Legislation – Finance Act 2026
Schedule 3Non-resident, and previously non-domiciled individuals
Part 1Relief for new residents on foreign income and gains
Reliefs only deductible against income or gains to which they relate
1
(1)
“(3A)
But a deduction for that purpose is to be made only from qualifying foreign income.”
(2)
“(4A)
But a deduction for that purpose is to be made only from qualifying foreign employment income.”
(3)
“section 41P of ITEPA 2003 (qualifying foreign employment income)”;
“section 845A of ITTOIA 2005 (qualifying foreign income)”.
(4)
In Schedule D1 to TCGA 1992, in paragraph 2(2) (relief for qualifying foreign gains)—
(a)
for “chargeable” substitute “qualifying foreign”
, and
(b)
after “individual” insert “in that tax year”
.
(5)
The amendments made by this paragraph have effect for the tax year 2025-26 and subsequent tax years.
QAHCs
2
(1)
In the table in section 845H of ITTOIA 2005—
(a)
in item 23—
(i)
for “paragraph 46” substitute “paragraph 46(4) to (6)”
,
(ii)
after “arising” insert “to an individual who provided investment management services in connection with investment arrangements to which a QAHC is party”
, and
(iii)
for “a QAHC (within the meaning of that Schedule)” substitute “the QAHC as a result of an interest the individual acquired during the course of the provision of those services”
, and
(b)
““QAHC” and “investment management services” have the meanings they have in that Schedule.”
(2)
In Schedule D1 to TCGA 1992, in paragraph 6—
(a)
in the definition of “qualifying QAHC gain”—
(i)
after “accruing” insert “to an individual who provided investment management services in connection with investment arrangements to which a QAHC is party”
, and
(ii)
for the words from “a QAHC” to the end substitute “the QAHC that were acquired during the course of the provision of those services”
, and
(b)
““QAHC” and “investment management services” have the meanings they have in that Schedule.”
(3)
In paragraph 46 of Schedule 2 to FA 2022 (qualifying asset holding companies), in sub-paragraph (6A) for “item 22” substitute “item 23”
.
(4)
This paragraph has effect in relation to income arising and gains accruing on or after the day on which this Act is passed.
Children under 10
3
In section 845B of ITTOIA 2005 (meaning of “qualifying new resident”), in subsection (1)—
(a)
omit the “and” after paragraph (b), and
(b)
“, and
(d)
the individual is at least 10 years old at the commencement of that tax year.”
Residence of personal representatives
4
(1)
In section 62 of TCGA 1992 (death: general provisions), in subsection (3) (residence of personal representatives), omit “or a long-term UK resident within the meaning of IHTA 1984”.
(2)
The amendment made by this paragraph is to be treated as having come into force on 6 April 2025 and has effect where the deceased person died on or after that date.
Foreign gains treated as accruing when remitted to UK
5
(1)
In paragraph 2 of Schedule 9 to FA 2025 (amendments of TCGA 1992 connected with end of remittance basis), in sub-paragraph (7)(b), after ““applies”” insert “, in the second place it occurs,”
.
(2)
Paragraph 2 of Schedule 9 to FA 2025 has effect, and is to be treated as always having had effect, with the amendment made by this paragraph (and the amendment made by that paragraph has effect accordingly).
Capital gains tax: amendments connected with end of remittance basis
6
(1)
In section 8C of TMA 1970 (returns so far as relating to capital gains tax)—
(a)
in subsection (1), in paragraph (a), the words from “does not” to the end become sub-paragraph (i) of that paragraph,
(b)
“or
(ii)
where the person is not entitled to the annual exempt amount for the tax year, is nil,”,
(c)
omit subsection (1)(c) (but not the “and” following it),
(d)
in subsection (2), for “to (c)” substitute “and (b)”
, and
(e)
omit subsection (4).
(2)
In section 1K of TCGA 1992 (annual exempt amount), omit subsection (6)(a).
(3)
The amendments made by this paragraph have effect for the tax year 2025-26 and subsequent tax years.
Definitions
7
(1)
““foreign gain claim” means a claim under paragraph 1 of Schedule D1 to TCGA 1992,”.
(2)
“foreign employment election
section 989 (and see section 41M of ITEPA 2003)”;
“foreign gain claim
section 989 (and see paragraph 1 of Schedule D1 to TCGA 1992)”;
“foreign income claim
section 989 (and see section 845A of ITTOIA 2005)”;
“qualifying new resident
section 989 (and see section 845B of ITTOIA 2005)”.
