Finance Act 2025

• Citation: 2025 c. 8
• Sections: 413

Section 1 Income tax charge for tax year 2025-26

Income tax is charged for the tax year 2025-26.

Section 2 Main rates of income tax for tax year 2025-26

For the tax year 2025-26 the main rates of income tax are as follows—

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

(c) the additional rate is 45%.

Section 3 Default and savings rates of income tax for tax year 2025-26

(1) For the tax year 2025-26 the default rates of income tax are as follows—

(a) the default basic rate is 20%,

(b) the default higher rate is 40%, and

(c) the default additional rate is 45%.

(2) For the tax year 2025-26 the savings rates of income tax are as follows—

(a) the savings basic rate is 20%,

(b) the savings higher rate is 40%, and

(c) the savings additional rate is 45%.

Section 4 Freezing starting rate limit for savings for tax year 2025-26

(1) 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”.

(2) 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.

Section 5 Appropriate percentage for cars: tax year 2028-29

(1) Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars, vans etc) is amended as follows.

(2) 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—

(3) In subsection (3) of section 139 (as amended by section 11(3) of FA 2023)—

(a) in paragraph (a), for “21%” substitute “22%” , and

(b) in paragraph (b), for “37%” substitute “38%” .

(4) In section 140 (cars without a CO 2 emissions figure: the appropriate percentage), in subsection (2), for the table substitute—

(5) In subsection (3) of section 140—

(a) in paragraph (a), for “2%” substitute “7%” , and

(b) in paragraph (b), for “37%” substitute “38%” .

(6) In section 141 (diesel cars: the appropriate percentage), in subsection (2), in Step 3, for “37%” substitute “38%” .

(7) In section 142 (cars first registered before 1 January 1998: the appropriate percentage), in subsection (2), for the table substitute—

(8) In subsection (3) of section 142, for “37%” substitute “38%” .

(9) The amendments made by subsections (2) to (8) have effect for the tax year 2028-29.

(10) In consequence of the amendments made by this section, in section 139, omit—

(a) in subsection (2), paragraph (b) together with the “and” before it, and

(b) subsections (5) to (5B).

(11) The amendments made by subsection (10) have effect for the for the tax year 2028-29 and subsequent tax years.

Section 6 Appropriate percentage for cars: subsequent tax years

(1) Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars, vans etc), as amended by section 5 , is amended as follows.

(2) In section 139 of ITEPA 2003, in subsection (1), for the table substitute—

(3) In subsection (3) of that section—

(a) in paragraph (a), for “22%” substitute “23%” , and

(b) in paragraph (b), for “38%” substitute “39%” .

(4) In section 140 (cars without a CO 2 emissions figure: the appropriate percentage), in subsection (2), for the table substitute—

(5) In subsection (3) of section 140—

(a) in paragraph (a), for “7%” substitute “9%” , and

(b) in paragraph (b), for “38%” substitute “39%” .

(6) In section 141 (diesel cars: the appropriate percentage), in subsection (2), in Step 3, for “38%” substitute “39%” .

(7) In section 142 (cars first registered before 1 January 1998: the appropriate percentage), in subsection (2), for the table substitute—

(8) In subsection (3) of section 142, for “38%” substitute “39%” .

(9) The amendments made by this section have effect for the tax year 2029-30 and subsequent tax years.

Section 7 Main rates of CGT for gains other than carried interest gains

(1) In section 1H of TCGA 1992 (the main rates of CGT)—

(a) omit subsection (1A) (which sets out the rates for residential property gains accruing to individuals),

(b) in subsection (3) (which sets out the rates for gains accruing to individuals that are not residential property gains or carried interest gains)—

(i) for “10%” substitute “18%” , and

(ii) for “20%” substitute “24%” ,

(c) omit subsection (4A) (which sets out the rates for residential property gains accruing to personal representatives),

(d) 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%” ,

(e) omit subsection (7) (which sets out the rates for residential property gains accruing to trustees), and

(f) in subsection (8) (which sets out the rates for gains accruing to trustees that are not residential property gains or carried interest gains)—

(i) omit “Other”, and

(ii) for “20%” substitute “24%” .

(2) Schedule 1 contains amendments in consequence of the provision made by this section.

(3) The amendments made by this section and that Schedule have effect in relation to disposals made on or after 30 October 2024.

Section 8 Business asset disposal relief: increase in rate

(1) 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%” .

(2) 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%” .

(3) The amendments made by subsections (1) and (2) have effect in relation to disposals made on or after 6 April 2025.

(4) In section 169N(3) of TCGA 1992 (as amended by subsection (1) ), for “14%” substitute “18%” .

(5) 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%” .

(6) The amendments made by subsections (4) and (5) have effect in relation to disposals made on or after 6 April 2026.

Section 9 Investors’ relief: increase in rate

(1) In section 169VC(2) of TCGA 1992 (which specifies the rate of CGT for the relief), for “10%” substitute “14%” .

(2) 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%” .

(3) 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%” .

(4) The amendments made by subsections (1) to (3) have effect in relation to disposals made on or after 6 April 2025.

(5) In section 169VC(2) of TCGA 1992 (as amended by subsection (1) ), for “14%” substitute “18%” .

(6) 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%” .

(7) 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%” .

(8) The amendments made by subsections (5) to (7) have effect in relation to disposals made on or after 6 April 2026.

Section 10 Investors’ relief: reduction in amount qualifying for relief

(1) In—

(a) 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

(b) 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),

for “£10 million” substitute “£1 million” .

(2) The amendments made by this section have effect in relation to disposals made on or after 30 October 2024.

Section 11 Sections 7 to 10 : transitional provision

Schedule 2 contains transitional provision in connection with the provision made by sections 7 to 10 .

Section 12 Rate of CGT for carried interest gains

(1) In section 1H of TCGA 1992 (which sets out the main rates of CGT)—

(a) omit subsection (2) (which provides for rates of 18% or 28% on carried interest gains accruing to individuals),

(b) in subsection (3), for “Other chargeable gains” substitute “Chargeable gains other than carried interest gains (see subsections (4B) and (9) to (11))” ,

(c) before subsection (5) insert—

(4B) Chargeable gains accruing in a tax year to an individual that are carried interest gains are charged to capital gains tax at a rate of 32%.

(d) 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%” .

(2) 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 —

(a) before subsection (1) insert—

(A1) This section applies for the purpose of determining the rate of capital gains tax that applies to gains accruing to an individual in a tax year that are not carried interest gains and, in the following provisions of this section, references to gains (or amounts chargeable to capital gains tax) do not include carried interest gains.

(b) in subsection (1), for the words from “charged—” to the end substitute “charged at the rate of 24%.” ,

(c) 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%.” ,

(d) in subsection (5), for the words from “are then charged—” to the end substitute “are then charged at the rate of 24%.” ,

(e) 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

(f) in subsection (9), for the words from “charged—” to the end substitute “charged at the rate of 24%.”

(3) The amendments made by this section have effect in relation to carried interest arising on or after 6 April 2025.

Section 13 Charge and main rate for financial year 2026

(1) Corporation tax is charged for the financial year 2026.

(2) The main rate of corporation tax for that year is 25%.

Section 14 Standard small profits rate and fraction for financial year 2026

For the purposes of Part 3A of CTA 2010, for the financial year 2026—

(a) the standard small profits rate is 19%, and

(b) the standard marginal relief fraction is 3/200ths.

Section 15 Increase in rate of energy (oil and gas) profits levy

(1) In section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 (charge to tax), in subsection (1) , for “35%” substitute “38%” .

(2) The amendment made by subsection (1) has effect for accounting periods beginning on or after 1 November 2024.

(3) In the case of an accounting period (a “straddling period”) beginning before 1 November 2024 and ending on or after that date—

(a) 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

(b) 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 .

(4) In the case of a straddling period, the Instalment Payments Regulations 1998 are to apply separately—

(a) in relation to the levy, and

(b) in relation to any other tax chargeable on the company.

(5) In their application as a result of subsection (4) (a) , the Instalment Payments Regulations 1998 are to have effect in relation to the levy—

(a) 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

(b) 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.

(6) Any reference in the Instalment Payments Regulations 1998 to the total liability of a company is accordingly to be read—

(a) in their application as a result of subsection (4) (a) , as a reference to the levy, and

(b) 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.

(7) For the purposes of the Instalment Payments Regulations 1998—

(a) 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

(b) 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 .

(8) In this section “ the Instalment Payment Regulations 1998 ” means the Corporation Tax (Instalment Payments) Regulations 1998 ( S.I. 1998/3175 ).

Section 16 Relief from levy for investment expenditure

(1) The Energy (Oil and Gas) Profits Levy Act 2022 is amended as follows.

(2) For section 2 substitute—

Additional expenditure treated as incurred for purposes of section 1

(2)

(1) This section applies for the purposes of section 1 if, in a qualifying accounting period, a company has incurred investment expenditure.

(2) Expenditure is “investment expenditure” of a company so far as the expenditure—

(a) is capital expenditure on the de-carbonisation of its upstream petroleum production,

(b) is incurred for the purposes of oil-related activities,

(c) is not incurred for disqualifying purposes, and

(d) does not consist of financing costs or decommissioning costs.

(3) For the purposes of section 1 the company is to be treated as if, in addition to the investment expenditure incurred by it in the accounting period, it had incurred in that period expenditure of an amount equal to 66% of the amount of that investment expenditure.

(4) For the purposes of this section—

(a) if investment expenditure is incurred partly for the purposes of oil-related activities and partly for other purposes, the expenditure is to be attributed to the oil-related activities on a just and reasonable basis, and

(b) if a company incurs expenditure part of which is capital expenditure on the de-carbonisation of its upstream petroleum production and part of which is not, the expenditure is to be apportioned on a just and reasonable basis.

(5) This section needs to be read with section 6 (which prevents recycling etc of assets to generate relief).

(3) Omit sections 3 and 4 (definitions of “operating expenditure” and “leasing expenditure”).

(4) In section 7 (1) (when investment expenditure is incurred)—

(a) in paragraph (a) , omit “in the case of capital expenditure,”, and

(b) omit paragraph (b) .

(5) In section 18 (1) (interpretation), omit the definitions of “leasing expenditure” and “operating expenditure”.

