Finance Act 2025

• (b) by the end of the relevant period it has not failed to meet the temporary importation rule in section 809Z4 of ITA 2007.

• (4) Section 809M(3)(a) of ITA 2007 (persons living together) apply for the purposes of sub-paragraph (2)(d)(i).

• (5) In this paragraph the “relevant period” means the period beginning with 6 March 2024 and ending with 5 April 2025.

Election for paragraph 1 not to apply

3

• (1) An individual may make an election for paragraph 1 not to apply to a disposal made by the individual.

• (2) Sections 42 and 43 of TMA 1970 (procedure and time limit for claims), except section 42(1A) of that Act, apply in relation to an election under this paragraph as they apply in relation to a claim for relief.

• (3) An election under this paragraph is irrevocable.

• (4) All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under this paragraph.

Rebasing under Schedule 8 to F(No.2)A 2017

4

• (1) In Schedule 8 to F(No.2)A 2017, in paragraph 41(4)(b), for “that in which the disposal was made” substitute “the tax year 2024-25”.

• (2) The amendment made by this paragraph has effect for the tax year 2025-26 and subsequent tax years.

Schedule 12

Part 1 — Settlements (income)

1

Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor or family) is amended in accordance with this Part of this Schedule.

2

In section 619 (charge to tax under Chapter 5), in subsection (1)—

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

• (b) in paragraph (e), after “protected foreign-source income” insert “or transitional trust income”;

• (c) omit paragraph (f) and the “and” before it.

3

In section 622 (person liable), for “sections 643A and 643I to 643M” substitute “section 643A (under which a close member of the settlor’s family may instead be liable)”.

4

In section 624 (income where settlor retains an interest), in subsection (3)—

• (a) after “section 627 (exceptions for certain types of income),” insert “and”;

• (b) omit “section 628A (exception for protected foreign-source income)” and the “and” before it.

5

Omit sections 628A to 628C (protected foreign-source income and transitional trust income).

6

In section 629 (income paid to relevant children of settlor), in subsection (5), omit “or section 630A (exception for protected foreign-source income)”.

7

Omit section 630A (exception to section 629 for protected foreign-source income).

8

In section 635 (capital sums charge: amount of available income)—

• (a) in subsections (2) and (3)(d)(i), omit “unprotected”;

• (b) for subsection (5) substitute—

(5) See also section 643ZB(2) (which provides for certain income not to be counted towards available income for the purposes of this section).

9

In section 636 (capital sums charge: calculation of undistributed income)—

• (a) omit “unprotected” in the following places—

• (i) subsection (1);

• (ii) subsection (2) (in both places it occurs);

• (iii) subsection (4);

• (iv) subsection (6);

• (b) in subsection (2)(b), omit “domiciled and”.

10

In section 637 (qualifications to section 636), in subsections (5) and (7A), omit “unprotected”.

11

For the italic heading before section 643A, substitute—

.

12

Before section 643A insert—

(643ZA) (1) In this Chapter— - “protected foreign-source income” means income that— arose under a settlement in any of the tax years 2017-18 to 2024-25, and was protected foreign-source income for that tax year within the meaning of section 628A (as that section had effect for that tax year). - “transitional trust income” means income that— arose under a settlement in any of the tax years 2008-09 to 2016-17, and was transitional trust income throughout the tax years 2017-18 to 2024-25 within the meaning of section 628C (as that section had effect for those tax years). (2) For the purposes of subsection (1) ignore section 648(3) to (5) (foreign income treated as arising under settlement only if and when remitted). (643ZB) (1) The rules in sections 624(1) and 629(1) do not apply to protected foreign-source income or transitional trust income (which, by virtue of section 648(3) to (5), may be treated as income arising under the settlement in the tax year 2025-26 or a subsequent tax year). (2) In the following provisions, “income” does not include protected foreign-source income or transitional trust income— - section 635(2) and (3)(d)(i); - section 636(1), (2) (in the words before paragraph (a)), (4) and (6); - section 637(5) and (7A).

13

For section 643A substitute—

(643A) (1) If— (a) an individual to whom this section applies has an untaxed benefits total for a settlement for a tax year (see section 643B), (b) there is available protected income in relation to the individual, the settlement and the tax year (see section 643C), and (c) the individual is UK resident for the tax year, an amount equal to so much of the untaxed benefits total as does not exceed the available protected income is treated for income tax purposes as income of the individual for the tax year. (2) This section applies to— (a) the settlor, and (b) anyone who has at any time been a close member of the settlor’s family. (3) If there is a choice about the individuals in whose case income is to be treated as arising under subsection (1), income is to be treated as arising— (a) to such one or more of them as appears to an officer of Revenue and Customs to be just and reasonable, and (b) if more than one, in such respective proportions as appear to the officer to be just and reasonable.

14

• (1) Section 643B (meaning of “untaxed benefits total” in section 643A) is amended as follows.

• (2) In subsection (1), for Step 1 substitute—

• Step 1 Identify each benefit provided by the trustees to the individual— in the current tax year, or an earlier tax year for which the individual was UK resident, and if the individual is not the settlor, at a time when the individual was a close member of the settlor’s family.

• (3) For subsection (2) substitute—

(2) For the purposes of Step 1 in subsection (1), if— (a) the trustees provide a benefit to an individual in a given tax year, (b) the individual is a close member of the settlor’s family when the benefit is provided, (c) the individual is non-UK resident, or is a qualifying new resident, for the tax year, and (d) the settlor is UK resident for the tax year, the benefit is instead treated as provided to the settlor.

• (4) In subsections (4) and (5), for “643M” substitute “643EA”.

15

For section 643C substitute—

(643C) (1) For the purposes of section 643A, take the following steps to determine the amount of available protected income in relation to an individual (“P”), a settlement and a tax year (“the current tax year”)— - Step 1 Identify the total amount of protected foreign-source income and transitional trust income that arose (at any time) under the settlement (“the total protected income”). - Step 2 Deduct any amount of the total protected income that is matched under the transfer of assets abroad code in the current tax year or an earlier tax year. - Step 3 Deduct any amount of the total protected income on which P or any other individual is liable to income tax in the current tax year or an earlier tax year. - Step 4 Deduct any amount that, in relation to the settlement, is treated under section 643A as P’s income in an earlier tax year or as another individual’s income in any tax year. - Step 5 Add back the amount of any income falling within Step 4 that is identified as qualifying foreign income on a foreign income claim made by P or any other individual for any tax year. (2) For the purposes of Step 1 in subsection (1), ignore section 648(3) to (5) (foreign income treated as “arising” under settlement only if and when remitted). (3) For the purposes of Step 2 in subsection (1), an amount of the total protected income is “matched under the transfer of assets abroad code” if it is matched under section 735A of ITA 2007 with— (a) benefits provided by the trustees to P or any other individual in the current tax year or in an earlier tax year, and (b) an amount of income treated as arising to P or any other individual under section 732 of ITA 2007 (or if it would be so matched if section 735A applied for those purposes). (4) For the purposes of Step 3 in subsection (1), ignore any liability to income tax arising under section 643A above or under section 731 of ITA 2007 (transfer of assets abroad: benefits charge). (5) In Step 4 in subsection (1) and in subsection (4), a reference to section 643A includes, in relation to any of the tax years 2018-19 to 2024-25, section 643J and 643L (old onward gifting rules).

