I’ve just worked my way through the Tax Justice Network’s paper, “The Millionaire Exodus Myth”. They take aim at Henley & Partners’ headline-grabbing claims of a mass flight in 2024 and – looking only as far as December that year – show that virtually no UK millionaires actually packed their bags. Fair play to the authors: for that narrow window they’re right. But their dataset stops four months before 6 April 2025, the day the Finance Act scrapped the remittance basis, so it can’t tell us what’s happening now.

Government spokespeople keep citing a Warwick-LSE model that mined anonymised HMRC records and forecast an extra £3 billion-plus a year in revenue with barely 80 people leaving. Nice econometrics – but it’s still just a model built on pre-2025 behaviour. Meanwhile ministers quote the Office for Budget Responsibility’s £33.8 billion five-year windfall as if it had already been banked, even though the figure comes from a Lords written answer that admits no fresh departure data exists.

What I’m seeing on the ground looks very different. Since Easter three long-standing clients have moved to Italy, Gibraltar and Cyprus, and the list of public departures keeps growing: Richard Gnodde of Goldman Sachs is heading for Milan; steel tycoon Lakshmi Mittal is preparing to follow; Egyptian billionaire Nassef Sawiris has shifted his base to Italy and Abu Dhabi; the Livingstone brothers have slipped off to Monaco; and, according to The Times, French pharma heiress Anne Beaufour and investor Max Gottschalk have left too.

Why are they going? The new Foreign Income & Gains rules give newcomers four tax-free years and then haul them onto the full UK tax net. At the same time – still only a proposal, but spelled out in May’s Home Office white paper – the government wants most migrants to wait ten years before they can settle. If that change goes through, anyone who arrives today faces at least five years of top-rate tax with no guarantee of permanent status. Unsurprisingly, many well-heeled arrivals are doing the sums and deciding four years is enough.

Those determined to stay are being nudged into more complex planning. Offshore insurance bonds and non-reporting funds are perfectly legitimate ways to roll up income and gains until you’re non-resident again, but they cost money to set up and still leave the Treasury empty-handed. Add to that the sense of betrayal among longer-term residents who trusted the 2017 “protected settlement” rules to shield their offshore trusts – rules that vanished overnight on 6 April 2025 – and goodwill is wearing thin.

One client who has chosen to remain put the macro picture starkly. He reckons around 12 000 wealthy families have already left or are leaving. On his back-of-the-envelope maths that’s more than £1 billion a year in lost direct tax, another £750 million in lost VAT, £7.5 billion wiped from domestic trade, and roughly 45 000 jobs gone – before you even count the second-round effects. I can’t vouch for every pound and job in his estimate, but the soft patch in prime-London property and luxury retail suggests he’s not miles off the mark.

So, yes, the Tax Justice Network is right that Henley’s 2024 scare story was overblown – but 2024 is ancient history in tax terms. The real test is playing out now, and the early score-line is clear enough: Milan, Nicosia, Monaco and even Gibraltar are picking up people (and their spending power) that London has chosen to let slip. Unless the UK lines up its tax offer with its immigration rules – and finds a way to keep promises it made back in 2017 – the talk of a “mythical” exodus will look more wishful than factual.

Just as I was about to hit “send” on this newsletter, The Times dropped a new piece (12 June 2025) that underlines everything above. Drawing on Companies House records, it says 4,400 company directors have already shifted their residential base overseas in the past twelve months, with April departures running 75 per cent higher than a year ago and the steepest losses coming from finance, insurance and property – classic non-dom territory. The same article cites Foreign Investors for Britain’s estimate that more than 12,000 non-dom families have relocated and Bloomberg’s calculation that the UK suffered a net loss of 10,800 millionaires in 2024, second only to China. Oxford Economics adds that 60 per cent of tax advisers expect over 40 per cent of their non-dom clients to leave within two years, and the roll-call of individual exits now includes not only Richard Gnodde and the Livingstone brothers but also boxing promoter Eddie Hearn, pharma heiress Anne Beaufour, investor Max Gottschalk, fund manager Alexander Ginzburg and JC Flowers co-president Tim Hanford. In short, the latest hard numbers from The Times line up squarely with what clients, colleagues and I have been witnessing for months – and with the doubts I’ve raised about the Tax Justice Network’s comforting narrative.

With warm regards

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
(www.ifsconsultants.com, dmitry@ifsconsultants.com)

Sources

1. Tax Justice Network press release, “Millionaire exodus did not occur,” 10 Jun 2025

The post From Remittance to Resistance: Why the Post-2025 Tax Shake-Up Is Driving Wealth Out of the UK appeared first on IFS Consultants Ltd.