(6) 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).

Section 17 Extending the period for which levy has effect

(1) 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” .

(2) In consequence of the amendment made by subsection (1) —

(a) in section 7 (2) of that Act (when investment expenditure is incurred), for “2028” substitute “2030” , and

(b) 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” .

Section 18 Decommissioning of carbon storage installations

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.

Section 19 Pillar Two

(1) Schedule 4 —

(a) makes provision about the UTPR, and

(b) makes other amendments to Parts 3 and 4 of F(No. 2)A 2023.

Section 20 Offshore receipts in respect of intangible property

(1) ITTOIA 2005 is amended as follows.

(2) In section 574 (overview of Part 5)—

(a) in subsection (1) omit paragraph (aa);

(b) in subsection (2) omit “(but see section 608X)”.

(3) Omit Chapter 2A (offshore receipts in respect of intangible property) of Part 5.

(4) In section 576 (priority between Chapters within Part 5) omit subsection (1).

(5) In section 873(3) (procedure for orders and regulations) omit paragraph (ba).

(6) TIOPA 2010 is amended as follows.

(7) In section 157(1) (direct participation)—

(a) at the end of paragraph (d) insert “, and” ;

(b) omit paragraph (f) and the “and” preceding it.

(8) In section 159(1) (indirect participation: potential direct participant)—

(a) at the end of paragraph (d) insert “, and” ;

(b) omit paragraph (f) and the “and” preceding it.

(9) In section 160(1) (indirect participation: one of several major participants) omit paragraph (f) and the “and” preceding it.

(10) In consequence of subsections (1) to (9) , omit Schedule 3 to FA 2019 (offshore receipts in respect of intangible property).

(11) Omit section 981A of ITA 2007 (offshore receipts in respect of intangible property: exception from duties to deduct).

(12) The amendments made by this section have effect in relation to income arising on or after 31 December 2024.

Section 21 Application of PAYE in relation to internationally mobile employees etc.

(1) For section 690 of ITEPA 2003 (employee non-resident etc) substitute—

Internationally mobile employees

(690)

(1) This section applies in relation to an employee if the employee is or has been internationally mobile at any time in tax year 2025-26 or a subsequent tax year.

(2) An employee is “internationally mobile” at a time in a tax year if at that time the employee works or is likely to work both inside and outside the UK during the tax year (“the mobile tax year”) and at that time—

(a) the employee is or is likely to be non-UK resident for the mobile tax year, or

(b) the mobile tax year is or is likely to be a split year as respects the employee.

(3) If the employer makes an uncertain payment to the employee in any tax year, the entire payment is to be treated for the purposes of PAYE regulations as a payment of PAYE income of the employee.

(4) For the purposes of this section and sections 690A and 690B , an “ uncertain payment ” means a payment of, or on account of, the income of the employee to the extent that—

(a) the employer is unable to ascertain the extent to which the income is PAYE income, and

(b) the reason for the employer being unable to ascertain that extent is connected to the employee being or having been internationally mobile in the mobile tax year.

(5) Subsection (3) is without prejudice to—

(a) any assessment in respect of the income of the employee in question, and

(b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

(6) For the purposes of this section and sections 690A to 690E —

(a) any reference to a payment made by the employer includes a reference to a payment made by a person acting on behalf of the employer and at the expense of the employer or a person connected with the employer, and

(b) in a case where section 689 or 689A applies, any reference to a payment made by the employer is to be read as a reference to a payment treated, for the purposes of PAYE regulations, as made by the relevant person.

Employer notification for internationally mobile employees

(690A)

(1) This section applies in relation to an employee if the employee is or has been internationally mobile within the meaning of section 690 (2) at any time in tax year 2025-26 or a subsequent tax year (“the mobile tax year”).

(2) The appropriate person may give a notice to an officer of Revenue and Customs at any time during the mobile tax year—

(a) that the employer is proposing to treat a proportion of any uncertain payment made by the employer to the employee as not being PAYE income of the employee for the purposes of PAYE regulations, and

(b) specifying that proportion.

(3) If a notice given under this section has effect, the proportion of any uncertain payment made by the employer to the employee in any tax year which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income is the proportion specified in the notice.

(4) But if section 690D (4) (employer notification for qualifying new resident) also applies to a payment made by the employer, subsection (3) does not apply to the payment to the extent that it is a qualifying payment within the meaning of section 690D .

(5) A notice given under this section—

(a) does not have effect if a direction has previously been given to the appropriate person under section 690B (direction by HMRC in relation to internationally mobile employees) in relation to the employee and the mobile tax year;

(b) otherwise, has effect when it is acknowledged by an officer of Revenue and Customs.

(6) A notice given under this section ceases to have effect if—

(a) a direction under section 690B is given to the appropriate person in relation to the employee and the mobile tax year,

(b) a subsequent notice is given by the appropriate person under this section and is acknowledged by an officer of Revenue and Customs, or

(c) where the notice was given on the basis that the employee was likely to be a non-UK resident for the mobile tax year, a subsequent notice—

(i) is given by the appropriate person under section 690D (employer notification for qualifying new resident) on the basis that the employee is or is likely to be a qualifying new resident for the mobile tax year, and

(ii) is acknowledged by an officer of Revenue and Customs.

(7) A notice given under this section must be in such manner and form, and contain such information, as may be specified in a general direction made by the Commissioners for His Majesty’s Revenue and Customs.

(8) Subsection (3) is without prejudice to—

(a) any assessment in respect of the income of the employee in question, and

(b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

(9) For the purposes of this section and sections 690B , 690D and 690E —

(a) where an amount of employment income is treated as PAYE income paid by the employer for the purposes of PAYE regulations by virtue of section 693 (cash vouchers), section 694 (non-cash vouchers) or section 695 (credit-tokens), the employer is to be treated as making a payment of that amount of employment income, and

(b) “ the appropriate person ” means—

(i) the person designated by the employer for the purpose of this section and sections 690B , 690D and 690E and, if no person is so designated, the employer, and

(ii) in a case where section 689 or 689A applies, the references to the employer in sub-paragraph (i) are to be read as references to the relevant person (within the meaning of section 689 or 689A).

Direction by HMRC in relation to internationally mobile employees

(690B)

(1) This section applies where—

(a) a notice given during the mobile tax year under section 690A has effect, and

(b) it appears to an officer of Revenue and Customs that the proportion of any uncertain payment made by the employer to the employee that is treated as not being a payment of PAYE income for the purposes of PAYE regulations should not be the proportion specified in the notice.

(2) An officer of Revenue and Customs may give a direction—

(a) for determining a proportion of any uncertain payment made by the employer to the employee which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income, or

(b) that any such payment is to be treated entirely as PAYE income for the purposes of PAYE regulations.

(3) A direction under subsection (2) —

(a) must specify the employee and the mobile tax year,

(b) must be given by notice to the appropriate person, and

(c) may be varied by notice to the appropriate person from a date specified in the notice (which may not be earlier than 30 days from the date on which the notice is given).

(4) If—

(a) a direction under subsection (2) has effect, and

(b) any uncertain payment is made by the employer to the employee in any tax year,

the direction applies in relation to the payment.

(5) A direction under subsection (2) has effect when it is given.

(6) A direction under subsection (2) ceases to have effect if—

(a) the notice to which the direction relates was given on the basis that the employee was likely to be non-UK resident for the mobile tax year, and

(b) a notice has subsequently been—

(i) given by the appropriate person under section 690D (employer notification for qualifying new resident) on the basis that the employee is or is likely to be a qualifying new resident for the mobile tax year, and

(ii) acknowledged by an officer of Revenue and Customs.

(7) Subsection (4) is without prejudice to—

(a) any assessment in respect of the income of the employee in question, and

(b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid.

Employees who were internationally mobile etc. before 2025-26

(690C)

(1) This section applies in relation to an employee if the employee falls within subsection (2) or (3) in relation to a tax year that was before tax year 2025-26.

(2) An employee falls within this subsection in relation to a tax year if the employee worked both inside and outside the UK in that tax year and—

(a) the employee was non-UK resident for that tax year or it appears likely to the employer that the employee was non-UK resident, or

(b) the tax year was a spilt year as respects the employee or it appears likely to the employer that the tax year was such a year.

(3) An employee falls within this subsection in relation to a tax year if—

(a) the employee worked outside the UK in the tax year,

(b) the employee met the requirement of section 26A for that tax year or it appears likely to the employer that the employee met that requirement, and

(c) the employee has made a claim under section 809B of ITA 2007 (claim for remittance basis) for that tax year or it appears likely to the employer that the employee has or will make such a claim.

(4) If the employer makes a payment to the employee of, or on account of, general earnings for that tax year, the amount of the payment that is to be treated as PAYE income for the purposes of the PAYE regulations is the amount that, on the basis of the best estimate that can be reasonably made, is likely to be PAYE income.

(5) For the purposes of subsection (4) —

(a) where this section applies to an employee because it appears likely to the employer that a certain state of affairs exists, the employer may assume that state of affairs exists;

(b) whether general earnings are “for” that tax year is determined in accordance with sections 29 and 30.

(2) The amendments made by this section have effect for the tax year 2025-26 and subsequent tax years.

(3) 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.

Section 22 Advance pricing agreements: indirect participation in financing cases

(1) 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)—

(a) in subsection (4), omit paragraph (c) (but not the “and” at the end of that paragraph), and

(b) after that subsection insert—

(5) For the purposes of section 219(2) (which is in Part 5), a person is indirectly participating in the management, control or capital of another person only if any of sections 159 to 162 so provide.

(2) In section 161 of that Act (indirect participation in financing cases)—

(a) in subsection (1), at the end insert “and, in Part 5, section 219(2)” , and

(b) in the heading, for “and 175” substitute “, 175 and 219(2)” .

(3) In section 162 of that Act (indirect participation in further financing cases)—

(a) in subsection (1), at the end insert “and, in Part 5, section 219(2)” , and

(b) in the heading, for “and 175” substitute “, 175 and 219(2)” .

(4) 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)” .

(5) The amendments made by this section are treated as always having had effect.

Section 23 Expenditure on zero-emission cars

(1) Section 45D of CAA 2001 (expenditure on zero-emission cars) is amended as follows.