16

• (1) Section 643E (reimbursement of tax paid by settlor) is amended as follows.

• (2) In the heading, for “section 643A” substitute “643B(2)”.

• (3) In subsection (1), for “section 643A(3) or (4)” substitute “section 643B(2) (benefit received by close family member attributed to settlor)”.

• (4) In subsection (2), for paragraphs (a) and (b) substitute—

(a) the tax year in which income is treated under section 643A as arising to the settlor, (b) the amount of income treated as arising, and (c) the amount of tax paid,

.

17

After section 643E insert—

(643EA) (1) Subsection (2) applies if— (a) the trustees of a settlement provide a benefit (“the original benefit”) to an individual (“the original recipient”), (b) the original recipient— (i) is liable neither to income tax nor to capital gains tax by reference to the amount or value of the original benefit, or (ii) is a qualifying new resident for the tax year in which the original benefit is provided, (c) section 643B(2) (close family member’s benefits attributed to settlor) does not apply to the provision of the original benefit to the original recipient, (d) at the time when the original benefit is provided— (i) there are arrangements, or an intention, as regards the (direct or indirect) passing on of the whole or part of the original benefit to another person, and (ii) it is reasonable to expect that, if the whole or part of the original benefit is passed on to another person in accordance with the arrangements or intention, that other person will be UK resident when they receive at least part of what is passed on to them, (e) the original recipient provides a benefit (“the onward gift”) to another person (“the subsequent recipient”)— (i) at the time when the original benefit is provided to the original recipient, or at any later time in the 3 years beginning with the day containing that time, or (ii) at any time before the original benefit is provided to the original recipient and, it is reasonable to assume, in anticipation of the original benefit’s being provided, (f) the onward gift is of or includes— (i) the whole or part of the original benefit, (ii) anything that (wholly or in part, and directly or indirectly) derives from, or represents, the whole or part of the original benefit, or (iii) any other property, but only if the original benefit is provided with a view to enabling or facilitating, or otherwise in connection with, the property’s being provided to the subsequent recipient, and (g) the subsequent recipient— (i) is the settlor, or (ii) is a close member of the settlor's family at the time when they receive the onward gift or, where the onward gift is provided as mentioned in subsection (1)(e)(ii), at the time given by subsection (4). (2) So much of the onward gift as falls within subsection (1)(f) is treated for the purposes of section 643B(1) and (2)(a) as a benefit provided by the trustees to the subsequent recipient at the time when the onward gift is provided. (3) For the purposes of subsection (1)(e), the circumstances in which the original recipient provides a benefit to the subsequent recipient include circumstances where there is a series of two or more benefits starting with a benefit provided by the original recipient and ending with a benefit provided to the subsequent recipient; and in such a case— (a) the onward gift is treated for the purposes of subsection (1)(e) as provided when the final benefit in the series is provided, and (b) the reference to the onward gift in subsection (1)(f) is to be read as a reference to each benefit in the series. (4) Where the onward gift is made as mentioned in subsection (1)(e)(ii), it is treated for the purposes of subsection (2) as made immediately after, and in the tax year in which, the original benefit is provided to the original recipient. (5) Where the conditions in subsection (1)(e) to (g) are met in any case, it is to be presumed (unless the contrary is shown) that the condition in subsection (1)(d) is also met in that case. (6) Where the original recipient is liable neither to income tax nor to capital gains tax by reference to the amount or value of part only of the original benefit, this section applies as if the two parts of the original benefit were separate benefits. (7) In this section, “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

18

• (1) Section 643F (income attributed by section 643A to user of remittance basis) is amended as follows.

• (2) In subsection (1)—

• (a) in paragraph (a), for the words from “is treated” to the end substitute “was treated by section 643A as arising to an individual for any of the tax years 2018-19 to 2024-25, and”;

• (b) in paragraph (b), for “applies” substitute “applied”.

• (3) In subsection (6)—

• (a) in the definition of “protected income”, for “forms” substitute “under section 643C formed”;

• (b) in the definition of “the relevant individual”, in paragraphs (a) and (b), for “is treated” substitute “was treated”.

• (4) At the end insert—

(7) A reference in this section to section 643A or 643C (or to any provision of that section) is to that section (or provision) as it had effect for the tax year in which the deemed income was treated as arising to the individual.

19

• (1) Section 643G (section 643F(4): benefits and income “relating” to deemed income) is amended as follows.

• (2) In subsection (1)—

• (a) in paragraph (a), for “applies” substitute “applied”;

• (b) after paragraph (a) insert—

(aa) references to section 643A, 643J or 643L (or to a provision of any of those sections) are to that section (or provision) as it had effect for the year,

.

• (3) In subsection (2)—

• (a) in paragraph (b), for “is allowed” substitute “was allowed”;

• (b) in paragraph (d), for “is”, in both places it occurs, substitute “was”;

• (c) in paragraph (e), for “is”, in both places it occurs, substitute “was”;

• (d) in paragraph (f), for “is treated” substitute “was treated”.

20

In section 643H (meaning of close member of settlor’s family), in the heading and in subsection (1), for “643B to 643M” substitute “643A to 643EA”.

21

Omit sections 643I to 643M (old onward gift provisions).

22

• (1) Section 643N (person liable under section 643J or 643L and remittance basis applies) is amended as follows.

• (2) In the heading, for “applies” substitute “applied”.

• (3) In subsection (1)—

• (a) in paragraph (a)—

• (i) in the words before sub-paragraph (i), for “is treated as arising to an individual for a tax year” substitute “was treated as arising to an individual for the tax year 2024-25 or an earlier tax year”;

• (ii) in sub-paragraph (i), for “applies” substitute “applied”;

• (b) in paragraph (b), for “applies” substitute “applied”.

• (4) In subsection (3), after “onward payment” insert “referred to in section 643I(1)(d)”.

• (5) At the end insert—

(5) A reference in this section to section 643I, 643J or 643L (or to a provision of any of those sections) is to that section (or provision) as it had effect for the tax year in which income was treated as arising to the individual.