In this article we discuss HMRC’s growing habit of taxing any deposit it cannot clearly trace. The Abdus Salam ruling (UKFTT 2025) underlines that when you cannot show solid paperwork for a credit – loan agreements, gift deeds, sale contracts – HMRC will simply treat the money as income and the burden of proof rests on you.

The First-tier Tribunal’s decision in [2025] UKFTT 527 (TC)-Abdus Salam is an almost perfect illustration of how HMRC will tax money that materialises in a bank account with no convincing back-story. Judge Popplewell accepted HMRC’s view that a series of unexplained credits paid into the taxpayer’s personal account were undeclared business takings. The appellant tried to challenge the closure notices, but she did so more than four years late, and the tribunal refused her application for permission to appeal out of time. That procedural failure was important, yet the really telling point was substantive: even if she had met every deadline her problem would still have been the same, because once HMRC could show that cash went in, the evidential burden switched to her to demonstrate that the money was something other than taxable income.

In practice HMRC needs very little to shift that burden. A bank statement showing the credit, a note that the amount never appeared in the accounts, perhaps a few follow-up questions that receive no satisfactory answer – those elements together are generally enough for officers to conclude, on a “prima facie” basis, that the receipt is taxable. At that moment the taxpayer must produce evidence that tips the balance of probabilities in her favour. The tribunal made the point bluntly: it wanted clear documentary linkage – each debit leaving her husband’s Standard Chartered account in Pakistan, each corresponding credit landing in her UK account, plus an explanation of the purpose of every transfer. The taxpayer and her adviser could not do it. They had bank statements but no reconciliation mapping one side to the other, no loan agreements, no gift letters, no sale contracts. Without that detail the judge said he could see “no obvious strength” in her case.

Delay compounded the weakness. Letters sent in November 2021 reminded the appellant that the deadline for taking matters further had already passed; nevertheless two more years slipped by before the tribunal received the appeal. That gave HMRC a legitimate complaint of prejudice: the investigating officer had by then retired, and under HMRC’s own six-year document retention policy much of the material that might have assisted either party could have been destroyed. The tribunal weighed that prejudice against the vague assertion that the appellant had suffered ill-health and bereavement, found the explanation inadequate, and dismissed the application.

The decision reinforces a lesson that recurs in tax cases. When a cash lodgement turns up on a bank statement and the surrounding paperwork is thin or non-existent, HMRC will default to treating the amount as income; the law entitles them to do so, and tribunals back them unless the taxpayer can produce better evidence quickly. Contemporaneous records – loan agreements drafted and signed when funds are advanced, properly witnessed gift deeds, sales contracts that match invoice values to bank entries – are what displaces HMRC’s presumption. Waiting until an enquiry starts, or worse until an appeal, to reconstruct the story is rarely successful and becomes harder as memories fade, officers move on and electronic records are deleted.

The Abdus Salam judgment therefore stands as a cautionary tale. The tax authority does not need to prove that the money is income; it merely needs to point to the unexplained credit and ask the taxpayer to disprove it. If the taxpayer cannot do so – because key documents were never created, or were lost, or cannot be reconciled – the tribunal will side with HMRC. Anyone in business who receives personal bank deposits, particularly from overseas family members, should assume HMRC will query them and prepare the documentary defence as soon as the funds arrive, not months or years later when the burden of proof has already shifted firmly onto the taxpayer’s shoulders.

HMRC всё чаще расценивает необъяснённые поступления на счёт как налогооблагаемый доход

В этом материале мы объясняем, почему HMRC всё чаще расценивает необъяснённые поступления на счёт как налогооблагаемый доход. Решение по делу Abdus Salam (UKFTT, 2025 г.) показывает: если нет надёжных документов – договоров займа, дарственных писем, контрактов – бремя доказывания ложится на налогоплательщика, а сумма будет включена в его доход.

Недавнее решение суда первой инстанции по налоговым спорам – [2025] UKFTT 527 (TC)-Abdus Salam – наглядно демонстрирует, как жёстко HMRCоблагает налогом деньги, поступившие на банковский счёт без убедительного объяснения их происхождения. Судья Попплвелл согласился с позицией налоговой службы: ряд неидентифицированных зачислений на личный счёт налогоплательщицы представляет собой незадекларированную предпринимательскую выручку. Апеллянтка попыталась оспорить закрывающие уведомления, но сделала это более чем на четыре года позже установленного срока, и суд отклонил прошение о восстановлении срока. Однако даже при соблюдении всех процессуальных требований её основная проблема осталась бы той же: едва HMRC продемонстрировала факт поступления средств, доказательственное бремя автоматически перешло на налогоплательщицу, которой надлежало показать, что деньги не являются налогооблагаемым доходом.

