INTM603645 - Transfer of assets abroad: 6 April 2025 non-UK domicile reforms: Removal of the remittance basis of taxation ITA07/S726
Source: gov.uk (2025-04-07)


From 6 April 2025 the application of the remittance basis of taxation for individuals who are non-UK domiciled was removed and from this date any individual who is UK resident and is taxable under ITA07/S720 of the ToAA provisions will be taxable on the arising basis unless the individual qualifies for and makes a claim under the 4-year FIG regime in respect of foreign source income (See RFIG41000 (https://www.gov.uk/hmrc-internal-manuals/residence-and-fig-regime-manual/rfig41000) onwards for guidance on this new regime).

For individuals who claimed the remittance basis of taxation for tax years prior to 2025 - 2026, the remittance basis will continue to apply to income that arose in these years and this income will only be taxable should it be remitted to the UK. Guidance on how the remittance basis affected the taxation of non-UK domiciled individuals subject to a charge under the ToAA provisions can be found at INTM (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm601900)601900 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm601900) onwards.

Individuals who have used the remittance basis can take advantage of the Temporary Repatriation Facility (TRF) during the years 2025 - 2026 to 2027 - 2028 to bring amounts of historical unremitted income and gains to the UK at a reduced rate of taxation. For details of the TRF see RDRM71000 (https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm71000) onwards.

A further change to ITA07/S726 is that subsections (6) and (7) have been repealed with effect from 6 April 2025 where the foreign deemed income arose in a year prior to the tax year 2017 - 18. The effect of these subsections was to remove from the remittance basis of charge any foreign deemed income that arose before the tax year 2017 - 2018 to the extent that it was remitted to the UK in the tax year 2017 - 2018 or later and was transitionally protected income. Transitionally protected income was any deemed foreign income which arose in a tax year earlier than 2017 - 2018 and that would have been protected foreign-source income had the definition of protected foreign-source income at ITA07/S721A been effective in the particular year in which the income arose. Guidance on the treatment of transitionally protected income from 6 April 2025 can be found at INTM603695 (https://www.gov.uk/hmrc-internal-manuals/international-manual/intm603695).

ITA07/S726 has also been extended as part of the 6 April 2025 reforms to include qualifying new residents. If an individual is a qualifying new resident they are entitled to claim in their first 4 years of UK residence a relief from tax on their foreign income. The amendments to ITA07/S726 means that any income assessable under ITA07/S721 that would be treated as relevant foreign income if it were the individual’s will be relieved from tax if the individual is a qualifying new resident and makes a claim for the relief. The income that comes within such a claim can be found in the table at ITTOIA05/S845F which defines what is “qualifying foreign income”. Further details of the 4-year FIG regime and how an individual can be a qualifying new resident can be found at RFIG44000 (https://www.gov.uk/hmrc-internal-manuals/residence-and-fig-regime-manual/rfig44000).