23

• (1) Section 645 (property or income originating from settlor) is amended as follows.

• (2) In subsection (1), for “sections 628A and 644” substitute “section 644”.

• (3) After subsection (2) insert—

(2A) If the same property has been provided by more than one settlor for the purposes of the settlement, so much of the property as is attributable to each settlor on a just and reasonable apportionment is treated for the purposes of this section as provided by that settlor.

24

• (1) Section 646 (adjustments between settlor and trustees etc) is amended as follows.

• (2) In subsection (2), for paragraphs (a) and (b) substitute—

(a) the tax year in which income was treated as arising to the settlor under section 624 or 629 (as the case may be), (b) the amount of the income in respect of which the settlor has paid tax, and (c) the amount of tax paid.

• (3) In subsection (6A)—

• (a) omit the “and” after paragraph (a);

• (b) at the end insert

, and (c) the tax year in which the income to which the repayment relates was treated as arising to the settlor.

25

• (1) Section 648 (income arising under a settlement) is amended as follows.

• (2) In subsection (1)(b), omit “domiciled and”.

• (3) In subsection (3)—

• (a) for “if, for a tax year, section 809B, 809D or 809E of ITA 2007 (remittance basis) applies”, substitute “if, for the tax year 2024-25 or an earlier tax year, section 809B, 809D or 809E of ITA 2007 (remittance basis) applied”;

• (b) for “relevant foreign income” substitute “specified foreign income”.

• (4) At the end insert—

(6) In subsection (3), “specified foreign income” means income that would be relevant foreign income if it were the income of a UK resident individual.

Part 2 — Transfer of assets abroad

26

Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) is amended in accordance with this Part of this Schedule.

27

In section 718 (meaning of “person abroad” etc)—

• (a) in subsection (1), for the words from “means” to the end, substitute “means a person who is resident outside the United Kingdom.”;

• (b) omit subsection (3).

28

In section 720 (charge to tax on income treated as arising under section 721)—

• (a) in subsection (4), omit “and section 726 (non-UK domiciled individuals to whom remittance basis applies)”;

• (b) in subsection (7), for “742A” substitute “742”.

29

In section 721 (individuals with power to enjoy income as a result of relevant transactions), for subsections (3B) and (3BA) substitute—

(3B) The amount of the income treated as arising under subsection (1) is equal to the amount of the income of the person abroad (subject to sections 724 and 725).

30

Omit sections 721A and 721B (meaning of “protected foreign-source income” etc).

31

After section 725 insert—

(725A) (1) Where any tax for which an individual is liable as a result of section 721 is paid, the individual is entitled to recover the amount of the tax from the person abroad. (2) For the purpose of recovering that amount, the individual is entitled to require an officer of Revenue and Customs to give the individual a certificate specifying— (a) the tax year in which income is treated under section 721 as arising to the individual, (b) the amount of income treated as arising, and (c) the amount of tax paid, and any such certificate is conclusive evidence of the facts stated in it.

32

• (1) Section 726 (remittance basis etc) is amended as follows.

• (2) For the heading substitute “Qualifying new residents and remittance-basis users: “foreign” deemed income”.

• (3) For subsection (1) substitute—

(1) Subsection (2) applies in relation to income treated under section 721 as arising to an individual (“the deemed income”)— (a) in the tax year 2024-25 or an earlier tax year if section 809B, 809D or 809E (remittance basis) applied to the individual for that tax year, or (b) in the tax year 2025-26 or a later tax year if the individual is entitled to claim relief under section 845A of ITTOIA 2005 (qualifying new residents) for that tax year.

• (4) After subsection (2) insert—

(2A) Subsections (3) to (5) apply where the deemed income falls within subsection (1)(a).

• (5) Omit subsections (6) and (7).

• (6) At the end insert—

(8) As to income falling within subsection (1)(b), see the table in section 845H of ITTOIA 2005 (under which deemed income that is foreign for the purposes of this section is “qualifying foreign income” and so may be identified in a foreign income claim).

33

In section 727 (charge to tax on income treated as arising under section 728)—

• (a) omit subsection (3A);

• (b) in subsection (5), for “742A” substitute “742”.

34

In section 728 (individuals receiving capital sums as a result of relevant transactions), for subsections (1A) and (1B) substitute—

(1A) The amount of the income treated as arising under subsection (1) is equal to the amount of the income of the person abroad (subject to subsection (2)).

35

Omit section 729A (meaning of “protected foreign-source income”).

36

Before section 730 insert—

(729B) (1) Where any tax for which an individual is liable as a result of section 728 is paid, the individual is entitled to recover the amount of the tax from the person abroad. (2) For the purpose of recovering that amount, the individual is entitled to require an officer of Revenue and Customs to give the individual a certificate specifying— (a) the tax year in which income is treated under section 728 as arising to the individual, (b) the amount of income treated as arising, and (c) the amount of tax paid, and any such certificate is conclusive evidence of the facts stated in it.

37

• (1) Section 730 (remittance basis etc) is amended as follows.

• (2) For the heading substitute “Qualifying new residents and remittance-basis users: “foreign” deemed income”.

• (3) For subsection (1) substitute—

(1) Subsection (2) applies in relation to income treated under section 728 as arising to an individual (“the deemed income”)— (a) in the tax year 2024-25 or an earlier tax year if section 809B, 809D or 809E (remittance basis) applied to the individual for that tax year, or (b) in the tax year 2025-26 or a later tax year if the individual is entitled to claim relief under section 845A of ITTOIA 2005 (qualifying new residents) for that tax year.

• (4) After subsection (2) insert—

(2A) Subsections (3) to (5) apply where the deemed income falls within subsection (1)(a).

• (5) Omit subsections (6) and (7).

• (6) At the end insert—

(8) As to income falling within subsection (1)(b), see the table in section 845H of ITTOIA 2005 (under which deemed income that is foreign for the purposes of this section is “qualifying foreign income” and so may be identified in a foreign income claim).

38

• (1) Section 731 (charge to tax on income treated as arising under section 732) is amended as follows.

• (2) In subsection (1), for “individuals receiving a benefit” substitute “non-transferors receiving a benefit”.

• (3) Omit subsections (1A) to (1C) and (2A).

• (4) In subsection (3), omit “, but this is subject to section 733A”.

• (5) In subsection (4), for “742A” substitute “742”.

39

• (1) Section 732 (deemed income where benefit received) is amended as follows.

• (2) In the heading, for “Individuals” substitute “Non-transferors”.