(2) In subsection (1)(a), for the words from “the period” to the end substitute “the relevant period,” .

(3) Omit subsection (1A).

(4) After that subsection insert—

(1B) The “relevant period” is the period beginning with 17 April 2002 and ending with—

(a) in the case of expenditure incurred by a company within the charge to corporation tax, 31 March 2026, and

(b) in the case of expenditure incurred by a person within the charge to income tax, 5 April 2026.

(1C) The Treasury may by regulations amend subsection (1B) so as to extend the relevant period.

Section 24 Expenditure on plant or machinery for electric vehicle charging point

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” .

Section 25 Commercial letting of furnished holiday accommodation

Schedule 5 contains provision abolishing the special rules relating to the commercial letting of furnished holiday accommodation.

Section 26 Films and television programmes: increased relief for visual effects

(1) In Part 14A of CTA 2009 (films, television programmes and video games), after section 1179EB insert—

Special credit for visual effects

(1179EC)

(1) This section applies in relation to a qualifying film or qualifying television programme.

(2) The production company is entitled to claim an additional amount of audiovisual expenditure credit for an accounting period (“the claim period”) that is the completion period (see section 1179DY) or a subsequent accounting period if—

(a) the company has incurred relevant visual effects expenditure on the film or programme in that period or an earlier accounting period, and

(b) where a claim has been made for Chapter 3 credit (whether for the claim period or earlier), the relevant percentage for the purposes of all such claims was the percentage given by subsection (2) or (5) of section 1179DV.

(3) The additional amount is equal to—

(a) 39% of the total amount of the relevant visual effects expenditure incurred on the film or programme in the claim period and in previous periods, less

(b) the sum of—

(i) where Chapter 3 credits have been claimed by the production company, the adjusted VFX portion of those credits, and

(ii) any additional amounts of audiovisual expenditure credit previously claimed under this section.

(4) Take the following steps to determine the adjusted VFX portion of previously claimed Chapter 3 credits—

Step 1 (identify the total UK expenditure in the AVEC period)

Determine the total amount of the company’s relevant global expenditure (see section 1179CA(2)) that—

is UK expenditure (see section 1179AB), and

was incurred for accounting periods falling within the company’s AVEC period.

Step 2 (identify the amount of visual effects expenditure)

Determine how much of the result of Step 1 is relevant visual effects expenditure.

Step 3 (determine the extent to which the 80% cap applied)

Determine the amount (if any) of the excess to be deducted at Step 3 in section 1179CA(1) for the most recent accounting period for which a claim for Chapter 3 credit was made (which may be the claim period).

If that amount is nil go to Step 4, otherwise go to Step 5.

Step 4 (where the 80% cap did not apply, calculate the adjusted VFX portion)

If this Step applies, the adjusted VFX portion is the amount given by multiplying—

the sum of Chapter 3 credits claimed by the production company, by

the amount given by dividing the result of Step 2 by the result of Step 1.

Step 5 (treat the 80% cap as affecting the VFX portion first)

Subtract the result of Step 3 from the result of Step 2.

If the result is nil or less, the adjusted VFX portion is nil. If not, go to Step 6.

Step 6 (calculate the adjusted VFX portion, taking account of the 80% cap)

If this Step applies, the adjusted VFX portion is the amount given by multiplying the result of Step 5 by 0.34.

(5) The Treasury may by regulations replace—

(a) the percentage for the time being specified in subsection (3) (a) , or

(b) the number for the time being specified in Step 6 in subsection (4) as the number by which the result of Step 5 in that subsection is multiplied.

(6) Sections 1179C and 1179CB to 1179CI (treatment of expenditure credits) apply to the additional amount as they apply to an expenditure credit under Chapter 3.

(7) In this section—

a company’s “ AVEC period ” means the period beginning with the commencement of the first accounting period for which this Part applies further to the election by the company under section 1179B(1) and ending with the end of the claim period;

“ Chapter 3 credit ” means an audiovisual expenditure credit in respect of the film or television programme determined under section 1179CA;

“ relevant visual effects expenditure ” means UK expenditure that—

is incurred in respect of relevant visual effects work carried out in the United Kingdom, and

counts as relevant production expenditure for the purposes of section 1179CA(2) (see section 1179DR);

“ relevant visual effects work ” means work consisting of the use of computer technology to create or alter images for inclusion in the film or programme.

(2) The amendment made by subsection (1) has effect only in relation to expenditure incurred on or after 1 January 2025.

(3) A claim for audiovisual expenditure credit may not be made in reliance on that amendment before 1 April 2025.

Section 27 Certification of films etc: minor amendments

(1) In section 1179AA (7) of CTA 2009 (qualifying companies)—

(a) after “for” insert “—” ;

(b) the words from “a production” to the end become paragraph (a);

(c) at the end, insert

;

(b) the submission of a film, television programme or video game certificate after the end of an accounting period.

(2) Section 1179DJ of CTA 2009 (British certification condition: films and television programmes) is amended as set out in subsections (3) to (6) .

(3) 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.”

(4) In subsection (3) , omit paragraphs (a) and (b) and insert—

(a) the production company’s company tax return for the completion period is accompanied by a valid final certificate, or

(b) the production company has abandoned production activities in relation to the film or programme and the production company’s company tax return for the completion period is accompanied by a valid interim certificate.

(5) 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” .

(6) For subsections (7) and (8) substitute—

(7) Subsection (6) does not apply to the extent that a direction under paragraph 3 of Schedule 1 to the Films Act 1985 or section 1179DM provides that the certificate is to be treated as having effect.

(8) For the purposes of this section, a certificate is valid if it has effect on the day on which the production company’s company tax return is submitted.

(7) Section 1179FC of CTA 2009 (British certification condition: video games) is amended as set out in subsections (8) to (11) .

(8) 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.”

(9) In subsection (3) , omit paragraphs (a) and (b) and insert—

(a) the production company’s company tax return for the completion period is accompanied by a valid final certificate, or

(b) the production company has abandoned production activities in relation to the video game and the production company’s company tax return for the completion period is accompanied by a valid interim certificate.

(10) 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” .

(11) For subsections (7) and (8) substitute—

(7) Subsection (6) does not apply to the extent that a direction under section 1179FF provides that the certificate is to be treated as having effect.

(8) For the purposes of this section, a certificate is valid if it has effect on the day on which the production company’s company tax return is submitted.

(12) 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” .

(13) In section 15 of the F(No.2)A 2024 (certification as a low-budget film: transitional), omit subsection (8) .

(14) The amendments made by this section have effect in relation to claims made on or after the day on which this Act is passed.

(15) 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—

(8) For the purposes of this section, a certificate is valid if—

(a) it has effect on the day on which the production company’s company tax return is submitted, or

(b) it had effect on the last day of the accounting period to which the return relates.

Section 28 Films etc: unpaid amounts

(1) CTA 2009 is amended as follows.

(2) In section 1179DT (excluded expenditure)—

(a) in the section heading, at the end insert “and unpaid amounts” ;

(b) the existing provision becomes subsection (1) ;

(c) at the end, as a new subsection, insert—

(2) Expenditure is excluded expenditure for an accounting period to the extent that it is not paid before the end of the period of four months beginning with the first day after the final day of the accounting period.

(3) Omit section 1179DX (3) .

(4) In section 1179FL (excluded expenditure)—

(a) in the section heading, at the end insert “and unpaid amounts” ;

(b) the existing provision becomes subsection (1) ;

(c) at the end, as a new subsection, insert—

(2) Expenditure is excluded expenditure for an accounting period to the extent that it is not paid before the end of the period of four months beginning with the first day after the final day of the accounting period.

(5) Omit section 1179FP (3) .

(6) The amendments in this section have effect in relation to claims made on or after the day on which this Act is passed.

Section 29 Research and development relief: Northern Ireland companies

(1) CTA 2009 is amended as set out in subsections (2) to (5).

(2) In section 1112A (overview), for subsection (6) substitute—

(6) Section 1112J contains provision about the amount of relief to which certain Northern Ireland companies are entitled under Chapter 2.

(3) For section 1112J and the heading above substitute—

Northern Ireland companies

Chapter 2 relief for Northern Ireland companies

(1112J)

(1) This section applies for the purpose of determining the entitlement of a Northern Ireland company to relief under Chapter 2.

(2) A Northern Ireland company is entitled to additional relief under Chapter 2 only to the extent that the additional relief would be exempted from notification under Article 108(3) of the TFEU by a de minimis aid regulation listed in paragraph 3.4 of Annex 5 to the Windsor Framework (as amended or replaced from time to time).

(3) In subsection (2), “ additional relief ” means the difference between the value of the relief claimed by the company under Chapter 2 in respect of expenditure and the value of the relief that could have been obtained by the company under Chapter 1A in respect of that expenditure.

(4) This section does not apply to a company in relation to an accounting period if the company—

(a) has not, at any time during the accounting period, carried on a trade involving—

(i) trade in goods, or

(ii) the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity, and

(b) has notified an officer of Revenue and Customs in writing that it wishes to rely on the exception in this subsection.

(5) In this section—

“ Northern Ireland company ” means a company whose registered office is in Northern Ireland;

“ TFEU ” means the Treaty on the Functioning of the European Union as it has effect by virtue of Article 10 of the Windsor Framework;

“ Windsor Framework ” means the part of the EU withdrawal agreement known as the Windsor Framework by virtue of Joint Declaration No. 1/2023 of 24th March 2023 made by the European Union and the United Kingdom in the Joint Committee established by the EU withdrawal agreement.

(4) In subsection 1138A(1) (research and development undertaken abroad)—

(a) for subsection (1)(b) substitute—

(b) the research and development is undertaken, or contracted out, by a company whose registered office is in Northern Ireland.

(b) after subsection (4) insert—

(5) Subsection (1)(b) does not apply in relation to a company in respect of an accounting period if the company—

(a) has not, at any time during the accounting period, carried on a trade involving—

(i) trade in goods, or

(ii) the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity, and

(b) has notified an officer of Revenue and Customs in writing that it wishes to rely on the exception in section 1112J(4) (restriction of Chapter 2 relief for Northern Ireland companies).

(5) In section 1142E(b) (orders and regulations: ancillary provision), omit “or areas”.

