of ITA 2007 (individuals receiving a benefit as a result of relevant transactions),
under section 735A of that Act (if it applied also for this purpose) that amount would be matched with relevant income that arose in the tax year 2024-25 or an earlier tax year, and
that amount would have been treated as relevant foreign income of the individual if it had been treated as accruing in the tax year 2024-25 and the individual had been subject to the remittance basis for that tax year.
An amount of income falling within paragraph (a), (b) or (c) of sub-paragraph (1) is to be treated as an amount of qualifying overseas capital of the individual.
An amount of income treated as qualifying overseas capital falling within sub-paragraph (1)(a) or (c) may only be designated in a return for the tax year in which the income was treated as arising to the individual.
For the purposes of this paragraph “relevant foreign income” has the meaning it has in the Income Tax Acts.
Sub-paragraph (2) applies where—
an individual is treated as having an amount of income for any of the tax years 2025-26, 2026-27 or 2027-28 as a result of section 732 of ITA 2007 (individuals receiving a benefit as a result of relevant transactions),
the amount of income does not fall within paragraph 6(1)(c), and
the benefit by reference to which that income is treated as arising would, if it were not chargeable to income tax, be an amount of qualifying overseas capital of the individual by virtue of paragraph 3 or 5 (capital payments).
For the purposes of applying those paragraphs for the purposes of sub-paragraph (1)(c)—
those paragraphs have effect as if—
for sub-paragraph (1)(a) (in each paragraph) there were substituted—,
the reference in sub-paragraph (2) (in each paragraph) to “the payment” were to the benefit by reference to which the income is treated as arising,
sub-paragraph (3)(b)(ii) (in each paragraph) were omitted, and
the references in each paragraph, and in section 87A of TCGA 1992 as applied by those paragraphs, to “capital payments” were to benefits falling within sub-paragraph (1)(c) of this paragraph, and
those paragraphs are to be applied after they have been applied for the purposes of determining whether any amount of a capital payment is qualifying overseas capital.
The amount is to be treated as an amount of income of qualifying overseas capital of the individual.
The amount may only be designated in a return for the tax year in which the income was treated as arising to the individual.
A designation election for a tax year must be made before the end of the period of 12 months beginning with 31 January after the end of that tax year.
The designation must—
set out the total amount designated, ...
for each amount designated, whether or not it is designated on the basis it is qualifying overseas capital as a result of a remittance provision, and
identify which (if any) of the amounts designated on that basis have been remitted in the tax year to which the return relates.
For the purposes of designating an amount of qualifying overseas capital of an individual that—the value of that amount is the value of the amount when it first arose to the individual.
is qualifying overseas capital as a result of paragraph 2(2) or (5), or
is treated as qualifying overseas capital as a result of paragraph 6(1)(b),
In this Part and in Part 2 “remittance provision” means paragraph 2(2) or (5) or paragraph 6(1)(b).
Where—it is not to be regarded as designated under that paragraph for the purposes of paragraph 10(7) (relief for offshore income gains) or paragraph 13 (relief for matched capital payments) as a result of that designation on that basis.
an amount is designated on the basis it is qualifying overseas capital as a result of a remittance provision, and
the amount would (ignoring this sub-paragraph) also be regarded as designated under paragraph 3 or 5 (matched capital payments),
Accordingly two designations of the amount are required to secure the benefit of all of the reliefs that may be available under paragraphs 10(1), 10(7),12(1) and 13—
one designation of the amount on the basis it is qualifying overseas capital as a result of a remittance provision, and
another not on that basis.
Where an amount of relevant foreign tax has been paid, or is payable, in respect of an amount of qualifying overseas capital, only so much of the amount as remains after deducting the amount of relevant foreign tax paid, or payable, may be designated.
For the purposes of this paragraph, relevant foreign tax means a tax imposed by the law of a territory outside the United Kingdom that corresponds to—
income tax, or
capital gains tax.
But where—sub-paragraph (3) does not apply to the related qualifying overseas capital to the extent that the tax has been, or will be, paid out of those funds.
an amount of relevant foreign tax has been paid, or will be paid, in respect of an amount of qualifying overseas capital (“the related qualifying overseas capital”), and
it has been, or will be, paid out of funds other than the related qualifying overseas capital,
An individual may designate an amount where it has not yet been determined—
whether the amount is qualifying overseas capital, or
whether, or to what extent, relevant foreign tax is, or was, payable in respect of the amount.
Where the individual considers that an amount designated under sub-paragraph (5) could, if it were qualifying overseas capital, be designated on the basis that it is qualifying overseas capital as a result of a remittance provision, the individual may designate it on that basis.
An amount designated—is to be nevertheless treated as designated qualifying overseas capital, other than for the purpose of Part 2 of this Schedule (exemptions etc).
that is determined to not be qualifying overseas capital, or
that should not have been designated as a result of sub-paragraph (3),
Sub-paragraph (6B) applies where—
an amount (“the TRF amount”) is treated as designated qualifying overseas capital of an individual as a result of sub-paragraph (6),
on or after 6 April 2025, an officer of Revenue and Customs, in relation to the tax year 2024-25 or an earlier tax year—
amends the individual’s self-assessment while an enquiry under section 9A of TMA 1970 (enquiry into return) into the individual’s return for that tax year is in progress,
issues a partial or final closure notice under section 28A of that Act (completion of enquiry) in relation to that return, or
makes an assessment under section 29 of that Act, and
the effect of the officer taking that step is that income tax or capital gains tax is charged in respect of the TRF amount.
The amount of income tax or capital gains tax due and payable under section 59B of TMA 1970 in respect of the TRF amount is to be treated as reduced (but not below nil) by the amount of the TRF charge paid in respect of the TRF amount.
Where sub-paragraph (6B) applies, the individual may not amend the return in which the designation election relating to the TRF amount was included to alter or revoke that election (if the return otherwise could have been amended) so as to cause the TRF amount not to be designated.
Where an amount is designated, it is treated as designated qualifying overseas capital from the beginning of the tax year to which the return in which it is designated relates.