Для смещения этого бремени HMRC требуется минимум. Выписка со входящим платежом, констатация того, что эта сумма не отражена в отчётности, пара уточняющих вопросов без внятного ответа – и у инспектора достаточно оснований считать поступление доходом. С этого момента налогоплательщик обязан опровергнуть презумпцию документами, которые убедят судью хотя бы на уровне «баланса вероятностей». Конкретно в этом деле суд ожидал аккуратной документальной связки: каждое списание со счёта мужа в пакистанском Standard Chartered Bank, каждое соответствующее зачисление на британский счёт супруги и пояснение, зачем перевод был произведён. У налогоплательщицы и её представителя нашлись выписки, но не оказалось детализированной сверки, договоров займа, дарственных писем или контрактов купли-продажи. Без такой детализации судья прямо заявил, что не видит «очевидной силы» в позиции апеллянтки.

Затягивание времени только усилило слабость её доводов. Письма HMRC в ноябре 2021 года напоминали, что срок на дальнейшие действия уже истёк; тем не менее прошло ещё два года, прежде чем суд получил апелляционную жалобу. Это дало налоговой службе веский аргумент о процессуальном ущербе: ведущий инспектор к тому моменту вышел на пенсию, а значительная часть материалов могла быть уничтожена в рамках шестилетней политики хранения документов. Суд сопоставил этот ущерб с весьма расплывчатыми ссылками на плохое здоровье и семейное горе апеллянтки, признал объяснения недостаточными и отклонил её просьбу.

Решение в очередной раз подчёркивает устойчивый урок. Когда на банковской выписке появляется зачисление, а подтверждающие бумаги либо не созданы, либо не представлены, HMRC по умолчанию рассматривает сумму как доход, и суды поддерживают этот подход до тех пор, пока налогоплательщик не предъявит убедительных доказательств. Пакет документов, сформированный заранее – договор займа, должным образом оформленная дарственная, контракт и счёт-фактура, которые показывают, откуда пришли деньги и зачем – в состоянии отбить претензию. Попытка же «поднять историю» задним числом, после начала проверки или, тем паче, на стадии апелляции, редко бывает успешной: память стирается, люди уходят, электронные базы чистятся.

История Abdus Salam потому служит предостережением. Налоговому ведомству вовсе не нужно доказывать, что деньги являются доходом; достаточно указать на необъяснённый кредит и потребовать от вас опровержения. Если же опровергнуть нечем – потому что ключевые документы так и не были созданы или бесследно исчезли – суд останется на стороне HMRC. Каждый предприниматель, получающий личные зачисления на счёт, особенно переводы от родственников из-за рубежа, должен исходить из того, что налоговики обязательно поинтересуются их природой и готовить доказательную базу сразу, в момент поступления средств, а не спустя месяцы или годы, когда бремя доказывания уже окончательно легло на плечи самого налогоплательщика.

With warm regards

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
(www.ifsconsultants.com, dmitry@ifsconsultants.com)

The post HMRC’s growing habit of taxing any deposit it cannot clearly trace appeared first on IFS Consultants Ltd.

Few taxpayers imagine that simply staying in the family home without paying rent could one day generate an income-tax liability larger than many people’s annual salary. Yet that is precisely what happened in Moran v HMRC [2025] UKFTT 540 (TC), decided on 14 May 2025. The First-tier Tribunal ruled that Mrs Anne Moran, a UK-resident widow, must pay tax on the market rental value of “Highlands”, the house where she has lived since 1987. The catch was that the property had been shifted decades earlier into a web of Jersey companies and discretionary trusts set up by her late husband, Vincent. Because the structure was offshore, the income that ultimately funded the house’s upkeep arose outside the UK tax net. Parliament anticipated precisely this sort of arrangement when it created the transfer-of-assets-abroad (TOAA) code in 1936 and, later, the “benefit charge” now found in sections 731-733 of the Income Tax Act 2007.

A short tour of the TOAA landscape

The TOAA rules are an anti-avoidance regime of last resort. Their purpose is simple to state: where a UK-resident individual moves an income-producing asset overseas, or stands to enjoy the income that flows from an overseas structure, the UK will still try to tax that income as if nothing had been moved. Over the years the code has grown three charging mechanisms. The first focuses on the original transferor; the second on “capital sums” that find their way back onshore; the third – the benefit charge – aims squarely at situations like Mrs Moran’s, where someone other than the transferor receives a benefit that can be matched to relevant foreign income. HMRC’s manuals emphasise that the charge can bite even though the individual never touches the income in cash, because Parliament wanted to stop benefits being routed through offshore intermediaries before they reach UK residents.