• (3) In subsection (1)—

• (a) in paragraph (b), for “receives a benefit in a tax year” substitute “who is UK resident for a tax year receives a benefit in that tax year”;

• (b) for paragraph (d) substitute—

(d) the individual is not liable to income tax under section 720 or 727 by reference to the transfer and would not be so liable if the effect of sections 726 and 730 were ignored,

.

• (4) Omit subsection (4).

40

• (1) Section 733 (income charged under section 731) is amended as follows.

• (2) In subsection (1), in Step 2, omit the words from “except that” to “for an earlier tax year”.

• (3) After subsection (2) insert—

(2A) For the purposes of subsection (1), the amount deducted at Step 2 does not include the amount of any income on which tax was not charged under section 731 by virtue of— (a) section 735AD(2) (transferor not taxable under benefits charge except where benefit matched to protected foreign-source income etc), or (b) section 731(1A) (equivalent provision for tax years 2024-25 and earlier). (2B) For the purposes of subsection (1), if in a tax year— (a) income is treated as arising to an individual under section 732(2), and (b) the income is identified as qualifying foreign income on a foreign income claim, the income is treated for later tax years as not having been charged to income tax under section 731. (2C) It follows from subsection (2B) that— (a) in the application of subsection (1) to the individual for subsequent tax years, the amount of the income will be deducted at Step 2 and at paragraph (a) of Step 5, but (b) in the application of subsection (1) to any other individual for subsequent tax years, the amount of the income will not be deducted at paragraph (b) of Step 5. (2D) See paragraph 11 of Schedule 10 to FA 2025 (temporary repatriation facility) for special provision about income that is treated as arising under section 732 but that is exempt from income tax under that Schedule.

41

Omit sections 733A to 733E and 734A (old provision about protected foreign-source income).

42

• (1) Section 735 (remittance basis etc) is amended as follows.

• (2) For the heading substitute “Qualifying new residents and remittance-basis users: “foreign” deemed income”.

• (3) For subsection (1) substitute—

(1) Subsection (2) applies in relation to income treated under section 732 as arising to an individual (“the deemed income”)— (a) in the tax year 2024-25 or an earlier tax year if section 809B, 809D or 809E (remittance basis) applied to the individual for that tax year, or (b) in the tax year 2025-26 or a later tax year if the individual is entitled to claim relief under section 845A of ITTOIA 2005 (qualifying new residents) for that tax year.

• (4) After subsection (2) insert—

(2A) Subsections (3) to (5) apply where the deemed income falls within subsection (1)(a).

• (5) At the end insert—

(6) As to income falling within subsection (1)(b), see the table in section 845H of ITTOIA 2005 (under which deemed income that is foreign for the purposes of this section is “qualifying foreign income” and so may be identified in a foreign income claim).

43

• (1) Section 735A (matching rules) is amended as follows.

• (2) In subsection (1), for paragraph (b) substitute—

(b) deduct from those benefits any benefit so far as— (i) chargeable gains (or offshore income gains) are treated as mentioned in section 734(1)(d) as accruing by reference to the benefit, (ii) income is treated as mentioned in section 735AG(1)(b) as arising by reference to the benefit under section 643A, 643J or 643L of ITTOIA 2005 (settlements: benefits charge), or (iii) income is treated as arising by reference to the benefit under section 732(2) and that income is identified in a foreign income claim,

.

• (3) in subsection (6), for “the individual, or as a result of section 733A another person” substitute “a person”.