An individual who makes a designation election must keep a record of each amount designated.
An amount of designated qualifying overseas capital is chargeable to the TRF charge for the tax year to which the return in which it is designated relates.
Amounts of TRF charge are to be charged as if they were amounts of income tax.
For the purposes of the collection and management of the TRF charge, all other enactments applying generally to income tax apply to the TRF charge.
Those enactments include—
those relating to returns of information and the supply of accounts, statements and reports,
those relating to the assessing, collecting and receiving of income tax,
those conferring or regulating a right of appeal, and
those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom.
But section 59A of TMA 1970 (payments on account of income tax) does not apply in relation to amounts of TRF charge.
For the purposes of section 12B of TMA 1970 (as applied as a result of sub-paragraph (4)), the records required to be kept as a result of paragraph 8(8) are to be regarded as records that must be kept for the purposes of enabling an individual to make and deliver a correct and complete return.
Paragraph 8(6) is not to be taken as preventing the amendment of a return so as to alter or revoke a designation of qualifying overseas capital made in that return, provided that amendment is made in accordance with section 9ZA of TMA 1970 (taxpayer permitted to amend return within 12 months of filing date).
Exemptions etc for designated qualifying overseas capital
No liability to income tax arises on
the remittance of an amount of designated qualifying overseas capital that is designated on the basis that it is qualifying overseas capital as a result of a remittance provision , or
an amount of income treated as qualifying overseas capital under paragraph 6 that—
falls within sub-paragraph (1)(b) of that paragraph, and
is designated on the basis that it is qualifying overseas capital as a result of a remittance provision.
No liability to income tax arises on an amount of income treated as qualifying overseas capital under paragraph 6 , and that falls within sub-paragraph (1)(a) or (c) of that paragraph, if the amount is designated.
But such an amount is to be treated for the purposes of section 97(1) of TCGA 1992 (capital payments not to include amounts chargeable to income tax) as if it were chargeable to income tax.
No liability to income tax arises on an amount of income treated as qualifying overseas capital under paragraph 7 if the amount is designated.
Accordingly the amount—
will be a capital payment for the purposes of sections 86A to 96 of, and Schedule 4C to, TCGA 1992 (see section 97(1) of that Act), and
will, as a result of paragraph 3 or 5 (or both), be qualifying overseas capital.
Any such qualifying overseas capital is to be treated as having been designated by the individual (under that paragraph or those paragraphs), but no liability to the TRF charge is to arise as a result of that deemed designation.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This paragraph has effect for the tax year 2025-26 and subsequent tax years.
This paragraph applies where an amount of income that is treated as arising to an individual under section 732 of ITA 2007 (“the deemed income”) is exempt from income tax by virtue of paragraph 10.
If the deemed income is qualifying overseas capital by virtue of paragraph 6(1)(c), Chapter 2 of Part 13 of ITA 2007 has effect as though the deemed income had been charged to tax under section 731 of that Act.
Accordingly—
in the application of section 733(1) of ITA 2007 to the individual for subsequent tax years, the amount of the deemed income will be deducted at Step 2 and at paragraph (a) of Step 5, and
in the application of section 733(1) of ITA 2007 to any other individual for subsequent tax years, the amount of the deemed income will be deducted at paragraph (b) of Step 5.
If the deemed income is qualifying overseas capital by virtue of paragraph 7, Chapter 2 of Part 13 of ITA 2007 has effect as though the benefit by reference to which the deemed income was treated as arising had never been provided.
Accordingly, in the application of section 733(1) of ITA 2007 to any individual for subsequent tax years—
that benefit will not be taken into account at Step 1,
no deduction in respect of the deemed income will be made at Step 2 or Step 5, and
the total untaxed benefits will not be reduced in respect of that benefit by virtue of section 734 (previous capital gains charge).
No gain is treated as accruing under paragraph 1(2) of Schedule 1 to TCGA 1992 on the remittance of an amount of designated qualifying overseas capital that is designated on the basis that it is qualifying overseas capital as a result of a remittance provision (other than paragraph 6(1)(b)).
This paragraph has effect for the tax year 2025-26 and subsequent tax years.
Sub-paragraph (2) applies where—
chargeable gains are treated as accruing to an individual in a tax year under section 87(2) or 89(2) of TCGA 1992 as a result of a capital payment made to an individual by the trustees of a settlement, and
an amount of that capital payment is qualifying overseas capital that has been designated by the individual under paragraph 3.
The gains are to be reduced by the amount of that designated qualifying overseas capital.
Sub-paragraph (4) applies where—
an individual is charged to capital gains tax by virtue of the matching (under section 87A of TCGA 1992) of a capital payment with the section 1(3) amount for the tax year 2024-25 or any earlier tax year,
section 91(2) of TCGA 1992 (increase of tax where capital payment matched to section 1(3) amount for earlier tax year) would (ignoring sub-paragraph (4)) apply in relation to the capital payment mentioned in paragraph (a),
an amount of a capital payment (which may or may not be the payment mentioned in paragraph (a)) is qualifying overseas capital that has been designated by the individual, and
the amount designated is qualifying overseas capital as a result of the fact it would, in accordance with paragraph 3(2), be matched with the section 1(3) amount mentioned in paragraph (a).
Section 91(2) of TCGA 1992 does not apply to capital gains tax payable by the individual in respect of so much of the capital payment mentioned in sub-paragraph (3)(a) as is matched with the amount of the section 1(3) amount as would also, in accordance with paragraph 3(2), be matched with the amount of a capital payment mentioned in sub-paragraph (3)(c).
Sub-paragraph (6) applies where—
chargeable gains are treated as accruing to an individual in a tax year under paragraph 8(1) of Schedule 4C to TCGA 1992 as a result of a capital payment made to an individual by the trustees of a settlement, and
an amount of that capital payment is qualifying overseas capital that has been designated by the individual under paragraph 5.
The gains are to be reduced by the amount of that designated qualifying overseas capital.
