Legalize / United Kingdom / Public General Act

Finance Act 2025

Type Public General Act

Publication 2025-03-20

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

Part 1 — Income tax, capital gains tax and corporate taxes

Income tax charge, rates etc

Income tax charge for tax year 2025-26

1

Income tax is charged for the tax year 2025-26.

Main rates of income tax for tax year 2025-26

2

For the tax year 2025-26 the main rates of income tax are as follows—

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

Default and savings rates of income tax for tax year 2025-26

3

(1) For the tax year 2025-26 the default rates of income tax are as follows—

(a) the default basic rate is 20%,

(b) the default higher rate is 40%, and

(2) For the tax year 2025-26 the savings rates of income tax are as follows—

(a) the savings basic rate is 20%,

(b) the savings higher rate is 40%, and

Freezing starting rate limit for savings for tax year 2025-26

4

(1) For the tax year 2025-26 the amount specified in section 12(3) of ITA 2007 (the starting rate limit for savings) is “£5,000”.

(2) Accordingly, section 21 of that Act (indexation) does not apply in relation to the starting rate limit for savings for the tax year 2025-26.

Income tax provisions relating to cars

Appropriate percentage for cars: tax year 2028-29

5

(1) Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars, vans etc) is amended as follows.

(2) In section 139 (cars with a CO₂ emissions figure: the appropriate percentage), in subsection (1), for the table (as substituted by section 11(7) of FA 2023) substitute—

Car	Appropriate percentage
Car with CO₂ emissions figure of 0	7%
Car with CO₂ emissions figure of 1–50	18%
Car with CO₂ emissions figure of 51–54	19%
Car with CO₂ emissions figure of 55–59	20%
Car with CO₂ emissions figure of 60–64	21%
Car with CO₂ emissions figure of 65–74	22%

(3) In subsection (3) of section 139 (as amended by section 11(3) of FA 2023)—

(a) in paragraph (a), for “21%” substitute “22%”, and

(b) in paragraph (b), for “37%” substitute “38%”.

(4) In section 140 (cars without a CO₂ emissions figure: the appropriate percentage), in subsection (2), for the table substitute—

Cylinder capacity of car in cubic centimetres	Appropriate percentage
1,400 or less	25%
More than 1,4000 but not more than 2,000	36%
More than 2,000	38%

(5) In subsection (3) of section 140—

(a) in paragraph (a), for “2%” substitute “7%”, and

(b) in paragraph (b), for “37%” substitute “38%”.

(6) In section 141 (diesel cars: the appropriate percentage), in subsection (2), in Step 3, for “37%” substitute “38%”.

(7) In section 142 (cars first registered before 1 January 1998: the appropriate percentage), in subsection (2), for the table substitute—

Cylinder capacity of car in cubic centimetres	Appropriate percentage
1,400 or less	25%
More than 1,4000 but not more than 2,000	36%
More than 2,000	38%

(8) In subsection (3) of section 142, for “37%” substitute “38%”.

(9) The amendments made by subsections (2) to (8) have effect for the tax year 2028-29.

(10) In consequence of the amendments made by this section, in section 139, omit—

(a) in subsection (2), paragraph (b) together with the “and” before it, and

(b) subsections (5) to (5B).

(11) The amendments made by subsection (10) have effect for the for the tax year 2028-29 and subsequent tax years.

Appropriate percentage for cars: subsequent tax years

6

(1) Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars, vans etc), as amended by section 5, is amended as follows.

(2) In section 139 of ITEPA 2003, in subsection (1), for the table substitute—

Car	Appropriate percentage
Car with CO₂ emissions figure of 0	9%
Car with CO₂ emissions figure of 1–50	19%
Car with CO₂ emissions figure of 51–54	20%
Car with CO₂ emissions figure of 55–59	21%
Car with CO₂ emissions figure of 60–64	22%
Car with CO₂ emissions figure of 65–74	23%

(3) In subsection (3) of that section—

(a) in paragraph (a), for “22%” substitute “23%”, and

(b) in paragraph (b), for “38%” substitute “39%”.

(4) In section 140 (cars without a CO₂ emissions figure: the appropriate percentage), in subsection (2), for the table substitute—

Cylinder capacity of car in cubic centimetres	Appropriate percentage
1,400 or less	26%
More than 1,4000 but not more than 2,000	37%
More than 2,000	39%

(5) In subsection (3) of section 140—

(a) in paragraph (a), for “7%” substitute “9%”, and

(b) in paragraph (b), for “38%” substitute “39%”.

(6) In section 141 (diesel cars: the appropriate percentage), in subsection (2), in Step 3, for “38%” substitute “39%”.

(7) In section 142 (cars first registered before 1 January 1998: the appropriate percentage), in subsection (2), for the table substitute—

Cylinder capacity of car in cubic centimetres	Appropriate percentage
1,400 or less	26%
More than 1,4000 but not more than 2,000	37%
More than 2,000	39%

(8) In subsection (3) of section 142, for “38%” substitute “39%”.

(9) The amendments made by this section have effect for the tax year 2029-30 and subsequent tax years.

Capital gains tax rates and reliefs

Main rates of CGT for gains other than carried interest gains

7

(1) In section 1H of TCGA 1992 (the main rates of CGT)—

(a) omit subsection (1A) (which sets out the rates for residential property gains accruing to individuals),

(b) in subsection (3) (which sets out the rates for gains accruing to individuals that are not residential property gains or carried interest gains)—

(i) for “10%” substitute “18%”, and

(ii) for “20%” substitute “24%”,

(d) in subsection (6) (which sets out the rates for gains accruing to personal representatives that are not residential property gains or carried interest gains), for “20%” substitute “24%”,

(e) omit subsection (7) (which sets out the rates for residential property gains accruing to trustees), and

(f) in subsection (8) (which sets out the rates for gains accruing to trustees that are not residential property gains or carried interest gains)—

(i) omit “Other”, and

(ii) for “20%” substitute “24%”.

(2) Schedule 1 contains amendments in consequence of the provision made by this section.

(3) The amendments made by this section and that Schedule have effect in relation to disposals made on or after 30 October 2024.

Business asset disposal relief: increase in rate

8

(1) In section 169N of TCGA 1992 (business asset disposal relief), in subsection (3) (which specifies the rate of CGT for the relief), for “10%” substitute “14%”.