(6) The Research and Development (Chapter 2 Relief) Regulations 2024 are revoked.

(7) The Relief for Research and Development (Content of Claim Notifications, Additional Information Requirements and Miscellaneous Amendments) Regulations 2023 are amended as follows—

(a) in regulation 3(4), omit the definition for “the Chapter 2 Regulations”;

(b) in paragraph 1(2)(b) of Schedule 2, for “regulation 2(3) of the Chapter 2 Regulations” substitute “section 1112J(4) of CTA 2009” ;

(c) in paragraph 10 of Schedule 2 omit sub-paragraphs (1)(a) and (b) and (2) and insert—

(a) a statement to the effect that any additional relief claimed by the company under Chapter 2 would be de minimis state aid, and

(b) the total value of de minimis state aid received by the company from the United Kingdom in the period of three years ending with the day on which the claim is made;

(2) For the purposes of sub-paragraph (1)—

“ additional relief ” has the meaning given in section 1112J(3) of CTA 2009;

“ de minimis state aid ” means aid that is exempted from notification as described in section 1112J(2) of CTA 2009.

(8) The Income and Corporation Taxes (Electronic Communications) Regulations 2003 are amended as follows—

(a) 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” ;

(b) 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” .

(9) The amendments and revocation made by this section have effect in relation to claims made on or after 30 October 2024.

Section 30 Research and development intensity condition: transitional provision

(1) 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—

(4) But that section is to be read for the purposes of sub-paragraph (3) as if—

(a) in subsections (2) and (3), for “30%” there were substituted “40%” ;

(b) in subsection (7), for paragraph (b) there were substituted—

(b) it is expenditure in respect of which the company is entitled to relief under this Chapter or Chapter 6A of Part 3 for the period.

(2) The amendment made by this section is to be treated as always having had effect.

Section 31 Employee-ownership trusts

Schedule 6 makes provision about employee ownership trusts.

Section 32 Overseas transfer charge: pension schemes in EEA state or Gibraltar

(1) 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).

(2) Subsections (3) to (5) contain amendments consequential on the repeal made by subsection (1).

(3) In Part 4 of FA 2004 —

(a) in section 244J (persons liable to charge), in subsection (4) omit “or 244C”;

(b) in section 244K (meaning of “ transferred value ”), in subsection (6) omit “or 244C”.

(4) 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 )—

(a) in regulation 3 (information to be provided to QROPS) in paragraph (2C)—

(i) for “neither” substitute “not” ;

(ii) omit paragraph (b) and the “nor” before it;

(b) in regulation 3AF (information provided by member to QROPS: inward and outward transfers), in paragraph (1)(b)(ii) omit “or 244C”;

(c) in regulation 3AG (provision of information about liability for overseas transfer charge), in paragraph (2)(d) omit “or 244C”;

(d) in regulation 3AH (accounting for overseas transfer charge where change of circumstances), in paragraph (1)(a)(ii) omit “or 244C(3)”.

(5) In the Registered Pension Schemes (Provision of Information) Regulations 2006 ( S.I. 2006/567 )—

(a) in regulation 11BB (information provided by members to scheme administrators), in paragraph (1)(b)(ii) omit “or 244C”;

(b) in regulation 12A (information provided by scheme administrators to members), in paragraph (2)(d) omit “or 244C”.

(6) 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.

(7) The amendments do not have effect in relation to a transfer that is made—

(a) in execution of a request made before 30 October 2024, and

(b) before 30 April 2025.

(8) Where—

(a) the repeal made by subsection (1) does not have effect in relation to a transfer, but

(b) 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 tax consequences of the earlier transfer are to be determined as if the repeal did not have effect in relation to the later transfer.

Section 33 Overseas pension schemes established in EEA states

(1) 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.

(2) In regulation 2 (requirements of an overseas pension scheme), in paragraph (2) , for sub-paragraphs (a) to (d) substitute—

(a) the scheme is an occupational pension scheme and—

(i) the scheme is regulated by a body in the country or territory in which the scheme is established that regulates occupational pension schemes, or

(ii) there is no body in that country or territory that regulates occupational pension schemes;

(b) the scheme is not an occupational pension scheme and the scheme is regulated by a body in the country or territory in which the scheme is established that regulates pension schemes that are not occupational pension schemes; or

(c) the scheme is not an occupational pension scheme and—

(i) there is no body in the country or territory in which the scheme is established that regulates pension schemes that are not occupational pension schemes, but

(ii) the establishment of the scheme was regulated, and the provision of the scheme is regulated, by a body in that country or territory that regulates providers of pension schemes.

(3) 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) .

(4) Subsections (1) to (3) come into force on 6 April 2025.

Section 34 Pension scheme administrators required to be resident in United Kingdom

(1) In Part 4 of FA 2004 (pensions), section 270 (meaning of “ scheme administrator ”) is amended as follows.

(2) In subsection (2)—

(a) in the opening words—

(i) for “cannot be” substitute “is not” ;

(ii) for “unless” substitute “at any time unless, at that time,” ;

(b) in paragraph (a) omit the words from “or another” to the end.

(3) In subsection (3)(b) omit the words from “, whether resident” to the end;

(4) Omit subsection (4).

(5) Subsections (1) to (4) come into force on 6 April 2026.

Section 35 Alternative finance: diminishing shared ownership refinancing arrangements

Schedule 7 makes provision about diminishing shared ownership refinancing arrangements.

Section 36 Statutory neonatal care pay

(1) ITEPA 2003 is amended as follows.

(2) In section 660 (taxable UK benefits)—

(a) in Table A in subsection (1), after the entry relating to statutory parental bereavement pay insert—

(b) in subsection (2), after the entry relating to statutory parental bereavement pay insert—

statutory neonatal care pay;

(3) 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” .

(4) 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 )—

(a) after “ statutory maternity pay ” (in the first place it appears) insert “, statutory neonatal care pay” ;

(b) after “ statutory sick pay ” (in the second place it appears) insert “, statutory neonatal care pay” .

(5) Subsection (4) comes into force on 6 April 2025.

Section 37 Claim for relief on foreign income

(1) In Part 8 of ITTOIA 2005 (foreign income: special rules), after Chapter 4 insert—

Relief for new residents on foreign income

Claim for relief for qualifying new residents

(845A)

(1) An individual may make a claim for relief for a tax year under this section (a “foreign income claim”) if the individual is a qualifying new resident for that year (see section 845B ).

(2) Where an individual makes a foreign income claim for a tax year, the individual is entitled to relief for the tax year that is equal to so much of the total income of the individual for that year as—

(a) reflects qualifying foreign income (see section 845H ), and

(b) is identified as such in the claim.

(3) The relief is given by deducting the amount of the relief in calculating the individual's net income for the tax year (see Step 2 of the calculation in section 23 of ITA 2007).

(4) A foreign income claim must be made in a return.

(5) A foreign income claim in relation to 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.

(6) A foreign income claim may not be made as a consequential claim (within the meaning of section 43C(5) of TMA 1970) if the circumstances which give rise to the consequential claim result from a loss of tax brought about carelessly or deliberately by the individual or a person acting on the individual’s behalf.

(7) See also—

(a) Chapter 5C of Part 2 of ITEPA 2003 which provides for a claim for relief that may be made in respect of foreign employment income where a foreign employment election is made, and

(b) Schedule D1 to TCGA 1992 which provides for a claim for relief that may be made in respect of foreign gains (a foreign gain claim).

(8) Sections 845C to 845E set out some income tax consequences of a foreign income claim, a foreign employment election or a foreign gain claim.

(9) See also section 1K of TCGA 1992, which provides for the loss of an individual’s annual exempt amount for capital gains tax where a foreign income claim, a foreign employment election or a foreign gain claim is made.

(10) For the purposes of this section—

(a) “ return ” means a return under section 8 of TMA 1970 (personal return),

(b) references to a claim being included in a return include a claim being so included as a result of an amendment of the return, and

(c) subsections (5) to (7) of section 118 of TMA 1970 (loss of tax brought about carelessly or deliberately) apply for the purposes of this section as they apply for the purposes of that Act.

Qualifying new residents

(845B)

(1) For the purposes of this Chapter, an individual is a qualifying new resident for a tax year if—

(a) the individual is UK resident for that tax year,

(b) the individual is not disqualified for that tax year, and

(c) for each of the 10 tax years before that tax year, the individual was not UK resident.

(2) An individual is also a qualifying new resident for a tax year if—

(a) the individual is UK resident for that tax year,

(b) the individual is not disqualified for that tax year, and

(c) that tax year is one of the next three tax years after a qualifying tax year in relation to the individual.

(3) A tax year is a qualifying tax year in relation to an individual if—

(a) the individual was a qualifying new resident for that tax year as a result of subsection (1) ,

(b) the individual would have been a qualifying new resident for that tax year as a result of that subsection, but was not only as a result of the individual being disqualified for that tax year, or

(c) the tax year—

(i) is the tax year 2022-23, 2023-24 or 2024-25, and

(ii) is a tax year to which paragraph (a) or (b) would have applied in relation to the individual had this section had effect for that tax year.

(4) An individual is disqualified for a tax year if the individual would, for the purposes of section 41 of the Constitutional Reform and Governance Act 2010, be regarded as—

(a) a member of the House of Commons for any part of that tax year, or

(b) a member of the House of Lords for any part of that tax year.

Effect of claim, foreign employment election or foreign gain claim on losses

(845C)

(1) Subsection (2) applies where—

(a) an individual who carries on a relevant business wholly outside the United Kingdom makes a foreign income claim, a foreign employment election or a foreign gain claim for a tax year,

(b) the individual has a loss for that tax year from the relevant business, and

(c) the profits (if there were any) of the business would be qualifying foreign income for that year.

(2) No relief for that loss is available in the tax year for which the claim or election is made or in any other tax year.

(3) In this section “ relevant business ” means—

(a) a trade, profession or vocation, or

(b) a property business.

Effect of claim, foreign employment election or foreign gain claim: costs of dwelling-related loan

(845D)

(1) This section applies where an individual—

(a) has a relievable amount for a tax year in respect of an overseas property business for the purposes of section 274A (reduction for individuals: entitlement), and

(b) makes a foreign income claim, a foreign employment election or a foreign gain claim for the tax year.