Sub-paragraph (8) applies where—
an individual is charged to capital gains tax by virtue of the matching (under section 87A of TCGA 1992 as it has effect for the purposes of paragraph 8(3) of Schedule 4C to that Act) of a capital payment with the section 1(3) amount in the Schedule 4C pool for the tax year 2024-25 or any earlier tax year,
paragraph 13(2) of Schedule 4C to that Act (increase of tax where capital payment matched to section 1(3) amount for earlier tax year) would (ignoring sub-paragraph (8)) apply in relation to the capital payment mentioned in paragraph (a),
an amount of a capital payment (which may or may not be the payment mentioned in paragraph (a)) is qualifying overseas capital that has been designated by the individual, and
the amount designated is qualifying overseas capital as a result of the fact it would, in accordance with paragraph 5(2), be matched with the section 1(3) amount mentioned in paragraph (a).
Paragraph 13(2) of Schedule 4C to TCGA 1992 does not apply to capital gains tax payable by the individual in respect of so much of the capital payment mentioned in sub-paragraph (7)(a) as is matched with the amount of the section 1(3) amount in the Schedule 4C pool as would also, in accordance with paragraph 5(2), be matched with the amount of a capital payment mentioned in sub-paragraph (7)(c).
For the purposes of this paragraph—
“section 1(3) amount” has the meaning it has in section 87 of TCGA 1992;
“section 1(3) amount in the Schedule 4C pool” is to be construed in accordance with Schedule 4C to TCGA 1992.
This paragraph has effect for the tax year 2025-26 and subsequent tax years.
This paragraph applies to an amount (“amount A”) if—
either—
the remittance of the amount to the United Kingdom would have the effect mentioned in paragraph 2(3)(a) or (b) by reference to income or gains, or
the remittance of the amount would result in income being treated as arising to a settlement in accordance with section 648(3) (and accordingly would result in an amount falling within paragraph 6(1)(b) arising), and
the remittance of an amount (“amount B”) of designated qualifying overseas capital to the United Kingdom would have one of the effects mentioned in paragraph (a)(i) or (ii) by reference to that same income or those same gains (“the reference income or gains”) if it had not been designated.
Where amount A falls within sub-paragraph (1)(a)(i), so much of amount A (so far as it relates to the reference income or gains) as does not exceed amount B (so far as it relates to the reference income or gains) is to be treated—
as designated qualifying overseas capital, and
as designated on the basis it is qualifying overseas capital as a result of a remittance provision.
Where amount A falls within sub-paragraph (1)(a)(ii), so much of the amount falling within paragraph 6(1)(b) as would result from the remittance of amount A as does not exceed amount B (so far as it relates to the reference income or gains) is to be treated—
as designated qualifying overseas capital, and
as designated on the basis it is qualifying overseas capital as a result of a remittance provision.
The effects of Parts 1 and 2 of this Schedule are to be ignored for the purposes of section 65(5)(b) of IHTA 1984 (and accordingly will not prevent any amount being regarded as income of a person for the purposes of income tax for the purposes of that section).
Where—so much of the deemed disposal under section 71 of TCGA 1992 arising on the making of the payment as reflects the designated qualifying overseas capital is (despite sub-paragraph (1)) treated as a chargeable transfer within the meaning of IHTA 1984 for the purposes only of section 260(2)(a) of TCGA 1992 (gifts on which inheritance tax is chargeable etc).
the trustees of a settlement make a capital payment to an individual,
the making of that payment results in the individual having qualifying overseas capital,
that qualifying overseas capital is designated,
Effect of designation on when amounts remitted etc
Section 809I of ITA 2007 (remittance basis charge: income and gains treated as remitted) does not apply for a tax year in relation to an individual if—
the tax year is tax year 2025-26, 2026-27 or 2027-28,
the individual—
makes a designation of qualifying overseas capital for that tax year, or
has made such a designation for a previous tax year, and
that section has not applied in relation to that individual for the tax year 2024-25 or an earlier tax year.
Section 809Q of ITA 2007 is amended as follows.
In subsection (3)—
before Step 1 insert—, and
in Steps 2 to 4, and in the first sentence in Step 5, for “transfer”, in each place it occurs, substitute “remainder”.
In subsection (6)—
omit the “or” after paragraph (a), and
after paragraph (b) insert
After subsection (8) insert—
In section 809Z10 of ITA 2007 (general interpretation), after the definition of “the remittance basis user” insert—
Section 809R of ITA 2007 is amended as follows.
In subsection (1), for “This section applies” substitute “Subsections (2) to (8) apply”.
After subsection (4) insert—
In subsection (5) for “section 809Q does not apply” substitute “neither section 809Q nor section 809RZA(2) applies”.
In subsection (6)—
in the words before paragraph (a), for “section 809Q as not applying in relation to it, if it” substitute “neither section 809Q nor section 809RZA(2) as applying in relation to it, if they”, and
in paragraph (a), for “section 809Q does not apply” substitute “neither section 809Q nor section 809RZA(2) applies”.
In subsection (7)—
omit the “or” after paragraph (a), and
after paragraph (b) insert
In subsection (9)—
for “step 1” substitute “steps A1 and 1”, and
for “step 2” substitute “steps A1 and 2”.
After section 809R of ITA 2007 insert—
This following modifications have effect for the tax years 2025-26, 2026-27 and 2027-28.
Chapter A1 of Part 14 of ITA 2007 has effect as if—
after section 809R there were inserted—, and
in section 809RZD (as inserted by paragraph 17), at the end there were inserted—
ITA 2007 is amended as follows.
In section 809VC (qualifying investments) in subsection (4), after “if” insert.
In section 809VG (income or gains treated as remitted following certain events)—
after subsection (6) insert—,
in subsection (7)—
for “Sections” substitute “Section”, and
for “and 809VO (investments made from mixed funds) make” substitute “makes”, and
in subsection (9), after paragraph (a) insert—.