(3)
“foreign employment election
section 989 of ITA 2007 (and see section 41M of ITEPA 2003)”;
“foreign gain claim
section 989 of ITA 2007 (and see paragraph 1 of Schedule D1 to TCGA 1992)”;
“foreign income claim
section 989 of ITA 2007 (and see section 845A of this Act)”;
“qualifying new resident
section 989 of ITA 2007 (and see section 845B of this Act)”.
(4)
“foreign employment election
section 989 of ITA 2007 (and see section 41M of this Act)”;
“qualifying new resident
section 989 of ITA 2007 (and see section 845B of ITTOIA 2005)”.
Part 2Temporary repatriation facility
Introduction
8
Schedule 10 to FA 2025 (temporary repatriation facility) is amended as follows.
Deemed income under section 732 of ITA 2007
9
In paragraph 7—
(a)
“(1A)
For the purposes of applying those paragraphs for the purposes of sub-paragraph (1)(c)—
(a)
those paragraphs have effect as if—
(i)
for sub-paragraph (1)(a) (in each paragraph) there were substituted—“(a)
an individual is treated as having an amount of income for any of the tax years 2025-26, 2026-27 or 2027-28 as a result of section 732 of ITA 2007 (individuals receiving a benefit as a result of relevant transactions),”,
(ii)
the reference in sub-paragraph (2) (in each paragraph) to “the payment” were to the benefit by reference to which the income is treated as arising,
(iii)
sub-paragraph (3)(b)(ii) (in each paragraph) were omitted, and
(iv)
the references in each paragraph, and in section 87A of TCGA 1992 as applied by those paragraphs, to “capital payments” were to benefits falling within sub-paragraph (1)(c) of this paragraph, and
(b)
those paragraphs are to be applied after they have been applied for the purposes of determining whether any amount of a capital payment is qualifying overseas capital.”, and
(b)
in sub-paragraph (2), after “amount”, in the first place it occurs, insert “of income”
.
Value of amounts of qualifying overseas capital
10
“(2A)
For the purposes of designating an amount of qualifying overseas capital of an individual that—
(a)
is qualifying overseas capital as a result of paragraph 2(2) or (5), or
(b)
is treated as qualifying overseas capital as a result of paragraph 6(1)(b),
the value of that amount is the value of the amount when it first arose to the individual.”
Designation where tax paid from other sources
11
“(4A)
But where—
(a)
an amount of relevant foreign tax has been paid, or will be paid, in respect of an amount of qualifying overseas capital (“the related qualifying overseas capital”), and
(b)
it has been, or will be, paid out of funds other than the related qualifying overseas capital,
sub-paragraph (3) does not apply to the related qualifying overseas capital to the extent that the tax has been, or will be, paid out of those funds.”
Income tax or capital gains tax reduction where TRF charge paid on same amount
12
“(6A)
Sub-paragraph (6B) applies where—
(a)
an amount (“the TRF amount”) is treated as designated qualifying overseas capital of an individual as a result of sub-paragraph (6),
(b)
on or after 6 April 2025, an officer of Revenue and Customs, in relation to the tax year 2024-25 or an earlier tax year—
(i)
amends the individual’s self-assessment while an enquiry under section 9A of TMA 1970 (enquiry into return) into the individual’s return for that tax year is in progress,
(ii)
issues a partial or final closure notice under section 28A of that Act (completion of enquiry) in relation to that return, or
(iii)
makes an assessment under section 29 of that Act, and
(c)
the effect of the officer taking that step is that income tax or capital gains tax is charged in respect of the TRF amount.
(6B)
The amount of income tax or capital gains tax due and payable under section 59B of TMA 1970 in respect of the TRF amount is to be treated as reduced (but not below nil) by the amount of the TRF charge paid in respect of the TRF amount.
(6C)
Where sub-paragraph (6B) applies, the individual may not amend the return in which the designation election relating to the TRF amount was included to alter or revoke that election (if the return otherwise could have been amended) so as to cause the TRF amount not to be designated.”
Capital payment derived from foreign income or gains
13
(1)
In paragraph 10—
(a)
in sub-paragraph (1) (income tax exemptions and relief)—
(i)
the words from “the” to the end become paragraph (a),
(ii)
in that paragraph, after “capital” insert “that is designated on the basis that it is qualifying overseas capital as a result of a remittance provision”
, and
(iii)
“, or
(b)
an amount of income treated as qualifying overseas capital under paragraph 6 that—
(i)
falls within sub-paragraph (1)(b) of that paragraph, and
(ii)
is designated on the basis that it is qualifying overseas capital as a result of a remittance provision.”, and
(b)
in sub-paragraph (2), after “paragraph 6” insert “, and that falls within sub-paragraph (1)(a) or (c) of that paragraph,”
.