(2) In consequence of the amendment made by subsection (1), in section 1H(1)(a) of TCGA 1992 (which refers to the rate for business asset disposal relief), for “10%” substitute “14%”.

(3) The amendments made by subsections (1) and (2) have effect in relation to disposals made on or after 6 April 2025.

(4) In section 169N(3) of TCGA 1992 (as amended by subsection (1)), for “14%” substitute “18%”.

(5) In consequence of the amendment made by subsection (4), in section 1H(1)(a) of TCGA 1992 (as amended by subsection (2)), for “14%” substitute “18%”.

(6) The amendments made by subsections (4) and (5) have effect in relation to disposals made on or after 6 April 2026.

Investors’ relief: increase in rate

9

(1) In section 169VC(2) of TCGA 1992 (which specifies the rate of CGT for the relief), for “10%” substitute “14%”.

(2) In consequence of the amendment made by subsection (1), in section 1H(1)(b) of TCGA 1992 (which refers to the rate for investors’ relief), for “10%” substitute “14%”.

(3) In consequence of the amendments made by subsection (1) and section 8 (1), in section 1I of TCGA 1992 (income taxed at higher rates or gains exceeding unused basic rate band), in subsection (4)(a) (which refers to the rate for business asset disposal relief and investors’ relief), for “10%” substitute “14%”.

(4) The amendments made by subsections (1) to (3) have effect in relation to disposals made on or after 6 April 2025.

(5) In section 169VC(2) of TCGA 1992 (as amended by subsection (1)), for “14%” substitute “18%”.

(6) In consequence of the amendment made by subsection (5), in section 1H(1)(b) of TCGA 1992 (as amended by subsection (2)), for “14%” substitute “18%”.

(7) In consequence of the amendments made by subsection (5) and section 8 (4), in section 1I(4)(a) of TCGA 1992 (as amended by subsection (3)), for “14%” substitute “18%”.

(8) The amendments made by subsections (5) to (7) have effect in relation to disposals made on or after 6 April 2026.

Investors’ relief: reduction in amount qualifying for relief

10

(1) In—

(a) section 169VK(1) and (2) of TCGA 1992 (which specify the amount of gains qualifying for the relief in the case of disposals by individuals), and

(b) section 169VL(2) and (3) of that Act (which specify the amount of gains qualifying for the relief in the case of disposals by trustees),

for “£10 million” substitute “£1 million”.

(2) The amendments made by this section have effect in relation to disposals made on or after 30 October 2024.

Sections 7 to 10: transitional provision

11

Schedule 2 contains transitional provision in connection with the provision made by sections 7 to 10.

Rate of CGT for carried interest gains

12

(1) In section 1H of TCGA 1992 (which sets out the main rates of CGT)—

(a) omit subsection (2) (which provides for rates of 18% or 28% on carried interest gains accruing to individuals),

(b) in subsection (3), for “Other chargeable gains” substitute “Chargeable gains other than carried interest gains (see subsections (4B) and (9) to (11))”,

(4B) Chargeable gains accruing in a tax year to an individual that are carried interest gains are charged to capital gains tax at a rate of 32%.

, and

(d) in subsection (5) (which provides for the rate of CGT on carried interest gains accruing to personal representatives of a deceased individual), for “28%” substitute “32%”.

(2) In section 1I of that Act (income taxed at higher rates or gains exceeding unused basic rate band), as amended by paragraph 2 of Schedule 1—

(a) before subsection (1) insert—

(A1) This section applies for the purpose of determining the rate of capital gains tax that applies to gains accruing to an individual in a tax year that are not carried interest gains and, in the following provisions of this section, references to gains (or amounts chargeable to capital gains tax) do not include carried interest gains.

(b) in subsection (1), for the words from “charged—” to the end substitute “charged at the rate of 24%.”,

(c) in subsection (2), in the words after paragraph (b), for the words from “is charged at” to the end substitute “is charged at the rate of 24%.”,

(d) in subsection (5), for the words from “are then charged—” to the end substitute “are then charged at the rate of 24%.”,

(e) in subsection (7), for the words from “as then remains” to the end substitute “as then remains to gains other than entrepreneur or investor gains.”, and

(f) in subsection (9), for the words from “charged—” to the end substitute “charged at the rate of 24%.”

(3) The amendments made by this section have effect in relation to carried interest arising on or after 6 April 2025.

Corporation tax charge and rates

Charge and main rate for financial year 2026

13

(1) Corporation tax is charged for the financial year 2026.

(2) The main rate of corporation tax for that year is 25%.

Standard small profits rate and fraction for financial year 2026

14

For the purposes of Part 3A of CTA 2010, for the financial year 2026—

(a) the standard small profits rate is 19%, and

(b) the standard marginal relief fraction is 3/200ths.

Oil and gas

Increase in rate of energy (oil and gas) profits levy

15

(1) In section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 (charge to tax), in subsection (1), for “35%” substitute “38%”.

(2) The amendment made by subsection (1) has effect for accounting periods beginning on or after 1 November 2024.

(3) In the case of an accounting period (a “straddling period”) beginning before 1 November 2024 and ending on or after that date—

(a) the Energy (Oil and Gas) Profits Levy Act 2022 is to apply as if so much of the straddling period as falls before that date, and so much of the straddling period as falls on or after that date, were separate accounting periods, and

(b) the company’s levy profits or loss determined for the straddling period (on the assumption that the whole of that period were a qualifying period) are apportioned to the two separate accounting periods in accordance with section 17 of that Act, which is to apply for the purposes of this section as it applies for the purposes of sections 15 and 16 of that Act.

(4) In the case of a straddling period, the Instalment Payments Regulations 1998 are to apply separately—

(a) in relation to the levy, and

(b) in relation to any other tax chargeable on the company.

(5) In their application as a result of subsection (4)(a), the Instalment Payments Regulations 1998 are to have effect in relation to the levy—

(a) as if the two separate accounting periods deemed to arise under subsection (3)(a)were accounting periods for the purposes of those Regulations and as if the levy were chargeable for those deemed accounting periods, but

(b) as if the final instalment payment for the deemed accounting period ending on 31 October 2024 became due and payable on the date on which the next instalment payment after 31 October 2024 would have become due and payable for the straddling period in the absence of this section.

(6) Any reference in the Instalment Payments Regulations 1998 to the total liability of a company is accordingly to be read—

(a) in their application as a result of subsection (4)(a), as a reference to the levy, and

(b) in their application as a result of subsection (4)(b), as a reference to the amount that would be the company’s total liability for the straddling period if the levy were left out of account.