How the benefit charge works, in plain English

Imagine an offshore trust or company earns investment income that is not taxed in the UK. If, because of that income, a UK-resident person is given any kind of benefit – rent-free accommodation, private school fees, use of a yacht, even flights – HMRC may treat the value of the benefit as if it were that person’s own income for the year. The calculation involves “matching” the benefit against the pool of untaxed income accumulated within the structure. The rules are deliberately broad: they sweep in indirect funding, “associated operations” and composite transactions so that the legislation cannot be side-stepped by layering companies, loans and further trusts.

The “motive defence” that almost no one can prove

Because the benefit charge is so wide, Parliament offered a statutory escape route – the motive defence. To succeed, a taxpayer must prove that avoiding UK tax was not one of the main purposes of the transfer or any related step, and that the transactions were carried out for genuine commercial reasons and were not artificial. HMRC’s guidance warns that the defence is “narrow” and will be accepted only when robust contemporary evidence exists. In practice, that means board minutes, advice letters and funding papers drafted at the time, not after the fact.

What actually happened in Moran

Vincent Moran bought Highlands in 1987 and, while the family were happily living there, began moving its ownership along a chain: first to a Jersey company he controlled, then into an offshore trust, and finally into a second trust. The company that now held the house financed extensive repairs with loans advanced by another trust-owned company. After Vincent’s death in 2002 a licence allowed Mrs Moran to remain in Highlands for life. For the tax years 2012/13 to 2019/20 HMRC assessed her to income tax on the notional rent she would have paid on the open market – around £63,000 a year – arguing that the figure could be matched to income accumulated inside the offshore structure.

The tribunal agreed. It held that the flow of repair finance through inter-company loans was an “associated operation”, so the benefits Mrs Moran enjoyed were “provided out of” the trust’s income. Emails, letters of wishes and professional attendance notes from the 1990s and early 2000s showed that mitigating UK taxes was a significant objective of the planning. Because Mrs Moran bore the burden of proof and could not demonstrate a wholly non-tax motive, the motive defence failed. A final argument based on the EU freedom-of-capital article also failed because the evidence did not show any export of capital from the UK to Jersey.

Why the case matters far beyond the Moran family

Moran is a textbook example of how the benefit charge can land decades after a structure is put in place, long after key witnesses have died and documentary trails have gone cold. Two broader developments make the decision even more relevant today.

First, Finance Act 2024 closed the post-Fisher loophole by deeming shareholders in a close company to be transferors if the company moves assets offshore, so participators can now be caught even where they never touched the assets themselves.

Secondly, the government has announced the abolition of the remittance basis from 6 April 2025. From that date virtually all UK-resident individuals – regardless of domicile – will be taxed on worldwide income as it arises, unless they qualify for the new four-year Foreign Income and Gains regime. Historic protections for income piling up inside non-resident trusts will also disappear . Combined with the benefit charge, these changes tighten the net around offshore structures that continue to confer lifestyle benefits on UK residents.

Tax professionals have long remarked that the TOAA rules “continue to perplex those attempting to understand them”, a sentiment endorsed by the Chartered Institute of Taxation earlier this year. Moran shows that ignorance is no shield. If a UK family home, yacht or investment portfolio sits in an offshore company or trust and any UK-resident enjoys the fruits, HMRC may still look to levy income tax – sometimes many years after the planning was put in place.

A final word

The moral of Mrs Moran’s costly experience is simple. Offshore structures set up for succession or privacy reasons can generate UK tax bills even when no money appears to flow onshore. The benefit charge reaches non-transferors, values non-cash benefits, and places an onerous burden on the taxpayer to disprove a tax-avoidance motive that may be buried deep in forgotten paperwork. With new legislation expanding the regime and the remittance basis about to vanish, now is the time for families, trustees and advisers to audit historic arrangements and document genuine commercial objectives where they exist. Waiting until HMRC opens an enquiry – perhaps many years from now – may leave you trying, like Mrs Moran, to reconstruct intentions that the paperwork no longer supports.

Когда бесплатное проживание оборачивается налоговым счётом — Дело Moran и британские правила о переводе активов за границу (TOAA) простыми словами

Мало кому приходит в голову, что проживание в семейном доме без уплаты аренды может однажды привести к внушительной сумме подоходного налога. Однако именно так закончилась история госпожи Энн Моран (Moran [2025] TC 09521), о которой 14 мая 2025 года вынес решение Трибунал первой инстанции (налоговая палата). Суд постановил, что она должна уплатить налог, рассчитанный исходя из рыночной арендной платы за особняк Highlands, где она живёт с 1987 года,-только потому, что недвижимость была оформлена на сложную сеть джерсийских компаний и трастов, созданных её покойным супругом ещё в 1990-е.

Такой результат стал возможен благодаря давнему антиофшорному механизму, известному как правила о переводе активов за границу (Transfer of Assets Abroad, или просто TOAA), закреплённому сегодня в разделах 714-751 Закона о подоходном налоге 2007 г. Эти правила позволяют британской казне «заглянуть» сквозь офшорную оболочку и обложить налогом доход, который фактически приносит пользу резиденту Великобритании, даже если деньги формально остаются за рубежом.