(2)
In paragraph 12(1) (capital gains tax: main exemption), after “capital” insert “that is designated on the basis that it is qualifying overseas capital as a result of a remittance provision (other than paragraph 6(1)(b))”
.
(3)
In paragraph 8—
(a)
(i)
omit the “and” after paragraph (a), and
(ii)
“(aa)
for each amount designated, whether or not it is designated on the basis it is qualifying overseas capital as a result of a remittance provision, and”
(iii)
in paragraph (b), after “designated” insert “on that basis”
,
(b)
“(2B)
In this Part and in Part 2 “remittance provision” means paragraph 2(2) or (5) or paragraph 6(1)(b).
(2C)
Where—
(a)
an amount is designated on the basis it is qualifying overseas capital as a result of a remittance provision, and
(b)
the amount would (ignoring this sub-paragraph) also be regarded as designated under paragraph 3 or 5 (matched capital payments),
it is not to be regarded as designated under that paragraph for the purposes of paragraph 10(7) (relief for offshore income gains) or paragraph 13 (relief for matched capital payments) as a result of that designation on that basis.
(2D)
Accordingly two designations of the amount are required to secure the benefit of all of the reliefs that may be available under paragraphs 10(1), 10(7),12(1) and 13—
(a)
one designation of the amount on the basis it is qualifying overseas capital as a result of a remittance provision, and
(b)
another not on that basis.”, and
(c)
“(5A)
Where the individual considers that an amount designated under sub-paragraph (5) could, if it were qualifying overseas capital, be designated on the basis that it is qualifying overseas capital as a result of a remittance provision, the individual may designate it on that basis.”
Amounts derived from designated qualifying overseas capital
14
“Amounts derived from designated qualifying overseas capital
13A
(1)
This paragraph applies to an amount (“amount A”) if—
(a)
either—
(i)
the remittance of the amount to the United Kingdom would have the effect mentioned in paragraph 2(3)(a) or (b) by reference to income or gains, or
(ii)
the remittance of the amount would result in income being treated as arising to a settlement in accordance with section 648(3) (and accordingly would result in an amount falling within paragraph 6(1)(b) arising), and
(2)
Where amount A falls within sub-paragraph (1)(a)(i), so much of amount A (so far as it relates to the reference income or gains) as does not exceed amount B (so far as it relates to the reference income or gains) is to be treated—
(a)
as designated qualifying overseas capital, and
(b)
as designated on the basis it is qualifying overseas capital as a result of a remittance provision.
(3)
Where amount A falls within sub-paragraph (1)(a)(ii), so much of the amount falling within paragraph 6(1)(b) as would result from the remittance of amount A as does not exceed amount B (so far as it relates to the reference income or gains) is to be treated—
(a)
as designated qualifying overseas capital, and
(b)
as designated on the basis it is qualifying overseas capital as a result of a remittance provision.”
Effect on section 65(5)(b) IHTA charge etc
15
“Effect of this Schedule on section 65(5) IHTA 1984 and section 260(2) of TCGA 1992
13B
(1)
The effects of Parts 1 and 2 of this Schedule are to be ignored for the purposes of section 65(5)(b) of IHTA 1984 (and accordingly will not prevent any amount being regarded as income of a person for the purposes of income tax for the purposes of that section).
(2)
Where—
(a)
the trustees of a settlement make a capital payment to an individual,
(b)
the making of that payment results in the individual having qualifying overseas capital,
(c)
that qualifying overseas capital is designated,
so much of the deemed disposal under section 71 of TCGA 1992 arising on the making of the payment as reflects the designated qualifying overseas capital is (despite sub-paragraph (1)) treated as a chargeable transfer within the meaning of IHTA 1984 for the purposes only of section 260(2)(a) of TCGA 1992 (gifts on which inheritance tax is chargeable etc).”
Amendment of returns
16
“(8)
Paragraph 8(6) is not to be taken as preventing the amendment of a return so as to alter or revoke a designation of qualifying overseas capital made in that return, provided that amendment is made in accordance with section 9ZA of TMA 1970 (taxpayer permitted to amend return within 12 months of filing date).”
Transfers from mixed funds
17
In section 809Q of ITA 2007, in subsection (9)—
(a)
omit paragraph (a), and
(b)
in paragraph (b)—
(i)
for “that Part of that Schedule” substitute “Part 1 of Schedule 10 to FA 2025”
, and
(ii)
after “8(7)” insert “of that Schedule”
.