(7) For the purposes of the Instalment Payments Regulations 1998—

(a) a company is to be regarded as a large company as respects the deemed accounting periods under subsection (3)(a) only if it is a large company for those purposes as respects the straddling period, and

(b) any question whether a company is a large company as respects the straddling period is to be determined as it would have been determined apart from section 1 of the Energy (Oil and Gas) Profits Levy Act 2022.

(8) In this section “the Instalment Payment Regulations 1998” means the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175).

Relief from levy for investment expenditure

16

(1) The Energy (Oil and Gas) Profits Levy Act 2022 is amended as follows.

(2) For section 2 substitute—

(2) (1) This section applies for the purposes of section 1 if, in a qualifying accounting period, a company has incurred investment expenditure. (2) Expenditure is “investment expenditure” of a company so far as the expenditure— (a) is capital expenditure on the de-carbonisation of its upstream petroleum production, (b) is incurred for the purposes of oil-related activities, (c) is not incurred for disqualifying purposes, and (d) does not consist of financing costs or decommissioning costs. (3) For the purposes of section 1 the company is to be treated as if, in addition to the investment expenditure incurred by it in the accounting period, it had incurred in that period expenditure of an amount equal to 66% of the amount of that investment expenditure. (4) For the purposes of this section— (a) if investment expenditure is incurred partly for the purposes of oil-related activities and partly for other purposes, the expenditure is to be attributed to the oil-related activities on a just and reasonable basis, and (b) if a company incurs expenditure part of which is capital expenditure on the de-carbonisation of its upstream petroleum production and part of which is not, the expenditure is to be apportioned on a just and reasonable basis. (5) This section needs to be read with section 6 (which prevents recycling etc of assets to generate relief).

(3) Omit sections 3 and 4 (definitions of “operating expenditure” and “leasing expenditure”).

(4) In section 7(1) (when investment expenditure is incurred)—

(a) in paragraph (a), omit “in the case of capital expenditure,”, and

(b) omit paragraph (b).

(5) In section 18(1) (interpretation), omit the definitions of “leasing expenditure” and “operating expenditure”.

(6) The amendments made by this section have effect in relation to expenditure incurred on or after 1 November 2024 (and section 7 of the Energy (Oil and Gas) Profits Levy Act 2022 applies for the purposes of this section as it applies for the purposes of that Act).

Extending the period for which levy has effect

17

(1) In section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 (charge to tax), in subsection (3) (which sets out the accounting periods by reference to which the tax is charged), in paragraph (b), for “2028” substitute “2030”.

(2) In consequence of the amendment made by subsection (1)—

(a) in section 7(2) of that Act (when investment expenditure is incurred), for “2028” substitute “2030”, and

(b) in section 16 of that Act (transitional provision for accounting periods straddling 31 March 2028), for “2028”, in each place (including the heading), substitute “2030”.

Decommissioning of carbon storage installations

18

Schedule 3 makes provision for certain payments into a decommissioning fund to be treated as decommissioning expenditure for the purposes of corporation tax, income tax and petroleum revenue tax.

International matters

Pillar Two

19

(1) Schedule 4—

(a) makes provision about the UTPR, and

(b) makes other amendments to Parts 3 and 4 of F(No. 2)A 2023.

Offshore receipts in respect of intangible property

20

(1) ITTOIA 2005 is amended as follows.

(2) In section 574 (overview of Part 5)—

(a) in subsection (1) omit paragraph (aa);

(b) in subsection (2) omit “(but see section 608X)”.

(3) Omit Chapter 2A (offshore receipts in respect of intangible property) of Part 5.

(4) In section 576 (priority between Chapters within Part 5) omit subsection (1).

(5) In section 873(3) (procedure for orders and regulations) omit paragraph (ba).

(6) TIOPA 2010 is amended as follows.

(7) In section 157(1) (direct participation)—

(a) at the end of paragraph (d) insert “, and”;

(b) omit paragraph (f) and the “and” preceding it.

(8) In section 159(1) (indirect participation: potential direct participant)—

(a) at the end of paragraph (d) insert “, and”;

(b) omit paragraph (f) and the “and” preceding it.

(9) In section 160(1) (indirect participation: one of several major participants) omit paragraph (f) and the “and” preceding it.

(10) In consequence of subsections (1) to (9), omit Schedule 3 to FA 2019 (offshore receipts in respect of intangible property).

(11) Omit section 981A of ITA 2007 (offshore receipts in respect of intangible property: exception from duties to deduct).

(12) The amendments made by this section have effect in relation to income arising on or after 31 December 2024.

Application of PAYE in relation to internationally mobile employees etc.