Как устроен режим TOAA и что такое «налог на выгоды»

Изначальная логика TOAA проста: если актив, приносящий доход, выводится за границу, а британский резидент продолжает прямо или косвенно пользоваться этим доходом, налоговые органы вправе обложить его так, будто актив никуда не выводился. С годами в кодекс вписали три самостоятельных «ловушки». Одна нацелена на самих переводящих активы, вторая-на получателей капитальных сумм, а третья-на тех, кто получает любые выгоды, оплаченные зарубежным доходом. Именно эта третья «ловушка»-разделы 731-733-и сработала в деле Моран.

Механизм действует так. Доход, накопленный внутри офшорного траста или компании, фиксируется по годам. Если благодаря этому доходу британский резидент получает выгоду-например, живёт в доме без аренды, пользуется яхтой или оплачивает зарубежную школу,-налоговики приравнивают стоимость такой выгоды к собственному доходу получателя. Причём закон намеренно охватывает даже косвенное финансирование, цепочки займов и прочие «каскады», чтобы нельзя было спрятаться за промежуточными структурами.

«Защитная оговорка о мотивах»-почему на неё почти невозможно сослаться

Поскольку правила охватывают практически любую ситуацию, парламент предусмотрел единственный выход-так называемую защитную оговорку о мотивах (motive defence). Чтобы ею воспользоваться, налогоплательщик обязан доказать два обстоятельства одновременно:

• что целью сделок не было уклонение от британского налога,

• что сделки имели подлинные коммерческие причины и не были искусственными.

Бремя доказывания лежит на самом налогоплательщике, а убедительными считаются только contemporaneous документы-советы консультантов, протоколы заседаний, финансовые расчёты, составленные до возникновения спора.

Что произошло в деле Моран

• В 1987 году Винсент Моран приобрёл Highlands, вскоре передал дом джерсийской компании Namib, а ту, в свою очередь, включил в трасты Blest и Castledown. Управление и финансирование ремонта велось через взаимные займы между компаниями, принадлежавшими тем же трастам.

• После смерти Винсента в 2002 году письмо с последними пожеланиями разрешило его супруге пожизненно проживать в Highlands без арендной платы.

• С 2012/13 по 2019/20-й налоговые годы HMRC доначислило госпоже Моран налог, исходя из рыночной аренды-порядка 63 тыс. фунтов в год.

Суд пришёл к выводу, что средства на содержание дома поступали из доходов, аккумулированных в трастовой структуре, а все промежуточные займы и переводы являются «связанными операциями». Опираясь на переписку 1990-х и ранних 2000-х, судья решил, что налоговые соображения играли существенную роль в планировании. Госпожа Моран, несущая бремя доказывания, не смогла опровергнуть это, поэтому оговорка о мотивах была отклонена.

Попытка сослаться на свободу движения капитала в праве ЕС тоже не удалась: доказательств того, что из Великобритании в Джерси действительно ушёл капитал, не было, а значит, статья 63 Договора о функционировании ЕС не применяется.

Почему история важна не только для семьи Моран

Во-первых, дело показывает, что «налог на выгоды» может быть предъявлен десятилетия спустя, когда ключевые участники уже умерли, а документы затеряны.

Во-вторых, с апреля 2024 года вступили в силу поправки, по которым, если закрытая британская компания переводит активы за рубеж, её акционеры автоматически считаются переводчиками активов. Тем самым круг потенциально облагаемых лиц расширился.

В-третьих, с 6 апреля 2025 года отменяется режим remittance basis, позволявший долгосрочным нерезидентам и не-домициллиантам платить налог только при ввозе дохода в страну. Теперь же почти все британские резиденты будут облагаться на принципе “world-wide income”, а защита старых офшорных доходов исчезнет.

В сумме это означает, что любой, кто живёт или пользуется активом, принадлежащим офшорному трасту, рискует встретиться с разделами 731-733, даже если фактических денежных поступлений в страну нет.

Вывод

История госпожи Моран служит наглядным напоминанием: офшорные структуры, созданные ради наследственного планирования или конфиденциальности, способны обернуться неожиданным налоговым счётом для тех, кто ими пользуется. «Налог на выгоды» распространяется и на тех, кто никогда не переводил активы лично, учитывает нематериальные преимущества и требует от налогоплательщика доказать отсутствие целей ухода от налогов. С учётом последних изменений законодательства сейчас самое время семьям, трастовым управляющим и консультантам пересмотреть старые схемы и задокументировать реальные коммерческие мотивы, если они существуют. Иначе, спустя годы, придётся-как у Моран-пытаться оправдываться, когда ответить за утраченную бумагу или умершего советника уже некому.