Commencement of this Part
18
(1)
Schedule 10 to FA 2025 has effect, and is to be deemed always to have had effect, with the amendments made by paragraphs 9 to 16 of this Schedule.
(2)
Subsection (9) of section 809Q of ITA 2007 has effect, and is to be deemed always to have had effect, with the amendments made by paragraph 17 of this Schedule.
Part 3Temporary non-residence
19
(1)
Section 401C of ITTOIA 2005 is amended as follows.
(2)
“(6A)
Where—
(a)
a company (“company A”) makes a payment (including by way of a loan) to the individual in the temporary period of non-residence,
(b)
the individual is, at a relevant time, a material participator in, or is an associate of a material participator in, another company that is a close company (“company B”),
(c)
at the time the payment is made, company B controls (within the meaning of sections 450 and 451 of CTA 2010) company A, and
(d)
it is reasonable to suppose that the making of that payment is intended to avoid an amount being received by the individual by way of relevant distribution made, or treated as made, by company B,
company A is to be treated as making a relevant distribution of that amount to the individual in that period.
(6B)
Where—
(a)
a company makes a payment (including by way of a loan) to any person other than the individual at any time in the temporary period of non-residence,
(b)
if the company had made a dividend to the individual at that time, it would have been a relevant distribution, and
(c)
the individual receives an amount or a benefit (“the relevant receipt”) as a result of arrangements that it is reasonable to suppose are intended to secure that—
(i)
the individual receives the benefit of the payment or any part of it, but
(ii)
without a relevant distribution having been made, or treated as made, to the individual in that period,
the company is to be treated as making a relevant distribution to the individual in that period in the amount of the value of the relevant receipt.
(6C)
(3)
“(6D)
Where tax of a similar character to income tax is payable by the individual under the law of a territory outside the United Kingdom on a relevant distribution—
(a)
credit for any such tax paid by the individual is to be allowed against income tax chargeable in respect of the relevant distribution, and
(b)
the credit is to be given effect by treating the amount of the relevant distribution as reduced to such amount as would secure that so much of the credit is given as does not exceed the income tax chargeable in respect of the relevant distribution.”
(4)
Omit subsections (7) to (9).
(5)
In subsection (12) omit the definition of “trade profits of the close company”.
20
(1)
Section 408A of ITTOIA 2005 is amended as follows.
(2)
In subsection (4), omit paragraphs (a) to (c).
(3)
“(4A)
Where—
(a)
a company (“company A”) makes a payment (including by way of a loan) to the individual in the temporary period of non-residence,
(b)
the individual is, at a relevant time, a material participator in, or an associate of a material participator in, another company (“company B”) that would be a close company if it were UK resident,
(c)
at the time the payment was made, company B controls (within the meaning of sections 450 and 451 of CTA 2010) company A, and
(d)
it is reasonable to suppose that the making of that payment is intended to avoid—
(i)
an amount being received by the individual by way of dividend that falls within subsection (3)(c), or
(ii)
the individual becoming entitled to such a dividend,
the individual is to be treated as having received, at that time, a dividend in that amount that falls within subsection (3)(b) and (c).
(4B)
Where—
(a)
a company makes a payment (including by way of a loan) to any person other than the individual in the temporary period of non-residence,
(b)
if the company had made a dividend to the individual at that time, it would have been a dividend within subsection (3), and
(c)
the individual receives an amount or a benefit (“the relevant receipt”) as a result of arrangements that it is reasonable to suppose are intended to secure that—
(i)
the individual receives the benefit of the payment or any part of it, but
(ii)
without the individual receiving, or becoming entitled to, a dividend that falls within subsection (3)(c),
the individual is to be treated as having received, in that period, a dividend in the amount of the value of the relevant receipt, that falls within subsection (3)(b) and (c).
(4C)
(4)
“(4D)
Where tax of a similar character to income tax is payable by the individual under the law of a territory outside the United Kingdom on a dividend within subsection (3)—
(a)
credit for any such tax paid by the individual is to be allowed against income tax chargeable in respect of the dividend, and
(b)
the credit is to be given effect by treating the amount of the dividend as reduced to such amount as would secure that so much of the credit is given as does not exceed the income tax chargeable in respect of the dividend.”
(5)
Omit subsections (5) to (8).