21

(1) For section 690 of ITEPA 2003 (employee non-resident etc) substitute—

(690) (1) This section applies in relation to an employee if the employee is or has been internationally mobile at any time in tax year 2025-26 or a subsequent tax year. (2) An employee is “internationally mobile” at a time in a tax year if at that time the employee works or is likely to work both inside and outside the UK during the tax year (“the mobile tax year”) and at that time— (a) the employee is or is likely to be non-UK resident for the mobile tax year, or (b) the mobile tax year is or is likely to be a split year as respects the employee. (3) If the employer makes an uncertain payment to the employee in any tax year, the entire payment is to be treated for the purposes of PAYE regulations as a payment of PAYE income of the employee. (4) For the purposes of this section and sections 690A and 690B, an “uncertain payment” means a payment of, or on account of, the income of the employee to the extent that— (a) the employer is unable to ascertain the extent to which the income is PAYE income, and (b) the reason for the employer being unable to ascertain that extent is connected to the employee being or having been internationally mobile in the mobile tax year. (5) Subsection (3) is without prejudice to— (a) any assessment in respect of the income of the employee in question, and (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid. (6) For the purposes of this section and sections 690A to 690E— (a) any reference to a payment made by the employer includes a reference to a payment made by a person acting on behalf of the employer and at the expense of the employer or a person connected with the employer, and (b) in a case where section 689 or 689A applies, any reference to a payment made by the employer is to be read as a reference to a payment treated, for the purposes of PAYE regulations, as made by the relevant person. (690A) (1) This section applies in relation to an employee if the employee is or has been internationally mobile within the meaning of section 690 (2) at any time in tax year 2025-26 or a subsequent tax year (“the mobile tax year”). (2) The appropriate person may give a notice to an officer of Revenue and Customs at any time during the mobile tax year— (a) that the employer is proposing to treat a proportion of any uncertain payment made by the employer to the employee as not being PAYE income of the employee for the purposes of PAYE regulations, and (b) specifying that proportion. (3) If a notice given under this section has effect, the proportion of any uncertain payment made by the employer to the employee in any tax year which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income is the proportion specified in the notice. (4) But if section 690D (4) (employer notification for qualifying new resident) also applies to a payment made by the employer, subsection (3) does not apply to the payment to the extent that it is a qualifying payment within the meaning of section 690D. (5) A notice given under this section— (a) does not have effect if a direction has previously been given to the appropriate person under section 690B (direction by HMRC in relation to internationally mobile employees) in relation to the employee and the mobile tax year; (b) otherwise, has effect when it is acknowledged by an officer of Revenue and Customs. (6) A notice given under this section ceases to have effect if— (a) a direction under section 690B is given to the appropriate person in relation to the employee and the mobile tax year, (b) a subsequent notice is given by the appropriate person under this section and is acknowledged by an officer of Revenue and Customs, or (c) where the notice was given on the basis that the employee was likely to be a non-UK resident for the mobile tax year, a subsequent notice— (i) is given by the appropriate person under section 690D (employer notification for qualifying new resident) on the basis that the employee is or is likely to be a qualifying new resident for the mobile tax year, and (ii) is acknowledged by an officer of Revenue and Customs. (7) A notice given under this section must be in such manner and form, and contain such information, as may be specified in a general direction made by the Commissioners for His Majesty’s Revenue and Customs. (8) Subsection (3) is without prejudice to— (a) any assessment in respect of the income of the employee in question, and (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid. (9) For the purposes of this section and sections 690B, 690D and 690E — (a) where an amount of employment income is treated as PAYE income paid by the employer for the purposes of PAYE regulations by virtue of section 693 (cash vouchers), section 694 (non-cash vouchers) or section 695 (credit-tokens), the employer is to be treated as making a payment of that amount of employment income, and (b) “the appropriate person” means— (i) the person designated by the employer for the purpose of this section and sections 690B, 690D and 690E and, if no person is so designated, the employer, and (ii) in a case where section 689 or 689A applies, the references to the employer in sub-paragraph (i) are to be read as references to the relevant person (within the meaning of section 689 or 689A). (690B) (1) This section applies where— (a) a notice given during the mobile tax year under section 690A has effect, and (b) it appears to an officer of Revenue and Customs that the proportion of any uncertain payment made by the employer to the employee that is treated as not being a payment of PAYE income for the purposes of PAYE regulations should not be the proportion specified in the notice. (2) An officer of Revenue and Customs may give a direction— (a) for determining a proportion of any uncertain payment made by the employer to the employee which is to be treated for the purposes of PAYE regulations as not being a payment of PAYE income, or (b) that any such payment is to be treated entirely as PAYE income for the purposes of PAYE regulations. (3) A direction under subsection (2)— (a) must specify the employee and the mobile tax year, (b) must be given by notice to the appropriate person, and (c) may be varied by notice to the appropriate person from a date specified in the notice (which may not be earlier than 30 days from the date on which the notice is given). (4) If— (a) a direction under subsection (2) has effect, and (b) any uncertain payment is made by the employer to the employee in any tax year, the direction applies in relation to the payment. (5) A direction under subsection (2) has effect when it is given. (6) A direction under subsection (2) ceases to have effect if— (a) the notice to which the direction relates was given on the basis that the employee was likely to be non-UK resident for the mobile tax year, and (b) a notice has subsequently been— (i) given by the appropriate person under section 690D (employer notification for qualifying new resident) on the basis that the employee is or is likely to be a qualifying new resident for the mobile tax year, and (ii) acknowledged by an officer of Revenue and Customs. (7) Subsection (4) is without prejudice to— (a) any assessment in respect of the income of the employee in question, and (b) any right to repayment of income tax and any relevant debts overpaid and any obligation to pay income tax underpaid and any relevant debts that remain wholly or partly unpaid. (690C) (1) This section applies in relation to an employee if the employee falls within subsection (2) or (3) in relation to a tax year that was before tax year 2025-26. (2) An employee falls within this subsection in relation to a tax year if the employee worked both inside and outside the UK in that tax year and— (a) the employee was non-UK resident for that tax year or it appears likely to the employer that the employee was non-UK resident, or (b) the tax year was a spilt year as respects the employee or it appears likely to the employer that the tax year was such a year. (3) An employee falls within this subsection in relation to a tax year if— (a) the employee worked outside the UK in the tax year, (b) the employee met the requirement of section 26A for that tax year or it appears likely to the employer that the employee met that requirement, and (c) the employee has made a claim under section 809B of ITA 2007 (claim for remittance basis) for that tax year or it appears likely to the employer that the employee has or will make such a claim. (4) If the employer makes a payment to the employee of, or on account of, general earnings for that tax year, the amount of the payment that is to be treated as PAYE income for the purposes of the PAYE regulations is the amount that, on the basis of the best estimate that can be reasonably made, is likely to be PAYE income. (5) For the purposes of subsection (4)— (a) where this section applies to an employee because it appears likely to the employer that a certain state of affairs exists, the employer may assume that state of affairs exists; (b) whether general earnings are “for” that tax year is determined in accordance with sections 29 and 30.

(2) The amendments made by this section have effect for the tax year 2025-26 and subsequent tax years.

(3) Any direction given by an officer of Revenue and Customs under section 690 of ITEPA 2003 (employee non-resident etc) has no effect in relation to tax year 2025-2026 or any subsequent tax year.

Advance pricing agreements: indirect participation in financing cases

22

(1) In section 158 of TIOPA 2010 (which sets out how to read references to indirect participation for the purposes of, among other provisions, provisions relating to advance pricing agreements under Part 5 of that Act)—

(a) in subsection (4), omit paragraph (c) (but not the “and” at the end of that paragraph), and

(b) after that subsection insert—

(5) For the purposes of section 219(2) (which is in Part 5), a person is indirectly participating in the management, control or capital of another person only if any of sections 159 to 162 so provide.

(2) In section 161 of that Act (indirect participation in financing cases)—

(a) in subsection (1), at the end insert “and, in Part 5, section 219(2)”, and

(b) in the heading, for “and 175” substitute “, 175 and 219(2)”.