With warm regards

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
(www.ifsconsultants.com, dmitry@ifsconsultants.com)

The post When living rent-free triggers an unexpected income-tax bill — the Moran decision and the wider “transfer-of-assets-abroad” rules explained appeared first on IFS Consultants Ltd.

The Finance Act 2025 rewrites the UK rule-book for foreign money. This article spells out, in plain English, what the changes mean if you already have offshore funds, are new to the UK, or are thinking of leaving – and offers practical pointers on keeping your tax bill under control.

The Finance Act 2025 has recast the United Kingdom’s approach to taxing foreign income and gains. The legislation is markedly shorter than its predecessors, yet its effect is profound: it abolishes the remittance basis for new foreign income and gains, establishes a four-year foreign-income-and-gains exemption for newcomers, and confirms the circumstances in which long-term residents remain exposed to inheritance tax on their worldwide estates. HMRC has issued detailed explanatory material that should be consulted alongside the primary legislation, but what follows provides a structured explanation of the principal rules and of the planning that individuals ought to consider.

A first group comprises those who have been resident in the United Kingdom for many years, have relied on the remittance basis and, because they spent at least one of the ten tax years preceding 2025-26 in the United Kingdom, cannot enter the four-year regime. They retain two statutory mechanisms for introducing historic offshore money. The Temporary Repatriation Facility (TRF) imposes a flat charge of 12 per cent in 2025-26 and 2026-27, rising to 15 per cent in 2027-28, on pre-2025 foreign income and gains that are brought into, or used in, the United Kingdom. Business Investment Relief (BIR) offers a broader exemption: an individual may lend money to, subscribe for shares in, or purchase shares of a United Kingdom trading company – including one that develops or manages UK real estate – provided that the funds represent foreign income or gains arising before 6 April 2025. The money must reach the company or seller within forty-five days of arriving in a UK bank account, and the investment must be made by 5 April 2028. Qualifying investments may use ordinary shares, preference shares or commercial loans; structures whose main purpose is to extract value for the investor or a connected person are barred, but normal commercial returns are acceptable. HMRC offers a statutory clearance, usually issued within thirty days, which is invaluable where the investment is substantial or novel.

BIR may be combined with the Enterprise Investment Scheme (EIS) or the Seed Enterprise Investment Scheme (SEIS) where the investee meets the relevant conditions. The same subscription then both avoids a UK tax charge on the remitted funds and generates an income-tax credit – 30 per cent under EIS and 50 per cent under SEIS – thereby reducing UK tax on other income; qualifying disposals after three years are exempt from capital gains tax. Where liquidity, rather than investment, is required, borrowing remains an option. The loan must come from an unconnected lender; interest must be serviced from funds that have already suffered UK tax or from clean capital; and, if secured, the collateral must be a UK asset or a foreign asset acquired with clean capital. If the lender is in a jurisdiction without a double-tax treaty, the borrower must withhold income tax at the basic rate – currently 20 per cent – unless the debt is structured as a deeply discounted security so that no periodic interest arises. Experience indicates that HMRC will accept rolled-up interest for up to ten years, but each arrangement needs bespoke analysis.

A further option for individuals who wish to remain UK-resident is to use vehicles that defer the tax charge. One route is to acquire interests in offshore non-reporting funds: income and gains roll up inside the fund without annual UK taxation and are taxed only on disposal, when the profit is an offshore income gain assessed at the investor’s marginal rate. The deferral aids compounding, but the eventual rate is higher than the capital gains tax rate that applies to a reporting fund. A second route is to take out offshore life-assurance (insurance) bonds. Income and gains accrue inside the bond free of UK tax until a chargeable event occurs, and the policy-holder may withdraw up to five per cent of the original premium each policy year on a cumulative basis without an immediate charge. Any taxable gain benefits from top-slicing relief and, if the holder is non-resident for part of the term, a proportionate reduction may apply. Both structures were examined in the previous article and remain legitimate deferral mechanisms, provided the underlying investments are suitable and the investor is ready for the eventual income-tax treatment.

The second group consists of individuals who have not been UK-resident in any of the ten tax years before arrival; they qualify for the four-year foreign-income-and-gains (FIG) regime. For each of their first four tax years of residence, beginning on or after 6 April 2025, the claimant may nominate that all foreign income and foreign chargeable gains are exempt from UK income tax and capital gains tax. The claim must be renewed annually and must be accompanied by a full disclosure of worldwide income and gains. This transparency creates practical challenges. Employees relying on the re-framed Overseas Workday Relief (OWR) find that the exemption is capped at the lower of 30 per cent of the overseas element of remuneration and £300,000, so high salaries bear a UK charge once the cap is exceeded. Shareholder-directors of foreign companies must recognise that HMRC, seeing their disclosure, may enquire into where the company’s central management and control is exercised; if that is found to be in the United Kingdom, the company becomes UK-resident and its dividends fall outside the four-year exemption. A comparable risk arises under the transfer of assets abroad (TOAA) code. The code lies dormant during the four-year FIG period, but it applies from year five. If a foreign company can satisfy the motive defence – broadly, that no tax-avoidance purpose exists – it is prudent to secure that defence now and to maintain conduct that preserves it so the company’s income is not automatically attributed to UK shareholders or creditors when the FIG period ends.