In section 809VN (order of disposals etc)—
in subsection (2)(b), for the words from “order” to the end substitute “following order.”, and
after subsection (2) insert—, and
in subsection (4), for paragraph (b) substitute—
In section 809VO (investments made from mixed funds)—
for subsection (4) substitute—
in subsection (7), after “proportion” insert “(determined under subsection (4) or (4C) as the case may be)”,
in subsection (8)(a)—
before “affected” insert “relevant”, and
before “portion” insert “relevant proportion of the”,
in subsection (8)(b), after “(3)” insert “or (4B) (as the case may be)”, and
after subsection (8) insert—
In section 809VI (the appropriate mitigation steps), in subsection (3), after “But” insert.
After that section insert—
Sections 397 to 398 of ITTOIA 2005 (which have been repealed and only have effect in relation to distributions made before tax year 2016-17) do not apply in relation to any amount of designated qualifying overseas capital.
The amendments made by this Part of this Schedule have effect for the tax year 2025-26 and subsequent tax years.
Sub-paragraph (1) does not apply to the modifications made by paragraphs 14 and 18.
Rebasing of assets
This paragraph applies to the disposal of an asset by an individual (“P”) where—
the asset was held by P on 5 April 2017,
the disposal is made on or after 6 April 2025,
the asset was not situated in the United Kingdom at any time in the period beginning with 6 March 2024 and ending with 5 April 2025,
P was not domiciled in the United Kingdom at any time in a tax year before tax year 2025-26, and
P has made a claim under section 809B of ITA 2007 (claim for remittance basis) for at least one tax year that is—
one of the tax years from tax year 2017-18 to tax year 2024-25, and
a tax year for which neither section 809D nor 809E of that Act applied to P (remittance basis applies without claim).
In computing, for the purpose of TCGA 1992, the gain or loss accruing on the disposal, it is to be assumed that P acquired the asset on 5 April 2017 for a consideration equal to its market value on that date.
Sub-paragraph (2) applies notwithstanding section 58(1) of TCGA 1992 (disposals between spouses).
Where under section 127 of TCGA 1992 (including that section as applied by sections 132, 135 and 136 of that Act) an original and a new holding of shares or other securities are treated as the same asset, the condition in sub-paragraph (1)(c) applies to both the original and the new holding.
Section 835BA of ITA 2007 (deemed domicile) applies for the purposes of sub-paragraph (1)(d).
This paragraph and paragraphs 2 and 3 have effect as if they were included in TCGA 1992.
This paragraph applies for the purposes of paragraph 1(1)(c) in the case of an asset which, having been situated outside the United Kingdom, becomes situated in the United Kingdom before the end of the relevant period.
The asset is to be regarded as not situated in the United Kingdom at a time in the relevant period when—
it meets the condition in section 809Z(3)(a), (b) or (c) of ITA 2007 (public access),
it meets the condition in section 809Z3(3)(a), (b) or (c) of ITA 2007 (repairs),
the sole or principal purpose of its being situated in the United Kingdom is to sell it or put it up for sale, or
in the case of clothing, footwear, jewellery or a watch, it is for the personal use of—
P or a husband, wife or civil partner of P, or
a child or grandchild of a person within sub-paragraph (i), if the child or grandchild has not reached the age of 18.
The asset is to be regarded as not situated in the United Kingdom at any time in the relevant period if it is brought to, or received or used in, the United Kingdom in circumstances in which section 809L(2)(a) of ITA 2007 applies but—
by virtue of section 809X(5)(c) of ITA 2007 (notional remitted amount less than £1000) it is treated as not remitted to the United Kingdom, or
by the end of the relevant period it has not failed to meet the temporary importation rule in section 809Z4 of ITA 2007.
Section 809M(3)(a) of ITA 2007 (persons living together) apply for the purposes of sub-paragraph (2)(d)(i).
In this paragraph the “relevant period” means the period beginning with 6 March 2024 and ending with 5 April 2025.
An individual may make an election for paragraph 1 not to apply to a disposal made by the individual.
An election under this paragraph is irrevocable.
All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under this paragraph.
In Schedule 8 to F(No.2)A 2017, in paragraph 41(4)(b), for “that in which the disposal was made” substitute “the tax year 2024-25”.
The amendment made by this paragraph has effect for the tax year 2025-26 and subsequent tax years.
Trusts: connected amendments, transitional provision etc
Settlements (income)
Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor or family) is amended in accordance with this Part of this Schedule.
In section 619 (charge to tax under Chapter 5), in subsection (1)—
at the end of paragraph (d), insert “, and”;
in paragraph (e), after “protected foreign-source income” insert “or transitional trust income”;
omit paragraph (f) and the “and” before it.
In section 622 (person liable), for “sections 643A and 643I to 643M” substitute “section 643A (under which a close member of the settlor’s family may instead be liable)”.
In section 624 (income where settlor retains an interest), in subsection (3)—
after “section 627 (exceptions for certain types of income),” insert “and”;
omit “section 628A (exception for protected foreign-source income)” and the “and” before it.
Omit sections 628A to 628C (protected foreign-source income and transitional trust income).
In section 629 (income paid to relevant children of settlor), in subsection (5), omit “or section 630A (exception for protected foreign-source income)”.
Omit section 630A (exception to section 629 for protected foreign-source income).
In section 635 (capital sums charge: amount of available income)—
in subsections (2) and (3)(d)(i), omit “unprotected”;
for subsection (5) substitute—
In section 636 (capital sums charge: calculation of undistributed income)—
omit “unprotected” in the following places—
subsection (1);
subsection (2) (in both places it occurs);
subsection (4);
subsection (6);
in subsection (2)(b), omit “domiciled and”.
In section 637 (qualifications to section 636), in subsections (5) and (7A), omit “unprotected”.
For the italic heading before section 643A, substitute— .
Before section 643A insert—
For section 643A substitute—
Section 643B (meaning of “untaxed benefits total” in section 643A) is amended as follows.
In subsection (1), for Step 1 substitute—
For subsection (2) substitute—
In subsections (4) and (5), for “643M” substitute “643EA”.
For section 643C substitute—
Section 643E (reimbursement of tax paid by settlor) is amended as follows.