(3) In section 162 of that Act (indirect participation in further financing cases)—

(a) in subsection (1), at the end insert “and, in Part 5, section 219(2)”, and

(b) in the heading, for “and 175” substitute “, 175 and 219(2)”.

(4) In section 219(4) of that Act (which sets out how to interpret references to associates by referring to, among other provisions, provisions in Part 4 of that Act that explain the meaning of indirect participation), for “and 160(1)” substitute “, 160(1), 161(1) and 162(1)”.

(5) The amendments made by this section are treated as always having had effect.

Reliefs for businesses

Expenditure on zero-emission cars

23

(1) Section 45D of CAA 2001 (expenditure on zero-emission cars) is amended as follows.

(2) In subsection (1)(a), for the words from “the period” to the end substitute “the relevant period,”.

(3) Omit subsection (1A).

(4) After that subsection insert—

(1B) The “relevant period” is the period beginning with 17 April 2002 and ending with— (a) in the case of expenditure incurred by a company within the charge to corporation tax, 31 March 2026, and (b) in the case of expenditure incurred by a person within the charge to income tax, 5 April 2026. (1C) The Treasury may by regulations amend subsection (1B) so as to extend the relevant period.

Expenditure on plant or machinery for electric vehicle charging point

24

In section 45EA of CAA 2001 (expenditure on plant or machinery for electric vehicle charging point), in subsection (3)(a) and (b) (which specify the date on or before which expenditure must be incurred to qualify for a first-year allowance), for “2025” substitute “2026”.

Commercial letting of furnished holiday accommodation

25

Schedule 5 contains provision abolishing the special rules relating to the commercial letting of furnished holiday accommodation.

Films and television programmes: increased relief for visual effects

26

(1) In Part 14A of CTA 2009 (films, television programmes and video games), after section 1179EB insert—

(1179EC) (1) This section applies in relation to a qualifying film or qualifying television programme. (2) The production company is entitled to claim an additional amount of audiovisual expenditure credit for an accounting period (“the claim period”) that is the completion period (see section 1179DY) or a subsequent accounting period if— (a) the company has incurred relevant visual effects expenditure on the film or programme in that period or an earlier accounting period, and (b) where a claim has been made for Chapter 3 credit (whether for the claim period or earlier), the relevant percentage for the purposes of all such claims was the percentage given by subsection (2) or (5) of section 1179DV. (3) The additional amount is equal to— (a) 39% of the total amount of the relevant visual effects expenditure incurred on the film or programme in the claim period and in previous periods, less (b) the sum of— (i) where Chapter 3 credits have been claimed by the production company, the adjusted VFX portion of those credits, and (ii) any additional amounts of audiovisual expenditure credit previously claimed under this section. (4) Take the following steps to determine the adjusted VFX portion of previously claimed Chapter 3 credits— - Step 1 (identify the total UK expenditure in the AVEC period) Determine the total amount of the company’s relevant global expenditure (see section 1179CA(2)) that— is UK expenditure (see section 1179AB), and was incurred for accounting periods falling within the company’s AVEC period. - Step 2 (identify the amount of visual effects expenditure) Determine how much of the result of Step 1 is relevant visual effects expenditure. - Step 3 (determine the extent to which the 80% cap applied) Determine the amount (if any) of the excess to be deducted at Step 3 in section 1179CA(1) for the most recent accounting period for which a claim for Chapter 3 credit was made (which may be the claim period). If that amount is nil go to Step 4, otherwise go to Step 5. - Step 4 (where the 80% cap did not apply, calculate the adjusted VFX portion) If this Step applies, the adjusted VFX portion is the amount given by multiplying— the sum of Chapter 3 credits claimed by the production company, by the amount given by dividing the result of Step 2 by the result of Step 1. - Step 5 (treat the 80% cap as affecting the VFX portion first) Subtract the result of Step 3 from the result of Step 2. If the result is nil or less, the adjusted VFX portion is nil. If not, go to Step 6. - Step 6 (calculate the adjusted VFX portion, taking account of the 80% cap) If this Step applies, the adjusted VFX portion is the amount given by multiplying the result of Step 5 by 0.34. (5) The Treasury may by regulations replace— (a) the percentage for the time being specified in subsection (3)(a), or (b) the number for the time being specified in Step 6 in subsection (4) as the number by which the result of Step 5 in that subsection is multiplied. (6) Sections 1179C and 1179CB to 1179CI (treatment of expenditure credits) apply to the additional amount as they apply to an expenditure credit under Chapter 3. (7) In this section— - a company’s “AVEC period” means the period beginning with the commencement of the first accounting period for which this Part applies further to the election by the company under section 1179B(1) and ending with the end of the claim period; - “Chapter 3 credit” means an audiovisual expenditure credit in respect of the film or television programme determined under section 1179CA; - “relevant visual effects expenditure” means UK expenditure that— is incurred in respect of relevant visual effects work carried out in the United Kingdom, and counts as relevant production expenditure for the purposes of section 1179CA(2) (see section 1179DR); - “relevant visual effects work” means work consisting of the use of computer technology to create or alter images for inclusion in the film or programme.

(2) The amendment made by subsection (1) has effect only in relation to expenditure incurred on or after 1 January 2025.

(3) A claim for audiovisual expenditure credit may not be made in reliance on that amendment before 1 April 2025.

Certification of films etc: minor amendments

27

(1) In section 1179AA(7) of CTA 2009 (qualifying companies)—

(a) after “for” insert “—”;

(b) the words from “a production” to the end become paragraph (a);

; (b) the submission of a film, television programme or video game certificate after the end of an accounting period.

(2) Section 1179DJ of CTA 2009 (British certification condition: films and television programmes) is amended as set out in subsections (3) to (6).

(3) In subsection (2), omit paragraphs (a) and (b) (including the dash before paragraph (a)) and insert “the production company’s company tax return for the period is accompanied by a valid interim certificate.”

(4) In subsection (3), omit paragraphs (a) and (b) and insert—

(a) the production company’s company tax return for the completion period is accompanied by a valid final certificate, or (b) the production company has abandoned production activities in relation to the film or programme and the production company’s company tax return for the completion period is accompanied by a valid interim certificate.

(5) In subsection (6), for the words from the beginning to “that period” substitute “If a certificate is revoked after the production company’s company tax return for a period is submitted”.

