Taxation of non-UK domiciled individuals

Operating PAYE on a reduced amount of a globally mobile employee’s earnings has changed.

Any HMRC directions that were issued before 6 April 2025 will have ceased to have effect.

Section 690 ITEPA 2003 has changed. The process of applying for an HMRC direction has ceased.

The new process allows employers and their agents to send HMRC a notification telling us a proportion of income paid to a globally mobile employee, or a treaty non-resident, which will be treated as not being PAYE income.

If employers wish to operate PAYE on a proportion of an employee’s income for the 2025 to 2026 tax year, you or your client will need to both:

• check the employee is eligible under the new rules

• tell HMRC that you’ll operate PAYE on a proportion of an employee’s income — you can operate PAYE on the reduced amount of income as soon as HMRC acknowledge receipt of it — this should be immediate

Read about globally mobile employees and PAYE for more information.

If you want to make any new globally mobile employee PAYE notifications and experience difficulties in completing and submitting the necessary forms ahead of your April payroll, you should contact HMRC through your usual route to discuss.

Inheritance Tax changes to a residence-based system

The new system affects the scope of property brought into UK Inheritance Tax for individuals and settlements.

The test for whether non-UK assets are in scope for Inheritance Tax is whether an individual has been resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event (including death) arises.

Read about Inheritance Tax if you’re a long-term UK resident for more information.

4-year foreign income and gains (FIG) regime

Individuals who are qualifying new residents in the UK will get 100% tax relief on eligible FIG during their first 4 years of being a resident here.

This is known as the ‘4-year FIG regime’. Read about how to Check if you can claim the 4-year foreign income and gains regime. 

This regime only applies to individuals who have not been UK tax resident in the 10 tax years immediately before their arrival.

Overseas Workday relief 

Employees will continue to be able to claim relief on their foreign employment income earned during tax years in which they are eligible for Overseas Workday Relief. 

Overseas Workday Relief will now be available for foreign employment income earned in the first 4 tax years of UK tax residence.

For further guidance and advise contact Amin & Co Accountants