In the heading, for “section 643A” substitute “643B(2)”.
In subsection (1), for “section 643A(3) or (4)” substitute “section 643B(2) (benefit received by close family member attributed to settlor)”.
In subsection (2), for paragraphs (a) and (b) substitute— .
After section 643E insert—
Section 643F (income attributed by section 643A to user of remittance basis) is amended as follows.
In subsection (1)—
in paragraph (a), for the words from “is treated” to the end substitute “was treated by section 643A as arising to an individual for any of the tax years 2018-19 to 2024-25, and”;
in paragraph (b), for “applies” substitute “applied”.
In subsection (6)—
in the definition of “protected income”, for “forms” substitute “under section 643C formed”;
in the definition of “the relevant individual”, in paragraphs (a) and (b), for “is treated” substitute “was treated”.
At the end insert—
Section 643G (section 643F(4): benefits and income “relating” to deemed income) is amended as follows.
In subsection (1)—
in paragraph (a), for “applies” substitute “applied”;
after paragraph (a) insert— .
In subsection (2)—
in paragraph (b), for “is allowed” substitute “was allowed”;
in paragraph (d), for “is”, in both places it occurs, substitute “was”;
in paragraph (e), for “is”, in both places it occurs, substitute “was”;
in paragraph (f), for “is treated” substitute “was treated”.
In section 643H (meaning of close member of settlor’s family), in the heading and in subsection (1), for “643B to 643M” substitute “643A to 643EA”.
Omit sections 643I to 643M (old onward gift provisions).
Section 643N (person liable under section 643J or 643L and remittance basis applies) is amended as follows.
In the heading, for “applies” substitute “applied”.
In subsection (1)—
in paragraph (a)—
in the words before sub-paragraph (i), for “is treated as arising to an individual for a tax year” substitute “was treated as arising to an individual for the tax year 2024-25 or an earlier tax year”;
in sub-paragraph (i), for “applies” substitute “applied”;
in paragraph (b), for “applies” substitute “applied”.
In subsection (3), after “onward payment” insert “referred to in section 643I(1)(d)”.
At the end insert—
Section 645 (property or income originating from settlor) is amended as follows.
In subsection (1), for “sections 628A and 644” substitute “section 644”.
After subsection (2) insert—
Section 646 (adjustments between settlor and trustees etc) is amended as follows.
In subsection (2), for paragraphs (a) and (b) substitute—
In subsection (6A)—
omit the “and” after paragraph (a);
at the end insert
Section 648 (income arising under a settlement) is amended as follows.
In subsection (1)(b), omit “domiciled and”.
In subsection (3)—
for “if, for a tax year, section 809B, 809D or 809E of ITA 2007 (remittance basis) applies”, substitute “if, for the tax year 2024-25 or an earlier tax year, section 809B, 809D or 809E of ITA 2007 (remittance basis) applied”;
for “relevant foreign income” substitute “specified foreign income”.
At the end insert—
Transfer of assets abroad
Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) is amended in accordance with this Part of this Schedule.
In section 718 (meaning of “person abroad” etc)—
in subsection (1), for the words from “means” to the end, substitute “means a person who is resident outside the United Kingdom.”;
omit subsection (3).
In section 720 (charge to tax on income treated as arising under section 721)—
in subsection (4), omit “and section 726 (non-UK domiciled individuals to whom remittance basis applies)”;
in subsection (7), for “742A” substitute “742”.
In section 721 (individuals with power to enjoy income as a result of relevant transactions), for subsections (3B) and (3BA) substitute—
Omit sections 721A and 721B (meaning of “protected foreign-source income” etc).
After section 725 insert—
Section 726 (remittance basis etc) is amended as follows.
For the heading substitute “Qualifying new residents and remittance-basis users: “foreign” deemed income”.
For subsection (1) substitute—
After subsection (2) insert—
Omit subsections (6) and (7).
At the end insert—
In section 727 (charge to tax on income treated as arising under section 728)—
omit subsection (3A);
in subsection (5), for “742A” substitute “742”.
In section 728 (individuals receiving capital sums as a result of relevant transactions), for subsections (1A) and (1B) substitute—
Omit section 729A (meaning of “protected foreign-source income”).
Before section 730 insert—
Section 730 (remittance basis etc) is amended as follows.
For the heading substitute “Qualifying new residents and remittance-basis users: “foreign” deemed income”.
For subsection (1) substitute—
After subsection (2) insert—
Omit subsections (6) and (7).
At the end insert—
Section 731 (charge to tax on income treated as arising under section 732) is amended as follows.
In subsection (1), for “individuals receiving a benefit” substitute “non-transferors receiving a benefit”.
Omit subsections (1A) to (1C) and (2A).
In subsection (3), omit “, but this is subject to section 733A”.
In subsection (4), for “742A” substitute “742”.
Section 732 (deemed income where benefit received) is amended as follows.
In the heading, for “Individuals” substitute “Non-transferors”.
In subsection (1)—
in paragraph (b), for “receives a benefit in a tax year” substitute “who is UK resident for a tax year receives a benefit in that tax year”;
for paragraph (d) substitute— .
Omit subsection (4).
Section 733 (income charged under section 731) is amended as follows.
In subsection (1), in Step 2, omit the words from “except that” to “for an earlier tax year”.
After subsection (2) insert—
Omit sections 733A to 733E and 734A (old provision about protected foreign-source income).
Section 735 (remittance basis etc) is amended as follows.
For the heading substitute “Qualifying new residents and remittance-basis users: “foreign” deemed income”.
For subsection (1) substitute—
After subsection (2) insert—
At the end insert—
Section 735A (matching rules) is amended as follows.
In subsection (1), for paragraph (b) substitute— .
in subsection (6), for “the individual, or as a result of section 733A another person” substitute “a person”.
After section 735A insert—
Section 735B (settlor charge: remittance-basis users) is amended as follows.
For the heading substitute “Historical liability under section 733A where remittance basis applied”.
For subsection (1) substitute—
Section 735C (old onward gifts provisions: remittance-basis users) is amended as follows.