(6) For subsections (7) and (8) substitute—

(7) Subsection (6) does not apply to the extent that a direction under paragraph 3 of Schedule 1 to the Films Act 1985 or section 1179DM provides that the certificate is to be treated as having effect. (8) For the purposes of this section, a certificate is valid if it has effect on the day on which the production company’s company tax return is submitted.

(7) Section 1179FC of CTA 2009 (British certification condition: video games) is amended as set out in subsections (8) to (11).

(8) In subsection (2), omit paragraphs (a) and (b) (including the dash before paragraph (a)) and insert “the production company’s company tax return for the period is accompanied by a valid interim certificate.”

(9) In subsection (3), omit paragraphs (a) and (b) and insert—

(a) the production company’s company tax return for the completion period is accompanied by a valid final certificate, or (b) the production company has abandoned production activities in relation to the video game and the production company’s company tax return for the completion period is accompanied by a valid interim certificate.

(10) In subsection (6), for the words from the beginning to “that period” substitute “If a certificate is revoked after the production company’s company tax return for a period is submitted”.

(11) For subsections (7) and (8) substitute—

(7) Subsection (6) does not apply to the extent that a direction under section 1179FF provides that the certificate is to be treated as having effect. (8) For the purposes of this section, a certificate is valid if it has effect on the day on which the production company’s company tax return is submitted.

(12) In section 1179DJA(9) of CTA 2009 (certification as a low-budget film), for the words “a low-budget certificate” to the end substitute “the production company’s company tax return for the period is accompanied by a low-budget certificate which has effect on that day the return is submitted”.

(13) In section 15 of the F(No.2)A 2024 (certification as a low-budget film: transitional), omit subsection (8).

(14) The amendments made by this section have effect in relation to claims made on or after the day on which this Act is passed.

(15) In relation to an accounting period beginning on or before 30 October 2024, sections 1179DJ(8) and 1179FC(8) of CTA 2009 (as inserted by subsections (6) and (11)) have effect as if they read as follows—

(8) For the purposes of this section, a certificate is valid if— (a) it has effect on the day on which the production company’s company tax return is submitted, or (b) it had effect on the last day of the accounting period to which the return relates.

Films etc: unpaid amounts

28

(1) CTA 2009 is amended as follows.

(2) In section 1179DT (excluded expenditure)—

(a) in the section heading, at the end insert “and unpaid amounts”;

(b) the existing provision becomes subsection (1);

(2) Expenditure is excluded expenditure for an accounting period to the extent that it is not paid before the end of the period of four months beginning with the first day after the final day of the accounting period.

(3) Omit section 1179DX(3).

(4) In section 1179FL (excluded expenditure)—

(a) in the section heading, at the end insert “and unpaid amounts”;

(b) the existing provision becomes subsection (1);

(2) Expenditure is excluded expenditure for an accounting period to the extent that it is not paid before the end of the period of four months beginning with the first day after the final day of the accounting period.

(5) Omit section 1179FP(3).

(6) The amendments in this section have effect in relation to claims made on or after the day on which this Act is passed.

Research and development relief: Northern Ireland companies

29

(1) CTA 2009 is amended as set out in subsections (2) to (5).

(2) In section 1112A (overview), for subsection (6) substitute—

(6) Section 1112J contains provision about the amount of relief to which certain Northern Ireland companies are entitled under Chapter 2.

(3) For section 1112J and the heading above substitute—

(1112J) (1) This section applies for the purpose of determining the entitlement of a Northern Ireland company to relief under Chapter 2. (2) A Northern Ireland company is entitled to additional relief under Chapter 2 only to the extent that the additional relief would be exempted from notification under Article 108(3) of the TFEU by a de minimis aid regulation listed in paragraph 3.4 of Annex 5 to the Windsor Framework (as amended or replaced from time to time). (3) In subsection (2), “additional relief” means the difference between the value of the relief claimed by the company under Chapter 2 in respect of expenditure and the value of the relief that could have been obtained by the company under Chapter 1A in respect of that expenditure. (4) This section does not apply to a company in relation to an accounting period if the company— (a) has not, at any time during the accounting period, carried on a trade involving— (i) trade in goods, or (ii) the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity, and (b) has notified an officer of Revenue and Customs in writing that it wishes to rely on the exception in this subsection. (5) In this section— - “Northern Ireland company” means a company whose registered office is in Northern Ireland; - “TFEU” means the Treaty on the Functioning of the European Union as it has effect by virtue of Article 10 of the Windsor Framework; - “Windsor Framework” means the part of the EU withdrawal agreement known as the Windsor Framework by virtue of Joint Declaration No. 1/2023 of 24th March 2023 made by the European Union and the United Kingdom in the Joint Committee established by the EU withdrawal agreement.

(4) In subsection 1138A(1) (research and development undertaken abroad)—

(a) for subsection (1)(b) substitute—

(b) the research and development is undertaken, or contracted out, by a company whose registered office is in Northern Ireland.

(b) after subsection (4) insert—

(5) Subsection (1)(b) does not apply in relation to a company in respect of an accounting period if the company— (a) has not, at any time during the accounting period, carried on a trade involving— (i) trade in goods, or (ii) the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity, and (b) has notified an officer of Revenue and Customs in writing that it wishes to rely on the exception in section 1112J(4) (restriction of Chapter 2 relief for Northern Ireland companies).

(5) In section 1142E(b) (orders and regulations: ancillary provision), omit “or areas”.

(6) The Research and Development (Chapter 2 Relief) Regulations 2024 are revoked.

(7) The Relief for Research and Development (Content of Claim Notifications, Additional Information Requirements and Miscellaneous Amendments) Regulations 2023 are amended as follows—

(a) in regulation 3(4), omit the definition for “the Chapter 2 Regulations”;

(b) in paragraph 1(2)(b) of Schedule 2, for “regulation 2(3) of the Chapter 2 Regulations” substitute “section 1112J(4) of CTA 2009”;

(a) a statement to the effect that any additional relief claimed by the company under Chapter 2 would be de minimis state aid, and (b) the total value of de minimis state aid received by the company from the United Kingdom in the period of three years ending with the day on which the claim is made;

(2) For the purposes of sub-paragraph (1)— - “additional relief” has the meaning given in section 1112J(3) of CTA 2009; - “de minimis state aid” means aid that is exempted from notification as described in section 1112J(2) of CTA 2009.