The third category covers individuals who, on 6 April 2025, will have been UK-resident for at least ten of the previous twenty tax years. These long-term residents are automatically within scope of UK inheritance tax on their worldwide assets, including assets held through offshore trusts. They remain exposed for the three tax years following their final year of residence, so many intend to cease residence in 2025-26 in order to avoid the three-year tail as early as possible. Residence is determined for the entire tax year, meaning that a departure late in spring 2025 can still secure non-resident status for the whole year if the individual limits UK presence until 5 April 2026. A claim for split-year treatment removes post-departure income and gains from UK income tax and CGT, but it does not shorten the inheritance-tax tail.

The statutory residence test contains three strands: the automatic overseas residence tests, the automatic UK residence tests and, if neither set applies, the sufficient-ties test. For many leavers the optimal path is to satisfy the full-time-work-overseas test, an automatic overseas test. It requires an average of thirty-five working hours a week overseas in a continuous twelve-month period that falls wholly or partly in the tax year, fewer than thirty-one UK workdays and fewer than ninety-one UK days in total. Actual hours are measured, not contractual promises, so a diary, timesheets, digital audit trails and travel records are essential. Employment or consultancy contracts should state expressly that the individual will work overseas on terms that keep within the statutory residence test, limit UK workdays and cap UK presence. The individual may keep a home and family in the United Kingdom without losing non-resident status, provided the numerical limits are met.

If the full-time-work-overseas test is not met, the taxpayer must avoid the automatic UK home test. This deems an individual UK-resident if they own or rent a UK home and spend at least thirty separate days there in the tax year, unless they also have a permanent home overseas and spend at least thirty days in that overseas home. Problems often arise when the person keeps a UK house but simply travels abroad. If accommodation abroad consists only of short-term rentals, hotel rooms or a summer house – or if the overseas home is occupied for fewer than thirty days – there is, in practice, no permanent overseas home, and the UK property remains the enduring base. In that case the automatic UK home test treats the individual as resident unless an automatic overseas test already applies. (A further automatic UK test is based on full-time work in the United Kingdom, but individuals who are actively leaving rarely work an average of thirty-five hours a week in the UK for a twelve-month period.) HMRC will scrutinise both the UK property and the supposed overseas home, examining permanence, year-round availability and the quality and regularity of occupation. Only when the automatic UK tests are ruled out does the sufficient-ties test apply, with its limits based on family, accommodation, ninety-day presence and the country tie.

These rules create distinct strategic considerations. Long-term remittance-basis users must decide whether to import historic offshore wealth through the TRF or BIR while weighing the inheritance-tax consequences of continued residence. New arrivals enjoy a generous four-year exemption but must accept full disclosure and plan early for the period after it expires. Prospective leavers must understand the statutory residence test in detail and document their activities precisely so they can demonstrate non-resident status and start the three-year inheritance-tax tail at the earliest practicable time.

In conclusion, the Finance Act 2025 does not merely shorten the legislation; it alters the balance of risks and opportunities for every internationally mobile taxpayer. The available reliefs are valuable, but each is bounded by strict conditions and by an expectation of full transparency. Whether the objective is to invest offshore profits in the United Kingdom, to exploit the four-year exemption on arrival or to end exposure to UK taxes altogether, timely analysis, meticulous documentation and careful contractual drafting are now indispensable elements of prudent tax planning.

With warm regards

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
(www.ifsconsultants.com, dmitry@ifsconsultants.com)

The post Life after the Remittance Basis: Navigating UK Tax under the Finance Act 2025 appeared first on IFS Consultants Ltd.

Many families rely on the idea that once a gift has been made and the donor survives seven years, inheritance tax (IHT) is no longer a threat. The First-tier Tribunal judgment in Afsha Chugtai v HMRC [2025] UKFTT 458 (TC) illustrates why that comfort can be misplaced when the donor continues to benefit from what was supposedly given away.

Back in 2000 Mohammed Chugtai transferred his home in Caversham, worth £380,000 at the date of death, and a £62,239 Santander account into two trusts for his children. On paper the deeds excluded him completely, yet he remained sole trustee and, after a short absence, he moved back into the property to care for an adult daughter. The building also housed the family shop, and utility bills were paid from the trust account. When Mr Chugtai died in 2017 his estate totalled £843,950, but HMRC added the full value of the house and the cash back in, raising an IHT assessment of about £442,000.