For the heading substitute “Historical operation of section 733C or 733E where remittance basis applied”.
In subsection (1)—
in paragraph (a)—
for the words before sub-paragraph (i) substitute “the income was treated as arising to an individual for any of the tax years 2018-19 to 2024-25”;
in sub-paragraph (i), for “applies” substitute “applied”;
in paragraph (b), for “applies” substitute “applied”.
After subsection (4) insert—
In section 736 (exemptions: introduction)—
in subsection (1), for “742A” substitute “742”;
omit subsection (2A).
Omit section 742A (post-5 April 2012 transactions: exemption for genuine transactions).
In section 747 (amounts corresponding to accrued income profits and related interest), in subsection (1)(b) and subsection (4)(b), omit “or domiciled”.
In section 751 (tribunal’s jurisdiction on appeals), omit paragraph (da).
Settlements (chargeable gains)
TCGA 1992 is amended in accordance with this Part of this Schedule.
In section 1A (territorial scope), in subsection (2)(e), omit “87K, 87L”.
In section 1E (losses deductible only when within scope of tax etc), omit subsection (4).
In section 62 (death: general provisions), in subsection (2A), omit paragraph (a).
Section 86 (attribution of gains to settlors with interest in non-resident or dual resident settlements) is amended as follows.
In subsection (1)(c), omit “is domiciled in the United Kingdom at some time in the year and”.
Omit subsection (3A).
In subsection (4), omit paragraph (b) and the “and” before it.
At the end insert—
In section 86A (attribution of gains to settlor where temporarily non-resident), in subsection (1)(b), omit “, 87K, 87L”.
In section 87 (non-UK resident settlements: attribution of gains to beneficiaries), at the end insert—
Section 87B (section 87: remittance basis) is amended as follows.
In subsection (1)—
in paragraph (a)—
for “are treated” substitute “were treated”;
for “a tax year” substitute “the tax year 2024-25 or an earlier tax year”;
in paragraph (b), for “applies” substitute “applied”.
In subsection (2), for “chargeable gains accruing” substitute “treated as having accrued”.
In subsection (4), for “are treated as accruing consists of” substitute “were treated as accruing consisted of”.
At the end insert—
In section 87D (sections 87 and 87A: capital payments to non-residents disregarded), in subsection (1) omit paragraph (b) and the “and” before it.
Section 87G (settlor liable if capital payment received by close family member) is amended as follows.
In subsection (1)(b), for “at any time in that year” substitute “for that tax year”.
After subsection (2) insert—
In subsection (4)—
omit the “and” after paragraph (a);
after paragraph (b) insert .
In section 87H (meaning of “close member of the settlor’s family”), in subsection (1), for “87D, 87G and 87L” substitute “87D and 87G”.
For sections 87I to 87M (old onward gifting provisions) substitute—
In section 91 (increase in tax payable under section 87 or 89(2)), in subsection (1)(a), omit “, 87K, 87L”.
In section 97 (supplementary provisions)—
in subsection (1)(a)(ii), for the words from “any of sections 643A” to the end of the sub-paragraph, substitute “Chapter 5 of Part 5 of ITTOIA 2005 (settlements) or Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad)”;
in subsection (3), for the words from “section 643A” to “ITA 2007”, substitute “Chapter 5 of Part 5 of ITTOIA 2005 (settlements) or Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad)”.
In section 279A (deferred unascertainable consideration: election for treatment of loss), in subsection (7), omit paragraph (b) (but not the “and” after it).
In section 279C (effect of election under section 279A), in subsection (6)—
after paragraph (a) insert “and”;
omit paragraph (c) and the “and” before it.
In Schedule 1 (UK resident individuals not domiciled in UK), in paragraph 3(5), omit paragraph (b) and the “and” before it.
Schedule 4C (transfers of value: attribution of gains to beneficiaries) is amended as follows.
In paragraph 8(6), after “87G(2),” insert “87HA(2),”.
Schedule 5 (attribution of gains to settlors with interest in non-resident or dual resident settlement) is amended as follows.
In paragraph 1 (construction of section 86(1)(e): losses etc), after sub-paragraph (6) insert—
Omit paragraphs 5A and 5B (protections for deemed domiciles etc).
After paragraph 5 insert—
In paragraph 6 (right of recovery), in sub-paragraph (3)—
omit the “and” after paragraph (a);
after paragraph (b) insert .
Commencement and transitional provision
The amendments made by paragraphs 1 to 53, 55 to 64 and 67 to 69 have effect for the tax year 2025-26 and subsequent tax years.
The amendment made by paragraph 54 to section 62 of TCGA 1992 (death: general provisions) has effect in relation to deaths occurring on or after 6 April 2025.
The amendments made by paragraphs 65 and 66 to sections 279A and 279C of TCGA 1992 (deferred unascertainable consideration: election for treatment of loss) have effect in relation to disposals made on or after 6 April 2025 of rights to which section 279A of that Act applies.
This paragraph applies for the purposes of section 643A of ITTOIA 2005 if an individual’s untaxed benefits total in relation to a settlement for the tax year 2024-25 exceeded the available protected income up to the end of that tax year.
In determining under section 643B of that Act the individual’s untaxed benefits total for the tax year 2025-26 or a later tax year, any benefit provided to the individual in the tax year 2024-25 or an earlier tax year is to be disregarded at Step 1 in subsection (1).
In this paragraph “untaxed benefits total” and “available protected income”, in relation to an individual, a settlement and a tax year, are to be construed in accordance with sections 643B and 643C of ITTOIA 2005 (as they have or had effect for the tax year in question).
Section 643EA of ITTOIA 2005 (onward gifts from non-residents or qualifying new residents), as inserted by paragraph 17 of this Schedule, applies where the onward gift is provided on or after 6 April 2025, even if the original benefit was provided before that date.
Where the original benefit was provided before 6 April 2025, that section applies as if for subsection (1)(b) there were substituted— .