44

After section 735A insert—

(735AA) (1) Sections 735AB to 735C apply if— (a) a relevant transfer occurred before 6 April 2025, (b) the person abroad was— (i) the trustees of a settlement, or (ii) a company in which the trustees of a settlement were participators or indirect participators, and (c) protected foreign-source income or transitionally protected income arose in relation to the transfer. (2) In sections 735AB to 735C— - “the relevant transfer” means the transfer referred to in subsection (1)(a); - “the settlement” means the settlement referred to in subsection (1)(b)(i) or (ii) (as the case may be); - “the settlor” means the settlor of that settlement. (3) For the purposes of subsection (1)(b)(ii), the trustees of a settlement are “indirect participators” in a company if they are participators in the first in a chain of two or more companies where the last company in the chain is the person abroad and where each company in the chain (except the last) is a participator in the next company in the chain. (735AB) (1) For the purposes of sections 735AA to 735AF— - “protected foreign-source income”, in relation to the relevant transfer, means income of the person abroad that by reference to the transfer— would have been treated as arising to the settlor under section 721 in any of the tax years 2017-18 to 2024-25 had it not been protected foreign-source income within the meaning of section 721A (as that section had effect for that tax year), or would have been treated as arising to the settlor under section 728 in any of the tax years 2017-18 to 2024-25 had it not been protected foreign-source income within the meaning of section 729A (as that section had effect for that tax year); - “transitionally protected income”, in relation to the relevant transfer, means income of the person abroad that by reference to the transfer— was treated as arising to the settlor under section 721 or 728 in a tax year earlier than the tax year 2017-18, was not remitted to the United Kingdom in a tax year earlier than the tax year 2017-18, and was transitionally protected income within the meaning of section 726(7) or 730(7) throughout the tax years 2017-18 to 2024-25 (as that section had effect for those tax years). (2) In subsection (1), in paragraph (b) of the definition of “transitionally protected income”, “remitted to the United Kingdom” is to be read in accordance with Chapter A1 of Part 14 (read with section 726 or 730 as the case may be). (735AC) Section 832 of ITTOIA 2005 (relevant foreign income charged on remittance basis) does not apply to transitionally protected income. (735AD) (1) For the purposes of section 732 (benefits charge: deemed income), subsection (1)(d) of that section (benefits charge confined to individuals not liable under section 720 or 727) is to be disregarded where the individual who receives the benefit is the settlor. (2) But any income treated as arising to the settlor under section 732(2) is not taxed under section 731 unless the income would, assuming that section 735A applied for this purpose by reference to the settlor, be matched under that section with an amount of relevant income that is protected foreign-source income or transitionally protected income in relation to the relevant transfer. (735AE) (1) If— (a) a benefit is provided to an individual in a given tax year out of assets which are available for the purpose as a result of— (i) the relevant transfer, or (ii) one or more associated operations, (b) the individual is a close member of the settlor’s family at the time when the benefit is provided, (c) the individual is non-UK resident, or is a qualifying new resident, for the tax year in which the benefit is provided, and (d) the settlor is UK resident for that tax year, the benefit is instead treated for the purposes of section 732 and section 735AD(1) as provided to the settlor. (2) For the purposes of this section, a person is a “close member of the settlor’s family” at any time if the settlor is living at that time and— (a) the person is the settlor’s spouse or civil partner at that time, or (b) the person— (i) is a child of the settlor, or of a person who at that time is the settlor’s spouse or civil partner, and (ii) at that time has not reached the age of 18. (3) For the purposes of subsection (2), two people living together as if they were a married couple or civil partners are treated as if they were spouses or civil partners of each other. (4) Where any tax for which the settlor is liable as a result of this section is paid, the settlor is entitled to recover the amount of the tax from the individual concerned. (5) For the purpose of recovering that amount, the settlor is entitled to require an officer of Revenue and Customs to provide the settlor with a certificate specifying— (a) the tax year in which income was treated as arising to the settlor, (b) the amount of income treated as arising, and (c) the amount of tax paid, and any such certificate is conclusive evidence of the facts stated in it. (735AF) (1) Subsection (2) applies if— (a) a benefit (“the original benefit”) is provided to an individual (“the original recipient”) out of assets which are available for the purpose as a result of— (i) the relevant transfer, or (ii) one or more associated operations, (b) the original recipient is non-UK resident, or is a qualifying new resident, for the tax year in which they receive the original benefit, (c) section 735AE(1) (close family member’s benefits attributed to settlor) does not apply to the provision of the original benefit to the original recipient, (d) at the time when the original benefit is provided— (i) there are arrangements, or there is an intention, as regards the (direct or indirect) passing on of the whole or part of the original benefit to another person, and (ii) it is reasonable to expect that, if the whole or part of the original benefit is passed on to another person in accordance with the arrangements or intention, that other person will be UK resident when they receive at least part of what is passed on to them, (e) the original recipient provides a benefit (“the onward gift”) to another person (“the subsequent recipient”)— (i) at the time when the original benefit is received by the original recipient, or at any later time in the 3 years beginning with the day containing that time, or (ii) at any time before the original benefit is received by the original recipient and, it is reasonable to assume, in anticipation of the original benefit’s being provided, and (f) the onward gift is of or includes— (i) the whole or part of the original benefit, (ii) anything that (wholly or in part, and directly or indirectly) derives from, or represents, the whole or part of the original benefit, or (iii) any other property, but only if the original benefit is provided with a view to enabling or facilitating, or otherwise in connection with, the property’s being provided to the subsequent recipient. (2) For the purposes of sections 732, 735AD(1) and 735AE(1), so much of the onward gift as falls within subsection (1)(f) is (so far as would not otherwise be the case) treated as a benefit provided to the subsequent recipient out of assets which are available for the purpose as a result of an associated operation in relation to the relevant transfer. (3) For the purposes of subsection (1)(e), the circumstances in which the original recipient provides a benefit to the subsequent recipient include circumstances where there is a series of two or more benefits starting with a benefit provided by the original recipient and ending with a benefit provided to the subsequent recipient; and in such a case— (a) the onward gift is treated for the purposes of subsection (1)(e) as provided when the final benefit in the series is provided, and (b) the reference to the onward gift in subsection (1)(f) is to be read as a reference to each benefit in the series. (4) Where the conditions in subsection (1)(e) and (f) are met, it is to be presumed, unless the contrary is shown, that the condition in subsection (1)(d) is also met. (5) In subsection (1)(d), “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable). (735AG) (1) This section applies if— (a) benefits provided as mentioned in section 732(1)(c) are received in a tax year, and (b) income is treated under section 643A of ITTOIA 2005 as arising to a person in that or a subsequent tax year by reference (direct or indirect) to the whole or part of any benefits so provided. (2) For any tax year after one in which such income is so treated, the amount of income treated as arising to the individual under section 732(2) in respect of benefits provided as mentioned in section 732(1)(c) as a result of the transfer or operations in question is calculated as follows. (3) The amount is calculated under section 733(1) as if the total untaxed benefits were reduced by the amount of that income. (4) The reference in subsection (1)(b) to income treated as arising under section 643A of ITTOIA 2005 includes, in relation to any of the tax years 2018-19 to 2024-25, a reference to income treated as arising under section 643J or 643L of ITTOIA 2005 (settlements code: old onward gift provisions). (5) In this section “the total untaxed benefits” has the same meaning as in section 733(1) (see Step 2).

45

• (1) Section 735B (settlor charge: remittance-basis users) is amended as follows.

• (2) For the heading substitute “Historical liability under section 733A where remittance basis applied”.

• (3) For subsection (1) substitute—

(1) This section applies in relation to income if— (a) the income was treated under section 732 as arising to an individual (“the beneficiary”) for any of the tax years 2017-18 to 2024-25, (b) the settlor was under section 733A(2) or (3) (as it had effect for that tax year) liable for tax on the income, and (c) section 809B, 809D or 809E (remittance basis) applied to the settlor for that year.

46

• (1) Section 735C (old onward gifts provisions: remittance-basis users) is amended as follows.

• (2) For the heading substitute “Historical operation of section 733C or 733E where remittance basis applied”.

• (3) In subsection (1)—

• (a) in paragraph (a)—

• (i) for the words before sub-paragraph (i) substitute “the income was treated as arising to an individual for any of the tax years 2018-19 to 2024-25”;

• (ii) in sub-paragraph (i), for “applies” substitute “applied”;

• (b) in paragraph (b), for “applies” substitute “applied”.

• (4) After subsection (4) insert—

(5) A reference in subsection (1) to section 733C or 733E (or to any provision of either section) is to that section (or provision) as it had effect for the tax year for which income was treated as arising to the individual.

47

In section 736 (exemptions: introduction)—

• (a) in subsection (1), for “742A” substitute “742”;

• (b) omit subsection (2A).

48

Omit section 742A (post-5 April 2012 transactions: exemption for genuine transactions).

49

In section 747 (amounts corresponding to accrued income profits and related interest), in subsection (1)(b) and subsection (4)(b), omit “or domiciled”.

50

In section 751 (tribunal’s jurisdiction on appeals), omit paragraph (da).

Part 3 — Settlements (chargeable gains)

51

TCGA 1992 is amended in accordance with this Part of this Schedule.

52

In section 1A (territorial scope), in subsection (2)(e), omit “87K, 87L”.

53

In section 1E (losses deductible only when within scope of tax etc), omit subsection (4).

54

In section 62 (death: general provisions), in subsection (2A), omit paragraph (a).

55

• (1) Section 86 (attribution of gains to settlors with interest in non-resident or dual resident settlements) is amended as follows.

• (2) In subsection (1)(c), omit “is domiciled in the United Kingdom at some time in the year and”.

• (3) Omit subsection (3A).

• (4) In subsection (4), omit paragraph (b) and the “and” before it.

• (5) At the end insert—

(6) See also paragraph 3 of Schedule D1 (foreign gain claims: foreign gains and losses of the trustees ignored for the purposes of subsection (1)(e)).

