RDRM34310 - Remittance Basis: Exemptions: Business Investment Relief: An Introduction
Source: gov.uk (2025-04-07)


From 6 April 2012 remittance basis users who bring their foreign income or gains to the UK and invest it in a target company [see RDRM34340 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34340)] may claim relief from the UK tax charge that would otherwise arise. The investment can be made in the form of money or other property derived from foreign income and gains from years in which a person was taxed on the remittance basis. The investor may be taxed on either the arising basis or the remittance basis in the tax year in which the investment is made and still benefit from the relief. This is not limited to the individual; a relevant person [see RDRM33030 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm33030)] can also make a qualifying investment.

Although it is no longer possible to use the remittance basis from 6 April 2025, former remittance basis users may have pre-6 April 2025 foreign income and gains which they can use to make qualifying investments on or after 6 April 2025.

However, from 6 April 2028 it will no longer be possible to claim business investment relief (BIR). Although existing qualifying investments within UK businesses will continue to benefit from BIR after this date, there can be no new qualifying investments on or after 6 April 2028, whether these are brand new investments in the business or re-investments as mitigation steps (see RDRM34440 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34440)).

In order for the foreign income or gains to qualify for relief from UK tax, the following conditions must be met:
- the investment is a qualifying investment [see RDRM34330 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34330)] made in a target company [see RDRM34340 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34340)], within 45 days of the foreign income and gains being brought to the UK [see RDRM34370 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34370)]
- the individual whose foreign income or gains are being brought to the UK must claim relief from UK tax under this provision as part of their Self Assessment tax return [see RDRM34380 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34380)].
Changes to the original rules apply to BIR from 6 April 2017 which relate to:
- qualifying investments [see RDRM34330 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34330)]
- an addition to the category of qualifying target companies [see RDRM34358 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34358)]
- potentially chargeable events [see RDRM34390 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34390)]
- the extraction of value rules [see RDRM34420 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34420)]
- the two-year start-up rules [see RDRM34430 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34430)]
Relief is not available where the investment is made, or where the foreign income and gains are brought to the UK, as part of, or as a result of, a scheme or arrangement whose main purpose, or one of the main purposes of which, is tax avoidance. (section 809VA(7) ITA 2007)

Example

Jamal, a remittance basis user brings £250,000 of his foreign income into the UK on 1 October 2012 and immediately invests the money in a target company. Jamal makes a claim for business investment relief on his 2012-13 Self Assessment tax return.

As there have been no potentially chargeable events during 2012-13 [see RDRM34390 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm34390)], the whole of the £250,000 foreign income is treated as not having been remitted to the UK in that year.