In this paragraph, “the original benefit” and “the onward gift” have the same meanings as in section 643EA of ITTOIA 2005; and in a case within section 643EA(3) “the onward gift” means the final benefit in the series.
Despite the repeal of section 643M of ITTOIA 2005 by paragraph 21 of this Schedule, that section continues to have effect so far as—
it provided before its repeal for a benefit of a particular amount to be treated for the purposes of section 643B of that Act as having been provided to a particular person at a particular time, and
the receipt of the benefit by the person is relevant to the application of section 643B of that Act in the tax year 2025-26 or a later tax year.
Section 735AF of ITA 2007 (onward gifts from non-residents or qualifying new residents), as inserted by paragraph 44 of this Schedule, applies where the onward gift is provided on or after 6 April 2025, even if the original benefit was provided before that date.
Where the original benefit was provided before 6 April 2025, that section applies as if for subsection (1)(b) there were substituted— .
In this paragraph, “the original benefit” and “the onward gift” have the same meanings as in section 735AF of ITA 2007; and in a case within section 735AF(3) “the onward gift” means the final benefit in the series.
Section 87HA of TCGA 1992 (benefits routed via non-residents or qualifying new residents), as inserted by paragraph 62 of this Schedule, applies where the onward gift is provided on or after 6 April 2025, even if the original benefit was provided before that date.
Where the original benefit was provided before 6 April 2025, that section applies as if for subsection (1)(b) there were substituted— .
In this paragraph, “the original benefit” and “the onward gift” have the same meanings as in section 87HA of TCGA 1992; and in a case within section 87HA(4) “the onward gift” means the final benefit in the series.
Despite the repeal of sections 87K and 87L of TCGA 1992 (old onward gifting rules) by paragraph 62 of this Schedule, each of those sections continues to have effect so far as—
before its repeal, it provided for section 87 and 87A of that Act to have effect as if a capital payment of a particular amount had been received at a particular time by a particular person, and
the receipt of the capital payment by that person is relevant to the application of sections 87 and 87A in the tax year 2025-26 or a later tax year.
Inheritance tax
Amendments to IHTA 1984 and related legislation
IHTA 1984 is amended as follows.
In section 5 (meaning of estate), for subsection (1B) substitute—
In section 6 (excluded property), omit subsection (3).
In section 8D(9), omit the definitions of “tax year” and “the tax year 2017-18”.
In section 13A(3), omit the definition of “tax year”.
In section 18 (transfers between spouses or civil partners), in subsection (2), for “domiciled in the United Kingdom” substitute “a long-term UK resident,”.
In section 28A, omit subsection (3).
In subsection (4), for “domiciled in the United Kingdom” substitute “a long-term UK resident”.
After subsection (4) insert—
Section 54 (exceptions from charge on death) is amended as follows.
In subsections (2) and (2B)(e), for “domiciled in the United Kingdom” substitute “a long-term UK resident”.
After subsection (2B) insert—
Section 64 (charge at ten-year anniversary) is amended as follows.
In subsection (1B), for the words from the beginning to “ten-year anniversary falls” substitute “Where the settlor of property comprised in a settlement meets the condition in subsection (1BZA)”.
After that subsection insert—
In subsection (1BA), for “subsection (1B)” substitute “subsection (1BZA)(c)”.
Section 65 (exit charges etc) is amended as follows.
In subsection (7), for “section 48(3)(a) above” substitute “section 48ZA”.
In subsection (7A), for the words from “becomes excluded property” to the end, substitute “is invested in a holding in an authorised unit trust or a share in an open-ended investment company and thereby becomes excluded property by virtue of section 48ZA”.
Omit subsection (7B).
In subsection (7C), for “section 48(3)(a) above” substitute “section 48ZA”.
In subsection (8), for the words from the beginning to “subsection (8A))”, substitute “If the condition in subsection (8ZA) is met in relation to property comprised in a settlement”.
After subsection (8) insert—
In subsection (8A), for “subsection (8)” substitute “subsection (8ZA)(c)”.
Section 74A (arrangements involving acquisition of interest in settled property etc) is amended as follows.
In subsection (1)—
in paragraph (b)(i), omit “domiciled in the United Kingdom”;
after paragraph (b) insert— .
For subsection (2) substitute—
In section 75A, omit subsection (4).
In section 81 (property moving between settlements), in subsection (1)—
after “for the purposes of this Chapter” insert “(including sections 48 and 48ZA (excluded property) as they apply for the purposes of this Chapter)”;
at the end insert “(but held on the trusts of the second)”.
For section 81B substitute—
In section 94 (close companies: charge on participators), in subsection (2)(b), for “domiciled outside the United Kingdom” substitute “not a long-term UK resident”.
In section 136 (transfers within three years before death: transactions of close companies), in subsection (3), for “domiciled in the United Kingdom” substitute “a long-term UK resident”.
In section 155 (visiting forces etc), in subsections (2) and (5B), omit “or domicile”.
Section 157 (non-residents’ bank accounts) is amended as follows.
In subsection (2)—
omit “is not domiciled and not resident in the United Kingdom”;
at the end insert “is neither resident in the United Kingdom nor a long-term UK resident”.
In subsection (3), for the words from “if the settlor” to the end, substitute
In section 218 (non-resident trustees), in subsection (1)(a), for “domiciled in the United Kingdom” substitute “a long-term UK resident”.
Omit section 267 (persons treated as domiciled in United Kingdom).
Section 267ZA (election to be treated as domiciled in the United Kingdom) (as it has effect before its repeal by paragraph 26) is amended as follows.
In subsections (3) and (4), for “on or after 6 April 2013 and” substitute “before 6 April 2025 but”.
Omit subsection (5).
In subsection (8)—
for “is or was domiciled” substitute “was domiciled”;
after “section 267” insert “(deemed domicile)”.
In section 267ZB (section 267ZA: further provision about election) (as it has effect before its repeal by paragraph 26), in subsection (4)(a), for “6 April 2013 or a later date” substitute “5 April 2025 or an earlier date”.
Omit sections 267ZA and 267ZB (election to be treated as domiciled in the United Kingdom).