56

In section 86A (attribution of gains to settlor where temporarily non-resident), in subsection (1)(b), omit “, 87K, 87L”.

57

In section 87 (non-UK resident settlements: attribution of gains to beneficiaries), at the end insert—

(8) See also paragraph 4 of Schedule D1 (foreign gain claims: capital payments ignored for the purposes of this section and Schedule 4C).

58

• (1) Section 87B (section 87: remittance basis) is amended as follows.

• (2) In subsection (1)—

• (a) in paragraph (a)—

• (i) for “are treated” substitute “were treated”;

• (ii) for “a tax year” substitute “the tax year 2024-25 or an earlier tax year”;

• (b) in paragraph (b), for “applies” substitute “applied”.

• (3) In subsection (2), for “chargeable gains accruing” substitute “treated as having accrued”.

• (4) In subsection (4), for “are treated as accruing consists of” substitute “were treated as accruing consisted of”.

• (5) At the end insert—

(5) The references in this section to sections 87I(1)(c), 87K and 87L (which were repealed by Part 3 of Schedule 12 to the Finance Act 2025) are to those provisions as they had effect for the tax year in which the chargeable gains were treated as accruing to the individual.

59

In section 87D (sections 87 and 87A: capital payments to non-residents disregarded), in subsection (1) omit paragraph (b) and the “and” before it.

60

• (1) Section 87G (settlor liable if capital payment received by close family member) is amended as follows.

• (2) In subsection (1)(b), for “at any time in that year” substitute “for that tax year”.

• (3) After subsection (2) insert—

(2A) But subsection (2) does not apply if— (a) the original recipient is resident in the United Kingdom for the tax year in which they receive the capital payment, and (b) the settlor is a qualifying new resident for that tax year.

• (4) In subsection (4)—

• (a) omit the “and” after paragraph (a);

• (b) after paragraph (b) insert

and (c) the tax year in which those gains were treated as arising,

.

61

In section 87H (meaning of “close member of the settlor’s family”), in subsection (1), for “87D, 87G and 87L” substitute “87D and 87G”.

62

For sections 87I to 87M (old onward gifting provisions) substitute—

(87HA) (1) Subsection (2) applies if— (a) a person (“the original recipient”) receives a capital payment (“the original benefit”) from the trustees of a settlement, (b) the original recipient is not resident in the United Kingdom, or is a qualifying new resident, for the tax year in which they receive the original benefit, (c) section 87G(2) (close family member’s benefits attributed to settlor) does not apply to the provision of the original benefit to the original recipient, (d) at the time when the person receives the original benefit— (i) there are arrangements, or an intention, as regards the (direct or indirect) passing on of the whole or part of the original benefit to another person, and (ii) it is reasonable to expect that, if the whole or part of the original benefit is passed on to another person in accordance with the arrangements or intention, that other person will be resident in the United Kingdom when they receive at least part of what is passed on to them, (e) the original recipient provides a benefit (“the onward gift”) to a person (“the subsequent recipient”)— (i) at the time when the original benefit is provided to the original recipient or at any later time in the 3 years beginning with the day containing that time, or (ii) at any time before the original benefit is made to the original recipient and, it is reasonable to assume, in anticipation of the original benefit’s being made, (f) the onward gift is of or includes— (i) the whole or part of the original benefit (ii) anything that (wholly or in part, and directly or indirectly) derives from, or represents, the whole or part of the original benefit, or (iii) any other property, but only if the original benefit is provided with a view to enabling or facilitating, or otherwise in connection with, the providing of the onward gift to the subsequent recipient, and (g) the subsequent recipient is resident in the United Kingdom for the tax year in which they receive the onward gift. (2) So much of the onward gift as falls within subsection (1)(f) is treated for the purposes of sections 87, 87A , 87D(2) and 87G(2) as a capital payment received from the trustees by the subsequent recipient at the time when the onward gift is provided. (3) Where subsection (2) applies, the subsequent recipient is treated as having received the capital payment as a beneficiary of the settlement (whether or not they are otherwise a beneficiary of it). (4) For the purposes of subsection (1)(e), the circumstances in which the original recipient provides a benefit to the subsequent recipient include circumstances where there is a series of two or more benefits starting with a benefit provided by the original recipient and ending with a benefit provided to the subsequent recipient; and in such a case— (a) the onward gift is treated for the purposes of subsection (1)(e) as provided when the final benefit in the series is provided, and (b) the reference to the onward gift in subsection (1)(f) is to be read as a reference to each benefit in the series. (5) Where the onward gift is made as mentioned in subsection (1)(e)(ii), the onward gift is treated for the purposes of subsection (2) as made in the tax year in which the original benefit is made to the original recipient. (6) Where the conditions in subsection (1)(e) to (g) are met, it is to be presumed (unless the contrary is shown) that the condition in subsection (1)(d) is also met. (7) In this section, “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

63

In section 91 (increase in tax payable under section 87 or 89(2)), in subsection (1)(a), omit “, 87K, 87L”.

64

In section 97 (supplementary provisions)—

• (a) in subsection (1)(a)(ii), for the words from “any of sections 643A” to the end of the sub-paragraph, substitute “Chapter 5 of Part 5 of ITTOIA 2005 (settlements) or Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad)”;

• (b) in subsection (3), for the words from “section 643A” to “ITA 2007”, substitute “Chapter 5 of Part 5 of ITTOIA 2005 (settlements) or Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad)”.

65

In section 279A (deferred unascertainable consideration: election for treatment of loss), in subsection (7), omit paragraph (b) (but not the “and” after it).

66

In section 279C (effect of election under section 279A), in subsection (6)—

• (a) after paragraph (a) insert “and”;

• (b) omit paragraph (c) and the “and” before it.

67

In Schedule 1 (UK resident individuals not domiciled in UK), in paragraph 3(5), omit paragraph (b) and the “and” before it.

68

• (1) Schedule 4C (transfers of value: attribution of gains to beneficiaries) is amended as follows.

• (2) In paragraph 8(6), after “87G(2),” insert “87HA(2),”.

69

• (1) Schedule 5 (attribution of gains to settlors with interest in non-resident or dual resident settlement) is amended as follows.

• (2) In paragraph 1 (construction of section 86(1)(e): losses etc), after sub-paragraph (6) insert—

(6A) In construing section 86(1)(e) as regards a particular year of assessment, if— (a) section 86 did not apply to the settlement in a year of assessment ending before 6 April 2025 (“the earlier year”), but (b) that section would have applied to the settlement in the earlier year if the condition in section 86(1)(e) (settlor domiciled in the United Kingdom) had been met in the earlier year, deductions shall be made in respect of losses accruing in the earlier year, but only so far as those losses have not been taken into account for the purposes of section 87 in determining the section 1(3) amount for the settlement for the earlier year.

