This week’s miscellaneous updates – 28 April 2025

In this week’s miscellaneous updates, HMRC has published a range of updated guidance for key legislative changes which took effect from 6 April 2025 and draft legislation on the carbon border adjustment mechanism has been published for consultation. HMRC has issued a press release highlighting that Making Tax Digital for income tax commences next year and in another press release to mark the 20th anniversary of HMRC, HMRC looks to the future and says it is “harnessing the spirit of then Chancellor Gordon Brown’s bold reforms and embarking on a new era of transformation”. An update has been published on the consultation on predevelopment costs and the latest schedule of HMRC Talking Points live and recorded webinars for tax agents are available for booking. Spaces are limited, so take a look now and save your place. And finally, check HMRC’s online services availability page for details of planned downtime and the online services affected.  

Updated guidance published on key legislative changes  

Globally mobile employees

The new Foreign Income and Gains regime commenced from 6 April 2025. HMRC has therefore published a collection of new guidance on 'Globally mobile employees' for employers. This includes guidance on the impact of residence on an employee’s liability to UK income tax, the newly reformed overseas workday relief, and the operation of PAYE for the new rules in place from 6 April 2025.  

HMRC has also published guidance on how to send a notification to HMRC on running PAYE on a proportion of globally mobile employee’s income related to their UK duties. This addresses the new Section 690 Income Tax (Earnings and Pensions) Act 2003 direction process.  

HMRC has also updated the relevant sections of their manuals with more detailed guidance as follows:

• new pages in the PAYE manual to cover the new globally mobile employee PAYE notification process,  

• a new section in the Employment Income manual for Overseas Workday Relief, and  

• updated pages on travelling expenses for non-resident and qualifying new resident employees working in the UK. 

In September 2024, the Institute established a new working sub-group of the NI Tax Committee and Tax Committee South which is examining the complexity of cross-border and remote/hybrid working on the island of Ireland with a view to discussing the complexities of this with both the UK and Irish Government to identify improvements for employers and employees impacted.

New Inheritance Tax (IHT) residence based regime 

From 6 April 2025, the UK’s IHT territoriality rules changed from a domicile to residence-based regime. Broadly, and subject to transitional provisions, individuals who have been UK tax resident for at least 10 out of the previous 20 tax years are now considered ‘long-term UK resident’ and are therefore subject to IHT on their worldwide assets. There are specific provisions relating to trusts.  

HMRC has now published guidance, and changes to its IHT manual which includes a new section on the rules for long-term UK residents. 

Abolition of non-domiciled regime 

The non-UK domiciled ‘remittance’ regime was abolished from 6 April 2025 and the new Foreign Income and Gains (FIG) regime was introduced. As a result, UK tax resident individuals now pay tax on worldwide income and gains on an arising basis irrespective of their domicile. This is subject to the four-year FIG regime which is available to individuals within their first four years of UK tax residence, after a period of at least 10 consecutive years of non-residence. These changes are also accompanied by a series of transitional rules which include the three-year Temporary Repatriation Facility for those previously taxed on the remittance basis.  

HMRC has now published guidance to support these changes as follows: 

• a new Residence and FIG regime manual, and  

• updated pages in the Trusts, Settlements and Estates Manual, and  

• International Manual.  

Further HMRC guidance and manual updates are expected to be published in due course. 

Update on consultation on predevelopment costs 

In the 2024 Autumn Budget, the Government committed to launching a consultation in early 2025 to explore the tax treatment of predevelopment costs. Earlier this month, HM Treasury published an update on this which referred to the recent Court of Appeal judgment in Orsted West of Duddon Sands (UK) Ltd v HMRC .  

According to HM Treasury, as this case considered “matters with significant readout across to this issue” the publication of this consultation has therefore been postponed. The Government will determine its next steps in respect to this consultation in due course.  

In the meantime, views from stakeholders on this judgment and its implications are invited by email to predevcosts@hmtreasury.gov.uk.