Domicile as Residence? A Guide to Part 2 Finance Act 2025
Domicile as Residence? A Guide to Part 2 Finance Act 2025
This book explains the tax consequences of the changes detailed in Part 2 of the Finance Act 2025 - the replacement of a domicile-based system with a residence-based system and the abolition of the Remittance Basis.
This work was originally written as a supplement to the earlier publication called Taxation of Entertainers and Sportspersons, but applies equally to personal tax advisers to mobile HNWIs.
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This book explains the tax consequences of the changes detailed in Part 2 of the Finance Act 2025, following the enactment of new rules announced on Budget Day 2024.
These were essentially the replacement of a domicile-based system with a residence-based system and the abolition of the Remittance Basis which had been around in its current form since the beginning of the First World War.
The text of the legislation is included in the publication. Each provision is analysed using the headings Overview, Relevant Legislation, Detail and Commencement. This is followed by a section on some thoughts as to how the provisions can be used for the benefit of clients.
This work was originally written as a supplement to the earlier publication called Taxation of Entertainers and Sportspersons, but applies equally to personal tax advisers to mobile HNWIs.
Preface. ii
1 The New Residence Based Regime after Finance Act 2025. 1
1.1 Summary. 2
1.2 General. 3
1.3 The Relevant Legislation. 11
2 Specifics: Replacement of Special Rules Relating to “Domicile. 13
2.1 Summary. 13
2.2 General. 18
2.3 Chapter 1 of Part 2 of the Act: New rules for foreign income and gains of individuals becoming UK resident. 21
2.4 Details of New Chapter 5 Part 8 ITTOIA. 39
2.5 Section 38 – The New Overseas Workday Relief. 81
2.6 Schedule 8 Relief on foreign employment income: consequential and transitional provision. 102
2.7 Abolition of the remittance basis. 119
2.8 Application of Income Tax Acts in relation to deemed employment. 143
2.9 Rebasing of assets for CGT for some former remittance basis users. 224
3 Trusts: connected amendments, transitional provision etc.. 231
3.1 Summary. 231
3.2 Further Review.. 3-234
3.3 The Legislation – section 43. 235
4 Inheritance Tax. 367
4.1 Summary. 368
4.2 Some Relevant Legislation. 4-374
4.3 Replacement of Domicile Test by Long-Term Residence Test - section 44 FA 2025 380
4.4 Long Term Residence and Excluded Property. 383
4.5 Position concerning settled property following move away from Domicile. 406
Appendix 2: ANNEXE. 460
Appendix 3: Inland Revenue Pamphlet IR 20 Extracts. 463
Appendix 4: Some Relevant Definitions. 475
5 Relief for New Residents for Foreign Gains. 480
5.1 Summary. 480
5.2 Introduction. 482
5.3 Finance Bill Committee. 483
5.4 Details of new schedule D1. 487
Appendix 5: Table of some relevant definitions. 505
6 Some first thoughts, and possibilities. 510
6.1 Summary. 510
6.2 Introduction. 513
6.3 Some approaches. 517
6.4 Putting in “firebreaks” - one other prophylactic to consider is the use of “firebreaks”. 6-532
6.5 Restructuring arrangements including image rights and endorsement arrangements. 6-536
6.6 Using insurance for funding and or as a wrapper. 6-537
6.7 Starting the clock again. 6-539
6.8 Checking nationality etc and applicability of DDC.. 6-546
6.9 Fragmenting and splitting ownership. 6-550
6.10 Fixing the value and giving away the value above that. 6-551
6.11 Double Death Conventions (“DDC”) 6-561
6.12 Conclusion. 604
Appendix 6: Some questions for clients?. 605
Appendix 7: Table of Situs of Assets. 606
Appendix 8: Jurisdiction Table. 625