• (3) Omit paragraphs 5A and 5B (protections for deemed domiciles etc).

• (4) After paragraph 5 insert—

(5C) (1) This paragraph applies if— (a) the trustees of the settlement made (at any time) an election under paragraph 126(1) of Schedule 7 to the Finance Act 2008 (remittance basis: capital gains rebasing), and (b) an amount of chargeable gains would (apart from this paragraph) be treated as accruing to the settlor under section 86(4) in a tax year (“the relevant tax year”). (2) The settlor is not charged to capital gains tax on so much of the chargeable gains as exceeds the relevant proportion of those gains. (3) For that purpose “the relevant proportion” is— $$A B$ where— A is the amount that would be treated under section 86(4) as accruing to the settlor in the relevant tax year if immediately before 6 April 2008 every relevant asset had been sold by the trustees and immediately re-acquired by them at its market value at that time, and B is the amount mentioned in sub-paragraph (1)(b).$ (4) In sub-paragraph (3), “relevant asset” means an asset— (a) that was disposed of in the relevant tax year, and (b) that was comprised in the settlement from the beginning of 6 April 2008 until its disposal.

• (5) In paragraph 6 (right of recovery), in sub-paragraph (3)—

• (a) omit the “and” after paragraph (a);

• (b) after paragraph (b) insert

, and (c) the tax year in which gains were treated as accruing under section 86(4),

.

Part 4 — Commencement and transitional provision

Commencement

70

• (1) The amendments made by paragraphs 1 to 53, 55 to 64 and 67 to 69 have effect for the tax year 2025-26 and subsequent tax years.

• (2) The amendment made by paragraph 54 to section 62 of TCGA 1992 (death: general provisions) has effect in relation to deaths occurring on or after 6 April 2025.

• (3) The amendments made by paragraphs 65 and 66 to sections 279A and 279C of TCGA 1992 (deferred unascertainable consideration: election for treatment of loss) have effect in relation to disposals made on or after 6 April 2025 of rights to which section 279A of that Act applies.

Onward gifts: settlements (income)

71

• (1) Section 643EA of ITTOIA 2005 (onward gifts from non-residents or qualifying new residents), as inserted by paragraph 17 of this Schedule, applies where the onward gift is provided on or after 6 April 2025, even if the original benefit was provided before that date.

• (2) Where the original benefit was provided before 6 April 2025, that section applies as if for subsection (1)(b) there were substituted—

(b) either— (i) the original recipient is non-UK resident for the tax year in which the original benefit is provided, or (ii) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the original recipient for that tax year,

.

• (3) In this paragraph, “the original benefit” and “the onward gift” have the same meanings as in section 643EA of ITTOIA 2005; and in a case within section 643EA(3) “the onward gift” means the final benefit in the series.

72

Despite the repeal of section 643M of ITTOIA 2005 by paragraph 21 of this Schedule, that section continues to have effect so far as—

• (a) it provided before its repeal for a benefit of a particular amount to be treated for the purposes of section 643B of that Act as having been provided to a particular person at a particular time, and

• (b) the receipt of the benefit by the person is relevant to the application of section 643B of that Act in the tax year 2025-26 or a later tax year.

Onward gifts: transfer of assets abroad

73

• (1) Section 735AF of ITA 2007 (onward gifts from non-residents or qualifying new residents), as inserted by paragraph 44 of this Schedule, applies where the onward gift is provided on or after 6 April 2025, even if the original benefit was provided before that date.

• (2) Where the original benefit was provided before 6 April 2025, that section applies as if for subsection (1)(b) there were substituted—

(b) either— (i) the original recipient is non-UK resident for the tax year in which the original benefit is provided, or (ii) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the original recipient for that tax year,

.

• (3) In this paragraph, “the original benefit” and “the onward gift” have the same meanings as in section 735AF of ITA 2007; and in a case within section 735AF(3) “the onward gift” means the final benefit in the series.

Onward gifts: settlements (chargeable gains)

74

• (1) Section 87HA of TCGA 1992 (benefits routed via non-residents or qualifying new residents), as inserted by paragraph 62 of this Schedule, applies where the onward gift is provided on or after 6 April 2025, even if the original benefit was provided before that date.

• (2) Where the original benefit was provided before 6 April 2025, that section applies as if for subsection (1)(b) there were substituted—

(b) either— (i) the original recipient is non-UK resident for the tax year in which they receive the original benefit, or (ii) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the original recipient for that tax year,

.

• (3) In this paragraph, “the original benefit” and “the onward gift” have the same meanings as in section 87HA of TCGA 1992; and in a case within section 87HA(4) “the onward gift” means the final benefit in the series.

75

Despite the repeal of sections 87K and 87L of TCGA 1992 (old onward gifting rules) by paragraph 62 of this Schedule, each of those sections continues to have effect so far as—

• (a) before its repeal, it provided for section 87 and 87A of that Act to have effect as if a capital payment of a particular amount had been received at a particular time by a particular person, and

• (b) the receipt of the capital payment by that person is relevant to the application of sections 87 and 87A in the tax year 2025-26 or a later tax year.

Schedule 13

Part 1 — Amendments to IHTA 1984 and related legislation

IHTA 1984

1

IHTA 1984 is amended as follows.

2

In section 5 (meaning of estate), for subsection (1B) substitute—

(1B) An interest in possession falls within this subsection if— (a) the person became beneficially entitled to it on or after 9 December 2009 by virtue of a disposition that was prevented from being a transfer of value by section 10 (no gratuitous benefit), and (b) the person— (i) has been a long-term UK resident at any time on or after 6 April 2025 while beneficially entitled to it, or (ii) became beneficially entitled to it at a time before 6 April 2025 while domiciled in the United Kingdom.

3

In section 6 (excluded property), omit subsection (3).

4

In section 8D(9), omit the definitions of “tax year” and “the tax year 2017-18”.

5

In section 13A(3), omit the definition of “tax year”.

6

In section 18 (transfers between spouses or civil partners), in subsection (2), for “domiciled in the United Kingdom” substitute “a long-term UK resident,”.

7

In section 28A, omit subsection (3).

8

• (1) Section 53 (exceptions from charge under section 52) is amended as follows.

• (2) In subsection (4), for “domiciled in the United Kingdom” substitute “a long-term UK resident”.