(2) The individual is not entitled to relief under section 274A for that tax year in respect of that relievable amount.

(3) For the purposes of section 274A, the individual’s brought-forward amount for the following tax year in respect of the overseas property business is nil.

Effect of claim, foreign employment election or foreign gain claim on personal allowance etc

(845E) Where an individual makes a foreign income claim, a foreign employment election or a foreign gain claim for a tax year, the individual is not entitled, for that year, to—

(a) any allowance under Chapter 2 of Part 3 of ITA 2007 (personal allowance and blind person's allowance),

(b) any tax reduction under Chapter 3 of that Part (tax reductions for married couples and civil partners),

(c) any tax reduction under Chapter 3A of that Part (transferable tax allowance for married couples and civil partners), or

(d) any relief under section 457 or 458 of ITA 2007 (payments for life insurance etc).

Effect of claim on relief for contributions to registered pension schemes

(845F)

(1) Subsection (2) applies where—

(a) an individual makes a foreign income claim for a tax year,

(b) the individual is entitled to relief under section 188 of FA 2004 (relief for contributions) for that tax year, and

(c) the maximum amount of relief to which the individual is entitled under that section for that tax year is greater than the basic amount within the meaning of section 190(4) of that Act.

(2) The maximum amount of relief to which the individual is entitled under section 188 of that Act for that tax year is to be reduced by the lesser of—

(a) the relevant amount, and

(b) the amount that would reduce the maximum amount of relief to the basic amount.

(3) The “relevant amount” is the amount of the relief to which the individual is entitled under section 845A(2) of this Act as a result of making the foreign income claim, so far as that amount reflects relevant qualifying foreign income.

(4) An amount of qualifying foreign income is “relevant qualifying foreign income” if the income is relevant UK earnings within the meaning of section 189(2) of FA 2004.

Foreign income relief ignored for purposes of determining adjusted net income

(845G)

(1) Subsection (2) applies for the purpose of determining the adjusted net income under section 58 of ITA 2007 of an individual for a tax year for which the individual has made a foreign income claim.

(2) The adjusted net income is to be determined as if the relief allowed by the claim had not been deducted in calculating the individual's net income for the tax year.

Qualifying foreign income

(845H) Income is qualifying foreign income if it—

(a) falls within a description set out in the following table, and

(b) is not disqualified income (see section 845I ).

Disqualified income

(845I) Income is disqualified income if—

(a) it is income of a settlement (within the meaning of Chapter 5 of Part 5) arising in the tax year 2024-25 or an earlier tax year that is treated as arising in tax year 2025-26 or a later year as a result of section 648(3) to (5),

(b) it is income arising from a security treated as situated in the United Kingdom as a result of section 138ZB of TCGA 1992 (share exchanges involving non-UK incorporated close companies),

(c) it is income chargeable to income tax as a result of section 809AZB of ITA 2007 (transferred income streams),

(d) it is performance income (see section 845J ),

(e) it is income from a pension to which section 629 of ITEPA 2003 applies (pre-1973 pensions paid under the Overseas Pensions Act 1973), or

(f) it is a payment made to or in respect of—

(i) a relieved member of a relevant non-UK scheme (within the meaning of Schedule 34 to FA 2004), or

(ii) a transfer member of such a scheme,

to which the member payment provisions (within the meaning of that Schedule) apply.

Performance income

(845J)

(1) Performance income is any income chargeable to income tax (however that charge arises) that results, directly or indirectly, from the performance of a relevant activity by a performer (whether performed in the United Kingdom or not).

(2) “ Performer ” means any individual who gives performances of entertainment or sport.

(3) For the purposes of this section “ performances of entertainment or sport ” includes any activity of a physical kind performed by an individual (alone or with others) which is or may be made available to the public or any section of the public, whether for payment or not.

(4) The following are “relevant activities”—

(a) the giving of a performance of entertainment or sport;

(b) the participation of the performer in any sound or video recording;

(c) any activity in connection with a commercial occasion or event (including the appearance of the performer in connection with the occasion or event).

(5) The reference to a commercial occasion or event includes any description of occasion or event—

(a) for which any person might receive or become entitled, as a result of anything done by the performer, to receive anything by way of cash or any other form of property; or

(b) which is designed to promote commercial sales or activity by advertising, the endorsement of goods or services, sponsorship, or other promotional means of any kind.

(2) In ITA 2007 —

(a) in section 24 (reliefs deductible at Step 2), in subsection (1)(a)—

(i) at the end insert—

section 845A of ITTOIA 2005 (claim for relief for qualifying new residents), and

(ii) at the end of the entry for section 193 (4) of FA 2004 , omit the “and”,

(b) in section 34 (personal allowance and blind person’s allowance) for subsection (3) substitute—

(3) See also—

(a) section 809G, in relation to tax years before 2025-26 where a claim for the remittance basis to apply is made, and

(b) section 845E of ITTIOA 2005, in relation to tax years from 2025-26 where a foreign income claim, a foreign employment election or a foreign gain claim is made.

Those sections provide that where an individual makes such a claim or election for a tax year, the individual is not entitled to any allowance under this Chapter for that tax year.

(c) in section 55A (transferable tax allowance for married couples and civil partners) for subsection (3) substitute—

(3) See also—

(a) section 809G, in relation to tax years before 2025-26 where a claim for the remittance basis to apply is made, and

(b) section 845E of ITTIOA 2005, in relation to tax years from 2025-26 where a foreign income claim, a foreign employment election or a foreign gain claim is made.

Those sections provide that where an individual makes such a claim or election for a tax year, the individual is not entitled to any tax reduction under this Chapter for that tax year.

(d) in section 460 (residence of claimants for relief under section 457 or 458) for subsection (4) substitute—

(4) See also—

(a) section 809G, in relation to tax years before 2025-26 where a claim for the remittance basis to apply is made, and

(b) section 845E of ITTOIA 2005, in relation to tax years from 2025-26 where a foreign income claim, a foreign employment election or a foreign gain claim is made.

Those sections provide that where an individual makes such a claim or election for a tax year, the individual is not entitled to any relief under section 457 or 458 for that tax year.

(e) in section 809EZA (disguised investment management fees: charge to income tax)—

(i) in subsection (2A), for paragraphs (d) and (e) substitute—

(d) the individual makes a foreign income claim for the relevant tax year.

(ii) in subsection (2C), for “before the end of the period of non-residence” substitute

in any period—

(a) ending immediately before a qualifying tax year in relation to the individual (within the meaning of section 845B (3) of ITTOIA (qualifying new residents)), and

(b) that consists only of tax years for which the individual is not UK resident.

(f) in section 989 (the definitions), at the appropriate places insert—

“ foreign income claim ” means a claim under section 845A of ITTOIA 2005

“ qualifying new resident ” has the meaning it has in Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act).

(3) In paragraph 46 of Schedule 2 to FA 2022 (qualifying asset holding companies)—

(a) in the heading for “applies” substitute “applied or who makes a foreign income claim” ,

(b) in sub-paragraph (1)—

(i) in the words before paragraph (a), for “This paragraph applies” substitute “Sub-paragraphs (2) and (3) apply” , and

(ii) in paragraph (a), for “applies” substitute “applied” , and

(c) after sub-paragraph (6) insert—

(6A) Sub-paragraphs (4) to (6) also apply for the purposes of item 22 in the table in section 845H of ITTOIA 2005 (qualifying foreign income for the purposes of foreign income claim).

(4) The amendments made by this section have effect for the tax year 2025-26 and subsequent tax years.

Section 38 Claim for relief on foreign employment income

(1) In Part 2 of ITEPA 2003 (employment income: charge to tax), after Chapter 5B insert—

Relief for new residents on foreign employment income

Foreign employment election

Foreign employment election for qualifying new residents

(41M)

(1) This Chapter applies if an individual is a qualifying new resident for a tax year (the “qualifying year”).

(2) An individual is a qualifying new resident for a tax year for the purposes of this Chapter if the individual is a qualifying new resident for the tax year for the purposes of Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act).

(3) The individual may make an election for the qualifying year under this section (“a foreign employment election”).

(4) Section 41P makes provision about a claim for relief—

(a) which an individual can make for the qualifying year or any subsequent tax year, where the individual has made a foreign employment election, and

(b) which entitles the individual to relief in that year calculated by reference to employment income that is in respect of the qualifying year.

(5) Sections 41Q (amount of relief available) and 41R (limit on relief) set out how to determine the amount of relief to which the individual is entitled.

(6) See also—

(a) sections 845C to 845E of ITTOIA 2005, which set out some income tax consequences of a foreign employment election, and

(b) section 1K of TCGA 1992, which provides for the loss of the individual’s annual exempt amount for capital gains tax where a foreign employment election is made.

(7) A foreign employment election must be made in a return.

(8) A foreign employment election for the qualifying year must be made before the end of the period of 12 months beginning with 31 January after the end of the qualifying year.

(9) A foreign employment election may not be made as a consequential claim (within the meaning of section 43C(5) of TMA 1970) if the circumstances which give rise to the consequential claim result from a loss of tax brought about carelessly or deliberately by the individual or a person acting on the individual’s behalf.

(10) For the purposes of this Chapter—

(a) “ return ” means a return under section 8 of TMA 1970 (personal return),

(b) references to a claim or election being included in a return include a claim or election being so included as a result of an amendment of the return, and

(c) subsections (5) to (7) of section 118 of TMA 1970 (loss of tax brought about carelessly or deliberately) apply as they apply for the purposes of that Act.

Key definitions

Key definitions

(41N)

(1) This section sets out some definitions that apply for the purposes of this Chapter.

(2) “ Qualifying employment income ” means—

(a) qualifying general earnings,

(b) qualifying third party income, and

(c) qualifying securities income.

(3) “ Qualifying foreign employment income ” means—

(a) qualifying foreign general earnings,

(b) qualifying foreign third party income, and

(c) qualifying foreign securities income.

(4) Section 41T defines what it means—

(a) for general earnings to be “qualifying general earnings”, and

(b) for qualifying general earnings to be “qualifying foreign general earnings”.

(5) Section 41U defines what it means—

(a) for third party income to be “qualifying third party income”, and

(b) for qualifying third party income to be “qualifying foreign third party income”.