(8) The Income and Corporation Taxes (Electronic Communications) Regulations 2003 are amended as follows—

(a) in regulation 2(1)(a)(xi) for “regulation 2(3)(b) of the Research and Development (Chapter 2 Relief) Regulations 2024” substitute “section 1112J(4)(b) of CTA 2009”;

(b) in regulation 3(2AA)(c) for “regulation 2(3)(b) of the Research and Development (Chapter 2 Relief) Regulations 2024” substitute “section 1112J(4)(b) of CTA 2009”.

(9) The amendments and revocation made by this section have effect in relation to claims made on or after 30 October 2024.

Research and development intensity condition: transitional provision

30

(1) In paragraph 21 of Schedule 1 to FA 2024 (higher rate of payable credit for R&D-intensive SMEs between 1 April 2023 and 1 April 2024), for sub-paragraph (4) substitute—

(4) But that section is to be read for the purposes of sub-paragraph (3) as if— (a) in subsections (2) and (3), for “30%” there were substituted “40%”; (b) in subsection (7), for paragraph (b) there were substituted— (b) it is expenditure in respect of which the company is entitled to relief under this Chapter or Chapter 6A of Part 3 for the period.

(2) The amendment made by this section is to be treated as always having had effect.

Employee-ownership trusts

31

Schedule 6 makes provision about employee ownership trusts.

Miscellaneous measures

Overseas transfer charge: pension schemes in EEA state or Gibraltar

32

(1) In Part 4 of FA 2004 (pensions) omit section 244C (exclusion from overseas transfer charge where receiving scheme in EEA state or Gibraltar, and member resident in UK or EEA state).

(2) Subsections (3) to (5) contain amendments consequential on the repeal made by subsection (1).

(3) In Part 4 of FA 2004—

(a) in section 244J (persons liable to charge), in subsection (4) omit “or 244C”;

(b) in section 244K (meaning of “transferred value”), in subsection (6) omit “or 244C”.

(4) In the Pension Schemes (Information Requirements for Qualifying Overseas Pension Schemes, Qualifying Recognised Overseas Pension Schemes and Corresponding Relief) Regulations 2006 (S.I. 2006/208)—

(a) in regulation 3 (information to be provided to QROPS) in paragraph (2C)—

(i) for “neither” substitute “not”;

(ii) omit paragraph (b) and the “nor” before it;

(b) in regulation 3AF (information provided by member to QROPS: inward and outward transfers), in paragraph (1)(b)(ii) omit “or 244C”;

(c) in regulation 3AG (provision of information about liability for overseas transfer charge), in paragraph (2)(d) omit “or 244C”;

(d) in regulation 3AH (accounting for overseas transfer charge where change of circumstances), in paragraph (1)(a)(ii) omit “or 244C(3)”.

(5) In the Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567)—

(a) in regulation 11BB (information provided by members to scheme administrators), in paragraph (1)(b)(ii) omit “or 244C”;

(b) in regulation 12A (information provided by scheme administrators to members), in paragraph (2)(d) omit “or 244C”.

(6) Subject to subsections (7) and (8), the amendments made by this section have effect in relation to transfers made on or after 30 October 2024.

(7) The amendments do not have effect in relation to a transfer that is made—

(a) in execution of a request made before 30 October 2024, and

(b) before 30 April 2025.

(8) Where—

(a) the repeal made by subsection (1) does not have effect in relation to a transfer, but

(b) the tax consequences of that transfer depend on the tax consequences of a later transfer in relation to which the repeal does have effect,

the tax consequences of the earlier transfer are to be determined as if the repeal did not have effect in relation to the later transfer.

Overseas pension schemes established in EEA states

33

(1) The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006 (S.I. 2006/206) are amended as follows.

(2) In regulation 2 (requirements of an overseas pension scheme), in paragraph (2), for sub-paragraphs (a) to (d) substitute—

(a) the scheme is an occupational pension scheme and— (i) the scheme is regulated by a body in the country or territory in which the scheme is established that regulates occupational pension schemes, or (ii) there is no body in that country or territory that regulates occupational pension schemes; (b) the scheme is not an occupational pension scheme and the scheme is regulated by a body in the country or territory in which the scheme is established that regulates pension schemes that are not occupational pension schemes; or (c) the scheme is not an occupational pension scheme and— (i) there is no body in the country or territory in which the scheme is established that regulates pension schemes that are not occupational pension schemes, but (ii) the establishment of the scheme was regulated, and the provision of the scheme is regulated, by a body in that country or territory that regulates providers of pension schemes.

(3) In regulation 3 (recognised overseas pension schemes: prescribed countries or territories and prescribed requirements), in paragraph (2) (prescribed countries) omit sub-paragraphs (a) and (b).

(4) Subsections (1) to (3) come into force on 6 April 2025.

Pension scheme administrators required to be resident in United Kingdom

34

(1) In Part 4 of FA 2004 (pensions), section 270 (meaning of “scheme administrator”) is amended as follows.

(2) In subsection (2)—

(a) in the opening words—

(i) for “cannot be” substitute “is not”;

(ii) for “unless” substitute “at any time unless, at that time,”;

(b) in paragraph (a) omit the words from “or another” to the end.

(3) In subsection (3)(b) omit the words from “, whether resident” to the end;

(4) Omit subsection (4).

(5) Subsections (1) to (4) come into force on 6 April 2026.

Alternative finance: diminishing shared ownership refinancing arrangements

35

Schedule 7 makes provision about diminishing shared ownership refinancing arrangements.

Statutory neonatal care pay

36

(1) ITEPA 2003 is amended as follows.

(2) In section 660 (taxable UK benefits)—

(a) in Table A in subsection (1), after the entry relating to statutory parental bereavement pay insert—

Statutory neonatal care pay	SSCBA 1992	Section 171ZZ16

;

(b) in subsection (2), after the entry relating to statutory parental bereavement pay insert—

statutory neonatal care pay;

(3) In paragraph 48 of Schedule 2 (notice of possible effect of deductions under SIP partnership share agreement on employee’s benefit entitlement), in sub-paragraph (2) after “statutory sick pay” insert “, statutory neonatal care pay”.

(4) In regulation 2 of the Employee Share Ownership Plans (Partnership Shares—Notice of Effects on Benefits, Statutory Sick Pay and Statutory Maternity Pay) Regulations 2000 (S.I. 2000/2090)—

(a) after “statutory maternity pay” (in the first place it appears) insert “, statutory neonatal care pay”;

(b) after “statutory sick pay” (in the second place it appears) insert “, statutory neonatal care pay”.