At the hearing the tribunal accepted HMRC’s argument that Mr Chugtai had reserved a benefit in both assets: he occupied the property, used it for trade and later took rental income, and the trust funds met household expenses. Judge Nigel Popplewell said the exclusion clauses in the deeds “butter no parsnips”; the reality was that the settlor still enjoyed what he had supposedly parted with, so the gifts were pulled back into his taxable estate.

The statutory hook is section 102 of the Finance Act 1986, which treats any property as still belonging to a donor if, during the seven years before death, the donees have not taken bona fide possession or the donor has not been excluded “entirely, or virtually entirely” from benefit. The House of Lords made the point vividly in Ingram v CIR, where Lord Hoffmann warned that if the donor eats more than “a few de minimis crumbs” of the gift, the tax system deems them to have eaten the whole cake.

Misunderstandings are common. People conflate the seven-year rule with absolute escape from IHT, overlook informal arrangements such as rent-free occupation, or assume that careful drafting alone guarantees success. HMRC’s own manuals stress that even partial use of a gifted asset is enough to trigger the gifts-with-reservation rules.

The lesson from Chugtai is straightforward: genuine IHT planning requires the donor to let go completely. Continued occupation, using trust money for personal bills, or keeping any other benefit will see the asset dragged back into the estate and taxed in full, no matter how long ago the trust deed was signed.

Подарил, но не отпустил: как сохранённая выгода сводит на нет семилетнее правило наследственного налога

Многие семьи исходят из того, что как только дар совершен и даритель пережил семилетний срок, риск налога на наследство (IHT) исчезает. Решение Первого-инстанционного налогового трибунала по делу Afsha Chugtai v HMRC [2025] UKFTT 458 (TC) показывает, почему это чувство безопасности бывает ложным, если даритель продолжает пользоваться переданным имуществом.

В 2000 году Мохаммед Чугтай оформил на трасты для своих детей дом в Каверсэме стоимостью 380 000 фунтов (по состоянию на дату смерти) и счёт в Santander на 62 239 фунтов. Формально учредительные документы полностью исключали его из числа выгодоприобретателей, однако он остался единственным трастовым управляющим и, ненадолго покинув дом, вскоре вернулся, чтобы ухаживать за совершеннолетней дочерью-инвалидом. В том же здании находился семейный магазин, а коммунальные платежи оплачивались со счёта траста. После смерти Чугтая в 2017 году его состояние составляло 843 950 фунтов, но HMRC включило в него полную стоимость дома и денег, доначислив IHT примерно на 442 000 фунтов.

На слушании трибунал принял довод HMRC о том, что Чугтай сохранил выгоду от обоих активов: он жил в доме, использовал его для торговли и позднее получал арендный доход, а трастовые средства покрывали бытовые расходы. Судья Найджел Попплуэлл отметил, что оговорки об исключении выгоды «масла к каше не прибавляют»: на деле учредитель продолжал пользоваться тем, от чего вроде бы отказался, и подаренные активы вернулись в наследственную массу.

Законный механизм для этого – статья 102 Финансового акта 1986 года, по которой имущество считается принадлежащим дарителю, если за семь лет до смерти одаряемые не получили его bona fide в своё распоряжение или даритель не был «полностью или практически полностью» отстранён от выгоды. Палата лордов ярко выразила эту идею в деле Ingram v CIR, где лорд Хоффман предупредил: если даритель съедает больше «чем несколько крошек de minimis» от подаренного, налоговая система считает, что он съел весь торт.

Недоразумения встречаются часто: люди смешивают семилетнее правило с полным уходом от IHT, не придают значения неформальным договорённостям, таким как бесплатное проживание, или думают, что одной аккуратной документации достаточно. Между тем в руководствах HMRC подчёркивается, что даже частичное использование подаренного актива запускает правила о дарениях с оговоркой о выгоде.

Урок из дела Чугтая прост: надёжное планирование IHT требует, чтобы даритель окончательно расстался с имуществом. Продолжение проживания, оплата личных счетов из трастовых средств или сохранение любой иной выгоды приведут к тому, что актив будет вновь включён в наследственную массу и обложен налогом в полном объёме, независимо от давности трастового договора.

With warm regards

Dmitry Zapol
Partner, international tax advisor, ADIT (Affiliate)
IFS Consultants, London
www.ifsconsultants.com, dmitry@ifsconsultants.com

The post The Gift That Bit Back: When Keeping a Benefit Blows Up Inheritance-Tax Plans appeared first on IFS Consultants Ltd.