(6) Section 41V defines what it means—

(a) for securities income to be “qualifying securities income”, and

(b) for qualifying securities income to be “qualifying foreign securities income”.

Claim for relief

Claim for relief for qualifying new residents

(41P)

(1) Where an individual has made a foreign employment election, the individual may make a claim for relief for the qualifying year or any subsequent tax year (“a foreign employment relief claim”).

(2) Where an individual makes a foreign employment relief claim for a tax year, the individual is entitled to relief that is equal to so much of the net taxable employment income for that year as—

(a) reflects qualifying foreign employment income (see section 41Q ), and

(b) is identified as such in the claim.

(3) But subsection (2) only applies to the extent the total amount of the relief given does not exceed the limit (see section 41R ).

(4) The relief is given by deducting the amount of the relief in calculating the individual's net income for the tax year for which the claim is made (see Step 2 of the calculation in section 23 of ITA 2007).

(5) A foreign employment relief claim must be made in a return.

(6) A foreign employment relief claim 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.

(7) A foreign employment relief claim may not be made as a consequential claim (within the meaning of section 43C(5) of TMA 1970) if the circumstances which give rise to the consequential claim result from a loss of tax brought about carelessly or deliberately by the individual or a person acting on the individual’s behalf.

(8) For the purposes of this Chapter “ net taxable employment income ”, in relation to a tax year, means the employment income on which the individual is charged to tax for the tax year (see section 9(1)).

Amount of relief available

(41Q)

(1) For the purposes of section 41P (2) , the amount of net taxable employment income for a tax year that “reflects” qualifying foreign employment income is the total of—

(a) the total of the amount of the net taxable earnings from each employment in the tax year that reflects qualifying foreign general earnings (see subsections (2) to (5) ), and

(b) the total of the amount of the net taxable specific income from each employment for the tax year that reflects qualifying foreign third party income or qualifying foreign securities income (see subsection (6) ).

(2) The amount of the net taxable earnings from an employment in a tax year that “reflects” qualifying foreign general earnings is—

(a) the amount of the taxable earnings from the employment in the tax year that are qualifying foreign general earnings, minus

(b) the amount of the qualifying deductions.

(3) If the amount calculated under subsection (2) is nil or a negative amount, then none of the net taxable earnings from the employment in the tax year reflect qualifying foreign general earnings.

(4) If the foreign employment relief claim is for the qualifying year, the amount of the qualifying deductions is the proportion of the total deductions that is the same as the proportion of the claim year taxable earnings that are qualifying foreign general earnings.

(5) If the foreign employment relief claim is for a subsequent tax year, the amount of the qualifying deductions is the amount resulting from the following steps—

Step 1

Deduct the claim year taxable earnings from the total deductions.

If the result is nil or a negative amount, there are no qualifying deductions.

Step 2

Deduct any other taxable earnings that are not qualifying foreign general earnings.

If the result is nil or a negative amount, there are no qualifying deductions.

(6) The proportion of the net taxable specific income from an employment for a tax year that “reflects” qualifying foreign third party income or qualifying foreign securities income is the same as the proportion of the taxable specific income for the employment in that year that is qualifying foreign third party income or qualifying foreign securities income.

(7) In this section—

“ claim year taxable earnings ” means the taxable earnings from the employment in the tax year that are “for” the year for which the claim is made determined in accordance with section 16 and 17;

“ total deductions ” means the total amount of any deductions allowed from the taxable earnings from the employment in the tax year under provisions listed in section 327(3) to (5) (see section 11(1)).

Limit on relief

(41R)

(1) This section sets out how to determine the limit on the amount of relief the individual is entitled to when making a foreign employment relief claim for a year for the purposes of section 41P (3) .

(2) The limit is the lesser of—

(a) 30% of the relevant qualifying employment income, and

(b) £300,000.

(3) For the purposes of this section “ relevant qualifying employment income ” means—

(a) so much of the net taxable employment income for the tax year for which the claim is made as reflects qualifying employment income, and

(b) if the foreign employment relief claim is for a tax year that is subsequent to the qualifying year, so much of any net taxable employment income for any earlier tax year (but not any tax year before the qualifying year) as would reflect qualifying employment income if that earlier year was the year for which the claim was made.

(4) If the foreign employment relief claim is for a tax year that is subsequent to the qualifying year, the limit is reduced by the total of any amounts reflecting qualifying foreign employment income that have previously been relieved under section 41P .

(5) To determine the amounts mentioned in subsection (3) (a) and (b) , apply section 41Q , but as if—

(a) the references in that section to qualifying foreign employment income were to qualifying employment income,

(b) the references in that section to qualifying foreign general earnings were to qualifying general earnings, and

(c) the references in that section to qualifying foreign third party income and qualifying foreign securities income were references to qualifying third party income and qualifying securities income.

Effect of claim on relief for contributions to registered pension schemes

(41S)

(1) This section applies where an individual who is an active member of a registered pension scheme for the purposes of section 188 of FA 2004 (relief for contributions) makes a foreign employment relief claim for a tax year.

(2) For the purposes of sections 189(1)(a) and 190 of that Act, references to the amount of the individual’s relevant UK earnings chargeable to income tax for that year are to be read as references to that amount minus the relieved amount.

(3) The “relieved amount” is the amount of the relief to which the individual is entitled under section 41P(2) of this Act as a result of making the foreign employment relief claim.

Foreign employment relief ignored for purposes of determining adjusted net income

(41T)

(1) Subsection (2) applies for the purpose of determining the adjusted net income under section 58 of ITA 2007 of an individual for a tax year for which the individual is entitled to relief under section 41P .

(2) The adjusted net income is to be determined as if the relief had not been deducted in calculating the individual’s net income for the tax year.

Qualifying foreign employment income

Qualifying foreign general earnings

(41U)

(1) General earnings are “qualifying general earnings” if they are—

(a) “for” the qualifying year determined in accordance with sections 16 and 17,

(b) if the qualifying year is a split year as respects the individual, attributable to the UK part of the year, and

(c) from an employment the duties of which are performed wholly or partly outside the UK during the qualifying year.

(2) Any attribution required for the purposes of subsection (1) (b) is to be done on a just and reasonable basis.

(3) Qualifying general earnings are “qualifying foreign general earnings” if they are neither—

(a) in respect of duties performed in the United Kingdom, nor

(b) from overseas Crown employment subject to United Kingdom tax (see section 41W ).

(4) For the purposes of subsection (3), the extent to which qualifying general earnings are in respect of duties performed in the United Kingdom is to be determined on a just and reasonable basis.

Qualifying foreign third party income

(41V)

(1) For the purposes of this Chapter, “third party income” is an amount that counts under Chapter 2 of Part 7A (treatment of relevant step for income tax purposes) as employment income in respect of an employment.

(2) Third party income is “qualifying third party income”—

(a) if it is in respect of an employment the duties of which are performed wholly or partly outside the UK during the qualifying year, and

(b) to the extent that the value of the relevant step that counts as employment income (see section 554Z3) is—

(i) “for” the qualifying year determined in accordance with section 554Z4(2), and

(ii) if the qualifying year is a split year as respects the individual, attributable to the UK part of the year.

(3) Any attribution required for the purposes of subsection (2) (b) (ii) is to be done on a just and reasonable basis.

(4) Qualifying third party income is “qualifying foreign third party income” to the extent that it is not in respect of duties performed in the United Kingdom.

(5) The extent to which qualifying third party income is not in respect of duties performed in the United Kingdom is to be determined on a just and reasonable basis.

Qualifying foreign securities income

(41W)

(1) For the purpose of this Chapter, “securities income” is an amount that counts under Chapters 2 to 5 of Part 7 (employment-related securities etc) as employment income in respect of an employment (the “relevant employment”).

(2) Securities income is “qualifying securities income”—

(a) if the duties of the relevant employment are performed wholly or partly outside the UK during the qualifying year, and

(b) to the extent that it—

(i) accrues during the qualifying year, or

(ii) if the qualifying year is a split year as respects the individual, accrues during the UK part of the year.

(3) To determine when securities income accrues treat an equal amount of the securities income as accruing on each day of the relevant period determined in accordance with section 41G.

(4) But if the proportion of the securities income that would be regarded as qualifying securities income by virtue of subsection (3) is not, having regard to all the circumstances, just and reasonable, the amount of the securities income that is qualifying securities income is such amount as is just and reasonable.

(5) Qualifying securities income is wholly “qualifying foreign securities income” if the duties of the relevant employment are performed wholly outside the United Kingdom.

(6) If some, but not all, of the duties of the relevant employment are performed outside the United Kingdom—

(a) the qualifying securities income is to be apportioned (on a just and reasonable basis) between duties performed in the United Kingdom and duties performed outside the United Kingdom, and

(b) the income apportioned in respect of duties performed outside the United Kingdom is qualifying foreign securities income.

(7) But qualifying securities income from overseas Crown employment subject to United Kingdom tax is not qualifying foreign securities income.

Meaning of “overseas Crown employment subject to UK tax”

(41X)

(1) This section explains what is meant by —

(a) qualifying general earnings “ from overseas Crown employment subject to United Kingdom tax ” for the purposes of section 41T (3) (b) , and

(b) qualifying securities income “ from overseas Crown employment subject to United Kingdom tax ” for the purposes of section 41V (7) .

(2) Qualifying general earnings and qualifying securities income are “from overseas Crown employment” if the earnings or income is from Crown employment (within the meaning of section 28(2)) in respect of duties performed outside the United Kingdom.

(3) Such earnings or income are to be taken as being “subject to United Kingdom tax” unless they fall within any exception contained in an order made under section 28(5) for the purposes of section 27(2).

(4) An order made under section 28(5) may also—

(a) provide for any exceptions mentioned in subsection (3) to not apply for the purposes of this section, and

(b) make exceptions for the purposes of this section.

(5) For the purposes of this section, if securities income is partly from overseas Crown employment subject to United Kingdom tax, a just and reasonable proportion of the securities income is to be taken to be from such employment.

Location of employment duties

(41Y)

(1) Section 38 (period of absence from employment) applies for the purposes of this Chapter as if references to general earnings were to general earnings or third party income.