Before section 267A insert—
Section 272 (general interpretation) is amended as follows.
The existing text becomes subsection (1).
In subsection (1)—
in the definition of “excluded property”, for “6 and 48” substitute “6, 48 and 48ZA”;
omit the definition of “formerly domiciled resident”.
Also in subsection (1), in the definition of “foreign-owned”—
in paragraph (a), for “domiciled outside the United Kingdom” substitute “not a long-term UK resident”;
for paragraph (b) substitute—
Also in subsection (1), at the appropriate places insert— ; ; .
After subsection (1) insert—
Schedule A1 (non-excluded overseas property) is amended as follows.
In paragraph 1, for “48(3)(a)” substitute “48ZA”.
In paragraph 5(2)(a), for “or 48(3)(a), (3A) or (4)” substitute “, section 48(4) or section 48ZA”.
In Schedule 4 (maintenance funds for historic buildings etc), in paragraph 10(8), for “domiciled in the United Kingdom” substitute “a long-term UK resident”.
Section 102 of FA 1986 (gifts with reservation) is amended as follows.
In subsection (1), for “(5) and (6)” substitute “(5), (6) and (7A)”.
After subsection (7) insert—
Schedule 15 to FA 2004 (pre-owned assets charge) is amended as follows.
In paragraph 11 (exemptions from charge), in sub-paragraph (5), after paragraph (b) insert— .
In the italic heading before paragraph 12, for “resident or domiciled outside the United Kingdom” substitute “non-UK resident or not a long-term UK resident”.
Paragraph 12 is amended as follows.
In sub-paragraph (2), for “domiciled outside the United Kingdom” substitute “not a long-term UK resident”.
Omit sub-paragraph (3).
For sub-paragraph (4) substitute—
In section 41 of the Constitutional Reform and Governance Act 2010 (tax status of MPs and members of the House of Lords), for subsections (2) and (3) substitute—
The Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 are amended in accordance with paragraphs 38 to 43.
In regulation 2 (interpretation)—
the existing text becomes paragraph (1);
after that paragraph insert—
Regulation 4 (excepted estates) is amended as follows.
In paragraphs (2)(a) and (3)(a), for “, domiciled in the United Kingdom” substitute “and was a long-term UK resident immediately before their death”.
For paragraph (5)(b) substitute—
In regulation 5 (spouse, civil partner and charity transfers), in paragraph (2), for the words from “was not domiciled” to the end substitute “—
In regulation 5A (IHT threshold), in paragraph (4)(a), for “died domiciled in the United Kingdom” substitute “was a long-term UK resident immediately before their death”.
In regulation 6 (production of information), in the heading, for “domiciled in the United Kingdom” substitute “a long-term UK resident”.
Regulation 6A (production of information) is amended as follows.
In the heading, for “deceased domiciled outside the United Kingdom” substitute “cases within regulation 4(5)”.
In paragraph (2)(g), for “domicile” substitute “place of tax residence”.
In the Inheritance Tax (Delivery of Accounts) (Excepted Settlements) Regulations 2008, regulation 4 (excepted settlement) is amended as follows.
In paragraph (3)(a), for “is domiciled in the United Kingdom” substitute “meets the condition in paragraph (3A)”.
After paragraph (3) insert—
Commencement and transitional provision
Part 1 of this Schedule, other than paragraph 26, comes into force on 6 April 2025.
Paragraph 26 (repeal of sections 267ZA and 267ZB) comes into force on 6 April 2032.
The amendments made by paragraph 12 to section 74A of IHTA 1984 (arrangements involving acquisition of interest in settled property etc) have effect where the relevant time (as defined in section 74C(5) of that Act) is on or after 6 April 2025 (even if the arrangements were entered into before that date).
The amendment made by paragraph 19 to section 136 of IHTA 1984 (transactions of close companies) has effect in relation to relevant transactions (within the meaning of that section) on or after 6 April 2025.
The amendments made by paragraphs 37 to 43 to the Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I. 2004/2543) have effect in relation to deaths occurring on or after 6 April 2025.
The amendments made by paragraph 44 to the Inheritance Tax (Delivery of Accounts) (Excepted Settlements) Regulations 2008 (S.I. 2008/606) have effect in relation to chargeable events (within the meaning of regulation 2 of those Regulations) occurring on or after 6 April 2025.
An individual who would otherwise be a long-term UK resident at any time in a given tax year (“the relevant tax year”) is treated for the purposes of IHTA 1984 as not being a long-term UK resident at that time if the individual—
was not domiciled in the United Kingdom on 30 October 2024,
has been resident in the United Kingdom for no tax year in the period beginning with the tax year 2025-26 and ending with the relevant tax year, and
either—
was resident in the United Kingdom for none of the 3 tax years immediately preceding the relevant tax year, or
was resident in the United Kingdom for fewer than 15 of the 20 tax years immediately preceding the relevant tax year.
For the purposes of sub-paragraph (1)(a), in determining where an individual was domiciled on 30 October 2024, ignore section 267 (deemed domicile) and sections 267ZA and 267ZB (domicile elections) of IHTA 1984.
The amendment of section 81(1) of IHTA 1984 by paragraph 15(b) of this Schedule (trusts on which property moving between settlements is held) is to be disregarded in construing section 81(1) in a case where the property in question ceased to be comprised in the first settlement before 6 April 2025.
The insertion of section 272(2) of IHTA 1984 by paragraph 28(6) of this Schedule (meaning of references to dying or being alive in the case of corporate settlors) is to be disregarded in construing section 201(1)(d) of IHTA 1984 in relation to property that became comprised in the settlement before 6 April 2025.
The repeal of section 267 of IHTA 1984 (persons treated as domiciled in United Kingdom) by paragraph 23 is to be disregarded in determining for the purposes of that Act any question as to where a person was domiciled at any time before 6 April 2025.
In construing section 267 of IHTA 1984, so far as saved by sub-paragraph (1), the repeal of the definition of “formerly domiciled resident” by paragraph 28(3)(b) is also to be disregarded.