(5) Subsection (4) comes into force on 6 April 2025.

Part 2 — Replacement of special rules relating to domicile

Chapter 1 — New rules for foreign income and gains of individuals becoming UK resident

Claim for relief on foreign income

37

(1) In Part 8 of ITTOIA 2005 (foreign income: special rules), after Chapter 4 insert—

(845A) (1) An individual may make a claim for relief for a tax year under this section (a “foreign income claim”) if the individual is a qualifying new resident for that year (see section 845B). (2) Where an individual makes a foreign income claim for a tax year, the individual is entitled to relief for the tax year that is equal to so much of the total income of the individual for that year as— (a) reflects qualifying foreign income (see section 845H), and (b) is identified as such in the claim. (3) The relief is given by deducting the amount of the relief in calculating the individual's net income for the tax year (see Step 2 of the calculation in section 23 of ITA 2007). (4) A foreign income claim must be made in a return. (5) A foreign income claim in relation to a tax year must be made before the end of the period of 12 months beginning with 31 January after the end of that tax year. (6) A foreign income claim may not be made as a consequential claim (within the meaning of section 43C(5) of TMA 1970) if the circumstances which give rise to the consequential claim result from a loss of tax brought about carelessly or deliberately by the individual or a person acting on the individual’s behalf. (7) See also— (a) Chapter 5C of Part 2 of ITEPA 2003 which provides for a claim for relief that may be made in respect of foreign employment income where a foreign employment election is made, and (b) Schedule D1 to TCGA 1992 which provides for a claim for relief that may be made in respect of foreign gains (a foreign gain claim). (8) Sections 845C to 845E set out some income tax consequences of a foreign income claim, a foreign employment election or a foreign gain claim. (9) See also section 1K of TCGA 1992, which provides for the loss of an individual’s annual exempt amount for capital gains tax where a foreign income claim, a foreign employment election or a foreign gain claim is made. (10) For the purposes of this section— (a) “return” means a return under section 8 of TMA 1970 (personal return), (b) references to a claim being included in a return include a claim being so included as a result of an amendment of the return, and (c) subsections (5) to (7) of section 118 of TMA 1970 (loss of tax brought about carelessly or deliberately) apply for the purposes of this section as they apply for the purposes of that Act. (845B) (1) For the purposes of this Chapter, an individual is a qualifying new resident for a tax year if— (a) the individual is UK resident for that tax year, (b) the individual is not disqualified for that tax year, and (c) for each of the 10 tax years before that tax year, the individual was not UK resident. (2) An individual is also a qualifying new resident for a tax year if— (a) the individual is UK resident for that tax year, (b) the individual is not disqualified for that tax year, and (c) that tax year is one of the next three tax years after a qualifying tax year in relation to the individual. (3) A tax year is a qualifying tax year in relation to an individual if— (a) the individual was a qualifying new resident for that tax year as a result of subsection (1), (b) the individual would have been a qualifying new resident for that tax year as a result of that subsection, but was not only as a result of the individual being disqualified for that tax year, or (c) the tax year— (i) is the tax year 2022-23, 2023-24 or 2024-25, and (ii) is a tax year to which paragraph (a) or (b) would have applied in relation to the individual had this section had effect for that tax year. (4) An individual is disqualified for a tax year if the individual would, for the purposes of section 41 of the Constitutional Reform and Governance Act 2010, be regarded as— (a) a member of the House of Commons for any part of that tax year, or (b) a member of the House of Lords for any part of that tax year. (845C) (1) Subsection (2) applies where— (a) an individual who carries on a relevant business wholly outside the United Kingdom makes a foreign income claim, a foreign employment election or a foreign gain claim for a tax year, (b) the individual has a loss for that tax year from the relevant business, and (c) the profits (if there were any) of the business would be qualifying foreign income for that year. (2) No relief for that loss is available in the tax year for which the claim or election is made or in any other tax year. (3) In this section “relevant business” means— (a) a trade, profession or vocation, or (b) a property business. (845D) (1) This section applies where an individual— (a) has a relievable amount for a tax year in respect of an overseas property business for the purposes of section 274A (reduction for individuals: entitlement), and (b) makes a foreign income claim, a foreign employment election or a foreign gain claim for the tax year. (2) The individual is not entitled to relief under section 274A for that tax year in respect of that relievable amount. (3) For the purposes of section 274A, the individual’s brought-forward amount for the following tax year in respect of the overseas property business is nil. (845E) Where an individual makes a foreign income claim, a foreign employment election or a foreign gain claim for a tax year, the individual is not entitled, for that year, to— (a) any allowance under Chapter 2 of Part 3 of ITA 2007 (personal allowance and blind person's allowance), (b) any tax reduction under Chapter 3 of that Part (tax reductions for married couples and civil partners), (c) any tax reduction under Chapter 3A of that Part (transferable tax allowance for married couples and civil partners), or (d) any relief under section 457 or 458 of ITA 2007 (payments for life insurance etc). (845F) (1) Subsection (2) applies where— (a) an individual makes a foreign income claim for a tax year, (b) the individual is entitled to relief under section 188 of FA 2004 (relief for contributions) for that tax year, and (c) the maximum amount of relief to which the individual is entitled under that section for that tax year is greater than the basic amount within the meaning of section 190(4) of that Act. (2) The maximum amount of relief to which the individual is entitled under section 188 of that Act for that tax year is to be reduced by the lesser of— (a) the relevant amount, and (b) the amount that would reduce the maximum amount of relief to the basic amount. (3) The “relevant amount” is the amount of the relief to which the individual is entitled under section 845A(2) of this Act as a result of making the foreign income claim, so far as that amount reflects relevant qualifying foreign income. (4) An amount of qualifying foreign income is “relevant qualifying foreign income” if the income is relevant UK earnings within the meaning of section 189(2) of FA 2004. (845G) (1) Subsection (2) applies for the purpose of determining the adjusted net income under section 58 of ITA 2007 of an individual for a tax year for which the individual has made a foreign income claim. (2) The adjusted net income is to be determined as if the relief allowed by the claim had not been deducted in calculating the individual's net income for the tax year. (845H) Income is qualifying foreign income if it— (a) falls within a description set out in the following table, and (b) is not disqualified income (see section 845I).

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