(2) Section 40(1) and (2) (place of performance of duties on board vessel or aircraft) applies for the purposes of this Chapter.

(3) Duties of an employment performed in the UK sector of the continental shelf in connection with exploration of exploitation activities are to be treated for the purposes of this Chapter as being performed in the United Kingdom.

(4) In subsection (3) “ the UK sector of the continental shelf ” and “ exploration or exploitation activities ” have the same meaning as in section 41 (treatment of general earnings from employment in the UK sector of the continental shelf).

Other rules for determining amounts of qualifying foreign employment income

Artificial arrangements to be disregarded

(41Z)

(1) Any arrangements falling within subsection (2) are to be disregarded for the purposes of determining the extent to which—

(a) general earnings are qualifying general earnings;

(b) third party income is qualifying third party income;

(c) securities income is qualifying securities income;

(2) Arrangements fall within this subsection if the main purpose, or one of the main purposes of the arrangements is to enable an individual to obtain—

(a) relief under this Chapter to which they would not otherwise be entitled, or

(b) relief under this Chapter of a greater amount than that to which they would otherwise be entitled.

(3) In this section “ arrangements ” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

Limit on qualifying foreign employment income from associated employments

(41Z1)

(1) This section applies if—

(a) the individual has associated employments from or in respect of which there is qualifying employment income, and

(b) the duties of the associated employments are not performed wholly outside the United Kingdom.

(2) There is a limit on how much of the qualifying employment income from or in respect of the associated employments is qualifying foreign employment income.

(3) The limit is the proportion of the qualifying employment income that is reasonable having regard to—

(a) the nature of, and time devoted to, the duties performed outside the United Kingdom, and those performed in the United Kingdom, and

(b) all other relevant circumstances.

(4) In this section “ associated employments ” means employments with the same employer or with associated employers; and section 24(5) and (6) applies for the purposes of this section.

(2) In Schedule 8 —

(a) Part 1 makes general consequential amendments;

(b) Part 2 makes consequential amendments relating to the operation of PAYE;

(c) Part 3 contains transitional provision.

(3) 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.

Section 39 Claim for relief on foreign gains

(1) TCGA 1992 is amended as follows.

(2) Before Schedule 1 insert—

Relief for new residents on foreign gains

Claim for relief for qualifying new residents

(1)

(1) An individual may make a claim for relief for a tax year under this paragraph (a “foreign gain claim”) if the individual is a qualifying new resident for that tax year.

(2) Paragraphs 2 , 3 and 4 set out the reliefs that may be obtained by making a foreign gain claim.

(3) A foreign gain claim must be made in a return.

(4) A foreign gain claim in relation to 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.

(5) A foreign gain claim may not be made as a consequential claim (within the meaning of section 43C(5) of the Management Act) if the circumstances which give rise to the consequential claim result from a loss of tax brought about carelessly or deliberately by the individual or a person acting on the individual’s behalf.

(6) For the purposes of this paragraph—

(a) “ return ” means a return under section 8 of the Management Act (personal return),

(b) references to a claim being included in a return include a claim being so included as a result of an amendment of the return, and

(c) subsections (5) to (7) of section 118 of the Management Act (loss of tax brought about carelessly or deliberately) apply as they apply for the purposes of that Act.

Relief for qualifying foreign gains

(2)

(1) Where an individual makes a foreign gain claim for a tax year, the individual is entitled to relief for each qualifying foreign gain accruing to the individual in that year that is identified in the claim.

(2) The relief is given by deducting an amount equal to the sum of those gains from the total amount of chargeable gains accruing to the individual.

Relief in respect of deemed gains under section 86

(3)

(1) This paragraph applies if—

(a) an amount of chargeable gains would (but for this paragraph) be treated as accruing to an individual in a tax year under section 86(4) (attribution of gains to settlors of non-resident settlements),

(b) a qualifying foreign gain accrued in that tax year to the trustees of the settlement concerned (or would have done on the assumption in section 86(3)), and

(c) the individual identifies the gain mentioned in paragraph (b) in a foreign gain claim for that tax year.

(2) For the purposes of section 86(1)(e) as it applies to the individual, the following are to be disregarded (in that tax year and in later tax years)—

(a) the gain mentioned in sub-paragraph (1) (b) ;

(b) any qualifying foreign loss that accrued to the trustees in that tax year (or that would have so accrued on the assumption in section 86(3)).

Relief in respect of deemed gains under sections 87 and 89(2) and Schedule 4C

(4)

(1) This paragraph applies if—

(a) a settlement is for a tax year—

(i) one to which section 87 or 89(2) applies (attribution of gains to beneficiaries of settlements), or

(ii) a relevant settlement in relation to a Schedule 4C pool, within the meaning of paragraph 8A of Schedule 4C (transfers of value: attribution of gains etc),

(b) a beneficiary of the settlement receives a capital payment from the trustees in that tax year, and

(c) the individual identifies the capital payment in a foreign gain claim for that tax year.

(2) The capital payment is to be disregarded (in that tax year and in later tax years) for the purposes of sections 87, 87A and 89(2) and paragraph 8 of Schedule 4C.

(3) The following apply for the purposes of this paragraph as they apply for the purposes of section 87—

(a) section 87G (which provides for capital payments made to a close member of the settlor’s family to be treated in certain cases as received by the settlor);

(b) section 97 (which makes provision about the construction of “capital payment”, “settlement”, “trustees” and “beneficiary”).

Other effects of claim

(5) For other effects of making a foreign gain claim, see—

(a) section 1K(6)(b) (annual exempt amount), which provides that where a foreign gain claim has effect in relation to an individual for a tax year, the individual has no entitlement to an annual exempt amount for that year,

(b) section 16 (4) (computation of losses), which provides that where a foreign gain claim has effect in relation to an individual for a tax year, qualifying foreign losses accruing to the individual in that year are not allowable losses, and

(c) sections 845C to 845E of ITTOIA 2005, which set out some income tax consequences of making a foreign gain claim.

Interpretation of Schedule

(6) In this Schedule—

“ qualifying foreign asset ” means an asset that—

is situated outside the United Kingdom, and

does not derive at least 75% of its value from UK land (see Schedule 1A);

“ qualifying foreign gain ” means—

a chargeable gain accruing on the disposal of a qualifying foreign asset,

a chargeable gain treated as accruing as a result of section 3 (gains of non-UK resident close companies attributed to UK residents) where the gain accruing to the non-UK resident close company to which the deemed gain relates accrued on the disposal of a qualifying foreign asset, or

a qualifying QAHC gain,

but a chargeable gain falling within paragraph (a) or (b) is not a qualifying foreign gain if it is a gain to which paragraph 1(2) of Schedule 1 applies (pre-2025-26 gains subject to the remittance basis);

“ qualifying foreign loss ” means a loss accruing on the disposal of an asset that is a qualifying foreign asset;

“ qualifying QAHC gain ” means the foreign proportion (see paragraph 46(4) to (6) of Schedule 2 to FA 2022) of a chargeable gain accruing on the disposal of shares in a QAHC (within the meaning of that Schedule) other than a chargeable gain to which paragraph 46(3) of that Schedule applies.

(3) In section 1A (territorial scope), in subsection (2), before paragraph (a) insert—

(za) Schedule D1 (relief for new residents on foreign gains),

(4) 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).”

(5) In section 1K (annual exempt amount), in subsection (6)—

(a) the words from “section” to the end become paragraph (a) of that subsection, and

(b) after that paragraph insert

, or

(b) the individual makes a foreign gain claim, a foreign income claim or a foreign employment election for that tax year.

(6) In section 16 (computation of losses), at the end insert—

(4) A qualifying foreign loss accruing to an individual in a tax year is not an allowable loss if a foreign gain claim, a foreign income claim or a foreign employment election has effect in relation to the individual for that tax year.

(5) In subsection (4), “ qualifying foreign loss ” has the same meaning as in Schedule D1 (see paragraph 6 of that Schedule).

(7) In section 288 (interpretation), in subsection (1) at the appropriate places insert—

“ foreign employment election ” means a claim under section 41M of ITEPA 2003;

“ foreign gain claim ” means a claim under paragraph 1 of Schedule D1 ;

“ foreign income claim ” means a claim under section 845A of ITTOIA 2005;

“ qualifying new resident ” has the meaning given by section 845B of ITTOIA 2005 (which sets out the circumstances in which an individual will be a qualifying new resident following a period of 10 years of non-residence);

(8) In Schedule 1A, in paragraph 1, after “2B(4)(b)” insert “or paragraph 6 of Schedule D1 ” .

(9) 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.”

(10) In Schedule 2 to FA 2022 (qualifying asset holding companies), in paragraph 46—

(a) in the heading (as amended by section 37 (3) (a) ), after “income” insert “or gain” , and

(b) 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)” .

(11) The amendments made by this section have effect for the tax year 2025-26 and subsequent tax years.

Section 40 Remittance basis not available after tax year 2024-25

(1) 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.

(2) 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.

(3) Other provision is made by that Schedule (including provision amending the Income Tax Acts and TCGA 1992)—

(a) in consequence of ending the availability of the remittance basis,

(b) clarifying the circumstances in which amounts are remitted (see paragraph 5 ), and

(c) in connection with otherwise ending the relevance of domicile to income tax and capital gains tax.

(4) Subject to subsections (5) and (6) , the provision made by that Schedule has effect for the tax year 2025-26 and subsequent tax years.

(5) Paragraph 6 of Schedule 9 (relief for amounts remitted again on becoming UK resident) is to be treated as having always had effect.

(6) 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.

Section 41 Temporary repatriation facility

Schedule 10 makes provision for a “temporary repatriation facility” for individuals who have been subject to the remittance basis.

Section 42 Rebasing of assets

Schedule 11 makes provision about the rebasing of assets for individuals who have been subject to the remittance basis.

Section 43 Trusts: connected amendments, transitional provision etc

(1) Schedule 12 amends legislation relating to the taxation of income and gains arising within trusts and similar structures, and in particular—

(a) 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

(b) 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.

(2) 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.

Section 44 Excluded property: domicile test replaced with long-term residence test

(1) IHTA 1984 is amended as follows.

(2) 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” .