(6)
“(10)
In this section—
(a)
“associate” and “participator” have the same meanings as in Part 10 of CTA 2010 (see sections 448 and 454),
(b)
a “material participator” is a participator who has a material interest in the company, as defined in section 457 of that Act,
(c)
“relevant time” means—
(i)
any time in the year of departure or, if the year of departure is a split year as respects the individual, the UK part of that year, or
(ii)
any time in one or more of the 3 tax years preceding that year.”
21
(1)
Section 413A of ITTOIA 2005 is amended as follows.
(2)
“(6A)
Where—
(a)
a company (“company A”) makes a payment (including by way of a loan) to the individual in the temporary period of non-residence,
(b)
the individual is, at a relevant time, a material participator in, or is an associate of a material participator in, another company that is a close company (“company B”),
(c)
at the time the payment was made, company B controls (within the meaning of sections 450 and 451 of CTA 2010) company A, and
(d)
it is reasonable to suppose that the making of that payment is intended to avoid an amount of relevant stock dividend income being treated under this Chapter as arising to the individual in that period,
relevant stock dividend income in that amount is treated as arising to the individual in that period.
(6B)
Where—
(a)
a company makes a payment (including by way of a loan) to any person other than the individual at any time in the temporary period of non-residence,
(b)
if the company had issued share capital in lieu of a cash dividend shares at that time that the individual is beneficially entitled to, relevant stock dividend income would have been treated under this Chapter as arising to the individual in that period, and
(c)
the individual receives an amount or a benefit (“the relevant receipt”) as a result of arrangements that it is reasonable to suppose are intended to secure that—
(i)
the individual receives the benefit of the payment or any part of it, but
(ii)
without relevant stock dividend income in that amount being treated under this Chapter as arising to the individual in that period,
relevant stock dividend income in amount of the value of the relevant receipt is treated as arising to the individual in that period.
(6C)
(3)
“(6D)
Where tax of a similar character to income tax is payable by the individual under the law of a territory outside the United Kingdom on relevant stock dividend income—
(a)
credit for any such tax paid by the individual is to be allowed against income tax chargeable in respect of the relevant stock dividend income, and
(b)
the credit is to be given effect by treating the amount of the relevant stock dividend income as reduced to such amount as would secure that so much of the credit is given as does not exceed the income tax chargeable in respect of the relevant stock dividend income.”
(4)
Omit subsections (7) to (9).
(5)
In subsection (11) omit the definition of “trade profits of the close company”.
22
(1)
Section 812A of ITA 2007 is amended as follows.
(2)
“(4A)
Where—
(a)
a company (“company A”) makes a payment (including by way of a loan) to the individual in the non-resident year,
(b)
the individual is, at a relevant time, a material participator in, or is an associate of a material participator in, another company that is a close company (“company B”),
(c)
at the time the payment was made, company B controls (within the meaning of sections 450 and 451 of CTA 2010) company A, and
(d)
it is reasonable to suppose that the making of that payment is intended to avoid the amount of the payment being included in the individual’s income for the non-resident year as relevant investment income,
the amount of the payment is to be treated as relevant investment income of the individual for the non-resident year.
(4B)
Where—
(a)
a company makes a payment (including by way of a loan) to any person other than the individual at any time in the non-resident year,
(b)
if the company had made a dividend to the individual at that time, it would be relevant investment income of the individual, and
(c)
the individual receives an amount or a benefit (“the relevant receipt”) as a result of arrangements that it is reasonable to suppose are intended to secure that—
(i)
the individual receives the benefit of the payment or any part of it, but
(ii)
without the amount being included in the individual’s income for the non-resident year as relevant investment income,
the amount of the value of the relevant receipt is to be treated as relevant investment income of the individual for the non-resident year.
(4C)
(3)
“(4D)
Where tax of a similar character to income tax is payable by the individual under the law of a territory outside the United Kingdom on relevant investment income—
(a)
credit for any such tax paid by the individual is to be allowed against income tax chargeable in respect of the relevant investment income, and
(b)
the credit is to be given effect by treating the amount of the relevant investment income as reduced to such amount as would secure that so much of the credit is given as does not exceed the income tax chargeable in respect of the relevant investment income.”
(4)
Omit subsections (5) and (6).
(5)
In subsection (8), omit paragraph (a).
(6)
In subsection (11) omit the definition of “trade profits of the distributing company”.
23
(1)
(2)
The amendments made by paragraphs 19(3) to (5), 20(4) to (5), 21(3) to (5) and 22(3) to (6) have effect for the tax year 2026-27 and subsequent tax years in relation to—
(a)
dividends, or other distributions, whenever made,
(b)
relevant stock dividend income, whenever it is treated as having arose, and
(c)
relevant investment income, whenever it arose.