(3) After section 6 insert—

“Long-term UK resident”: individuals

(6A)

(1) For the purposes of this Act, an individual is a “long-term UK resident” at all times in a tax year if they were UK resident for at least 10 of the previous 20 tax years.

(2) But an individual is not a long-term UK resident at any time in a tax year (“the current tax year”) if they were non-UK resident—

(a) for any 10 consecutive tax years during the 19 tax years before the current tax year, or

(b) for at least the required number of consecutive tax years ending with the tax year before the current tax year.

(3) To determine “ the required number ” for the purposes of subsection (2) (b) , take the 20 tax years ending with the last tax year for which the individual was UK resident and find the number of those tax years for which the individual was UK resident (“the number of resident years”).

The required number is the number in the second column of the following table corresponding to the number of resident years.

(4) In this section, “ UK resident ” means resident in the United Kingdom and “ non-UK resident ” means not resident in the United Kingdom.

(5) For the purposes of this section, a question as to whether the individual was UK resident for the tax year 2012-13 or an earlier tax year is to be determined as it would have been determined for income tax purposes for that tax year (and as to later tax years see Schedule 45 to the Finance Act 2013 (statutory residence test)).

(6) See also—

(a) section 6B (which modifies this section in its application to young persons);

(b) sections 267ZC to 267ZE (under which a person may be treated as a long-term UK resident as the result of an election).

“Long-term UK resident”: young persons

(6B)

(1) In the application of section 6A (1) for the purpose of determining whether a young person is a long-term UK resident at any time in a tax year (“the current tax year”), that subsection has effect as if—

(a) for “20” there were substituted the number of whole tax years for which the person was alive before the current tax year, and

(b) for “10” there were substituted half the number mentioned in paragraph (a) (rounded up, if not a whole number, to the next whole number).

(2) In subsection (1) , “ young person ” means an individual who was under the age of 20 immediately before the current tax year.

(3) For the purposes of this Act, an individual is not a long-term UK resident at any time in a tax year if they were under the age of 1 (or were not yet born) immediately before the tax year.

“Long-term UK resident”: bodies corporate

(6C) For the purposes of this Act, a body corporate is a “long-term UK resident” at all times in a tax year if the body—

(a) is incorporated in the United Kingdom, or

(b) was (if in existence before the beginning of the tax year) within the charge to corporation tax on income at any time during the previous tax year by virtue of section 5(1) of the Corporation Tax Act 2009 (UK resident companies).

(4) This section comes into force on 6 April 2025.

Section 45 Corresponding change for settled property

(1) IHTA 1984 is amended as follows.

(2) In section 48 (excluded property)—

(a) in the heading, at the end insert “: reversionary interests and Treasury securities” ;

(b) omit subsections (3) to (3F).

(3) After section 48 insert—

Excluded property: property situated outside the UK etc

(48ZA)

(1) If property comprised in a settlement—

(a) is situated outside the United Kingdom, or

(b) is a holding in an authorised unit trust or a share in an open-ended investment company,

this section applies to the property and section 6(1) and (1A) (general excluded property rule) does not.

(2) If the settlor is alive, the property is excluded property at any time when the settlor is not a long-term UK resident.

(3) If the settlor died on or after 6 April 2025, the property is excluded property if the settlor was not a long-term UK resident immediately before they died.

(4) If the settlor died before 6 April 2025, the property is excluded property if the settlor was not domiciled in the United Kingdom when the property became comprised in the settlement.

(5) Subsections (2) and (3) do not apply at any time to property to which section 49(1) (certain interests in possession) applies if, at that time, the person beneficially entitled to the interest is a long-term UK resident.

(6) Subsections (2) to (4) do not apply to property if—

(a) an individual has been beneficially entitled to an interest in possession in the property—

(i) at any time on or after 6 April 2025 while a long-term UK resident, or

(ii) at any time before that date while domiciled in the United Kingdom, and

(b) the entitlement arose directly or indirectly as a result of a disposition made on or after 5 December 2005 for a consideration in money or money's worth.

(7) For the purposes of subsection (6) —

(a) it is immaterial whether the consideration was given by the individual or by anyone else, and

(b) the cases in which an entitlement arose indirectly as a result of a disposition include any case where the entitlement arose under a will or the law relating to intestacy.

(8) Where the conditions in paragraphs (a) to (d) of section 74A(1) (arrangements involving acquisition of interest in settled property etc) are satisfied, none of subsections (2) to (4) applies at the time when the conditions are first satisfied or at any later time to make the relevant settled property (within the meaning of section 74A) excluded property.

(9) If—

(a) an amount is payable in respect of property (“the existing property”) comprised in a settlement, and

(b) the amount represents an accumulation of income which (once accumulated) becomes comprised in the settlement,

subsection (4) has effect in the case of the amount as if the reference to the time when it became comprised in the settlement were to the time when the existing property became comprised in the settlement.

(10) Subsections (2) to (4) are subject to Schedule A1 (overseas property with value attributable to UK residential property).

(11) The reference in subsection (1) to property comprised in a settlement does not include a reversionary interest in the property (and accordingly this section does not apply to such an interest and section 6(1) does).

(4) This section comes into force on 6 April 2025.

Section 46 Consequential, connected and transitional provision

In Schedule 13 —

Part 1 contains amendments to IHTA 1984 and related legislation that are consequential on, connected with or incidental to the new excluded property tests introduced by sections 44 and 45 ;

Part 2 contains provision about commencement and transitional provision.

Section 47 Removal of exemption for private school fees

(1) VATA 1994 is amended as follows.

(2) In Schedule 9 (exemptions)—

(a) in Group 6 (education)—

(i) in item 3(b)(i), after “5A” insert “(or would be so exempt but for item 1 or 2 of Part 3)” ;

(ii) in item 4, after “item 1” insert “(whether or not that supply also falls within item 1 or 2 of Part 3)” ;

(b) after Part 2 (the groups) insert—

Exceptions

Notes:

A “ private school ” means an institution which is either—

a school—

at which full-time education is provided for pupils of compulsory school age or, in Scotland, school age (whether or not such education is also provided for pupils under or over that age),

where fees or other consideration are payable for that provision of full-time education, and

which is not a nursery school, or

an institution—

which is wholly or mainly concerned with providing education suitable to the requirements of persons over compulsory school age (or, in Scotland, school age) but under 19,

at which full-time education is provided for such persons,

where the provision of full-time education falling within sub-paragraph (ii) is wholly or mainly provision in respect of which fees or other consideration are payable, and

which is not an independent training or learning provider.

In Note (1)(b) an “ independent training or learning provider ” means an institution—

at which education or training is provided for persons over compulsory school age (or, in Scotland, school age) but under 19 under a contract with a relevant contracting authority, and

where the consideration for the provision falling within paragraph (a) is payable by the relevant contracting authority under that contract.

For the purposes of Note (2), a “ relevant contracting authority ” means the Secretary of State, Medr (Commission for Tertiary Education and Research), the Department for the Economy in Northern Ireland or Skills Development Scotland.

For the purposes of items 1 and 2, the provision of education or vocational training at a private school by any eligible body other than a private school is to be treated as provision by a private school if—

the eligible body and that private school are connected within the meaning of section 1122 of the Corporation Tax Act 2010 (connected persons), or

the provision by the eligible body is a result of arrangements the main purpose, or one of the main purposes, of which is to secure that the provision is an exempt supply.

For the purposes of Note (4)—

“arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and

an “ eligible body ” has the meaning given by Note (1) to Group 6.

For the purposes of item 1—

a “ nursery class ” means a class that is composed wholly (or almost wholly) of children who—

are under compulsory school age or, in Scotland, school age, and

would not be expected to attain that age while in that class, and

a “higher education course”—

in relation to England and Wales, has the meaning given by section 83(1) of the Higher Education and Research Act 2017;

in relation to Scotland, means a course of any description mentioned in section 5(3) of the Further and Higher Education (Scotland) Act 2005;

in relation to Northern Ireland, means a course of any description mentioned in paragraph 1 of Schedule 1 to the Further Education (Northern Ireland) Order 1997 ( S.I. 1997/1772 (N.I. 15)) .

For the purposes of item 2 “ vocational training ” has the meaning given by Note (3) to Group 6.

In these Notes, “compulsory school age”, “ pupil ”, “ school ” and “ school age ” have the meanings given by the Education Act 1996, the Education (Scotland) Act 1980 and the Education and Libraries (Northern Ireland) Order 1986 ( S.I. 1986/594 (N.I. 3)) in relation to England and Wales, Scotland and Northern Ireland respectively.

The provision of education by a private school, other than—

the provision of the teaching of English as a foreign language,

the provision of education in a nursery class, or

the provision of a higher education course.

(3) In section 31 (exempt supplies), in subsection (1), for “Schedule 9” substitute “Part 2 of Schedule 9 and it is not of a description specified in Part 3 of that Schedule” .

(4) In section 8 (reverse charge on supplies received from abroad), in subsection (4A), for “Schedule 9” substitute “Part 2 of Schedule 9 and not specified in Part 3 of that Schedule” .

(5) In section 43 (groups of companies), in subsection (2A)—

(a) 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” ;

(b) 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” .

Section 48 Charge on pre-paid private school fees

(1) 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.

(2) That provision is treated for the purposes of the charge to VAT as a supply taking place on the later of—

(a) 1 January 2025, and

(b) the first day of that term.

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.

(3) 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).

(4) 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).

(5) This section is to be read as if it were contained in VATA 1994.

Section 49 Sections 47 and 48 : commencement

(1) Sections 47 and 48 are to be treated as having come into force on 30 October 2024 and have effect in relation to any provision of education, vocational training or board and lodging on or after 1 January 2025 (whenever that supply is treated as taking place for the purposes of the charge to VAT).

Section 50 Increased rates for additional dwellings: transactions before 1 April 2025

(1) 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.

(2) In subsection (3) (which deals with purchases of additional dwellings), for the Table A mentioned there substitute—

(3) 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.

(4) But the amendment made by this section does not have effect in relation to a land transaction which—

(a) is effected in pursuance of a contract entered into before 31 October 2024, and

(b) is not excluded.

(5) For this purpose a land transaction is excluded if—

(a) there is any variation of the contract, or assignment of rights under the contract, on or after 31 October 2024,

(b) 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

(c) 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.

(6) 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).