• (3) After subsection (4) insert—

(4A) Tax shall not be chargeable under section 52 above if— (a) the settled property became comprised in the settlement before 30 October 2024, (b) immediately before 30 October 2024, the settled property was excluded property by virtue of section 48(3) or (3A) (as it had effect at that time), (c) the person whose interest comes to an end became beneficially entitled to the interest before 30 October 2024, and (d) immediately before the person’s interest in possession in it comes to an end, the settled property— (i) was situated outside the United Kingdom and was not property to which paragraph 2 or 3 of Schedule A1 applied (overseas property with value attributable to UK residential property), or (ii) was a holding in an authorised unit trust or a share in an open-ended investment company.

9

• (1) Section 54 (exceptions from charge on death) is amended as follows.

• (2) In subsections (2) and (2B)(e), for “domiciled in the United Kingdom” substitute “a long-term UK resident”.

• (3) After subsection (2B) insert—

(2C) Where— (a) a person who is entitled to an interest in possession in settled property dies, (b) the settled property became comprised in the settlement before 30 October 2024, (c) immediately before 30 October 2024, the settled property was excluded property by virtue of section 48(3) or (3A) (as it had effect at that time), (d) the person became beneficially entitled to the interest before 30 October 2024, and (e) immediately before the person’s death, the settled property— (i) was situated outside the United Kingdom and was not property to which paragraph 2 or 3 of Schedule A1 applied (overseas property with value attributable to UK residential property), or (ii) was a holding in an authorised unit trust or a share in an open-ended investment company, the value of the settled property shall be left out of account in determining for the purposes of this Act the value of the person’s estate immediately before their death. (2D) Where a person became beneficially entitled to an interest in possession in settled property on or after 22 March 2006, subsection (2C) applies in relation to the interest only if it is— (a) an immediate post-death interest, (b) a disabled person’s interest, or (c) a transitional serial interest, or falls within section 5(1B) (certain interests acquired with no gratuitous benefit).

10

• (1) Section 64 (charge at ten-year anniversary) is amended as follows.

• (2) In subsection (1B), for the words from the beginning to “ten-year anniversary falls” substitute “Where the settlor of property comprised in a settlement meets the condition in subsection (1BZA)”.

• (3) After that subsection insert—

(1BZA) The condition is that the settlor— (a) is alive and is not a long-term UK resident immediately before the ten-year anniversary, (b) died on or after 6 April 2025 and was not a long-term UK resident immediately before their death, or (c) died before 6 April 2025 and was not domiciled in the United Kingdom when the property became comprised in the settlement.

• (4) In subsection (1BA), for “subsection (1B)” substitute “subsection (1BZA)(c)”.

11

• (1) Section 65 (exit charges etc) is amended as follows.

• (2) In subsection (7), for “section 48(3)(a) above” substitute “section 48ZA”.

• (3) In subsection (7A), for the words from “becomes excluded property” to the end, substitute “is invested in a holding in an authorised unit trust or a share in an open-ended investment company and thereby becomes excluded property by virtue of section 48ZA”.

• (4) Omit subsection (7B).

• (5) In subsection (7C), for “section 48(3)(a) above” substitute “section 48ZA”.

• (6) In subsection (8), for the words from the beginning to “subsection (8A))”, substitute “If the condition in subsection (8ZA) is met in relation to property comprised in a settlement”.

• (7) After subsection (8) insert—

(8ZA) The condition is that the settlor— (a) is alive and is not a long-term UK resident, (b) died on or after 6 April 2025 and was not a long-term UK resident immediately before they died, or (c) died before 6 April 2025 and was not domiciled in the United Kingdom when the property became comprised in the settlement.

• (8) In subsection (8A), for “subsection (8)” substitute “subsection (8ZA)(c)”.

12

• (1) Section 74A (arrangements involving acquisition of interest in settled property etc) is amended as follows.

• (2) In subsection (1)—

• (a) in paragraph (b)(i), omit “domiciled in the United Kingdom”;

• (b) after paragraph (b) insert—

(ba) the individual— (i) is a long-term UK resident at any time on or after 6 April 2025 during the course of the arrangements, or (ii) acquired the interest, or became able to acquire it, at a time before 6 April 2025 while domiciled in the United Kingdom.

.

• (3) For subsection (2) substitute—

(2) Condition A is that the relevant settled property is excluded property at any time during the course of the arrangements. Ignore for this purpose— (a) section 48ZA(8) (as it has effect on and after 6 April 2025); (b) section 48(3D) (as it had effect before 6 April 2025).

13

In section 75A, omit subsection (4).

14

In section 80 (initial interest of settlor or spouse), in subsection (1), after “for the purposes of this Chapter” insert “(including sections 48 and 48ZA (excluded property) as they apply for the purposes of this Chapter)”.

15

In section 81 (property moving between settlements), in subsection (1)—

• (a) after “for the purposes of this Chapter” insert “(including sections 48 and 48ZA (excluded property) as they apply for the purposes of this Chapter)”;

• (b) at the end insert “(but held on the trusts of the second)”.

16

For section 81B substitute—

(81B) (1) This section applies where— (a) property is treated under section 80(1) as becoming comprised in a settlement, and (b) the property would, apart from this section, be excluded property by virtue of meeting the condition in any of subsections (2) to (4) of section 48ZA (excluded property: long-term residence and domicile tests). (2) For the purposes of this Chapter, except sections 78 and 79, the property is excluded property only if the condition in any of those subsections (whether or not the same one) is met by reference to the actual settlor and the actual settlement. (3) Section 65(8) (no exit charge where property invested in Treasury securities thereby becomes excluded property) applies in relation to the property only if the condition in section 65(8ZA) is met by reference to the actual settlor. (4) In this section, “the actual settlor” means the person who is the settlor of the property in relation to the settlement first mentioned in section 80(1); and “the actual settlement” means that settlement. (5) This section does not apply in relation to property that is a holding in an authorised unit trust or a share in an open-ended investment company if the occasion first referred to in section 80(1) occurred before 22 July 2020.

17

Omit sections 82 and 82A (excluded property: property to which section 81 applies).

18

In section 94 (close companies: charge on participators), in subsection (2)(b), for “domiciled outside the United Kingdom” substitute “not a long-term UK resident”.

19

In section 136 (transfers within three years before death: transactions of close companies), in subsection (3), for “domiciled in the United Kingdom” substitute “a long-term UK resident”.

20

In section 155 (visiting forces etc), in subsections (2) and (5B), omit “or domicile”.

21

• (1) Section 157 (non-residents’ bank accounts) is amended as follows.

• (2) In subsection (2)—

• (a) omit “is not domiciled and not resident in the United Kingdom”;

• (b) at the end insert “is neither resident in the United Kingdom nor a long-term UK resident”.

• (3) In subsection (3), for the words from “if the settlor” to the end, substitute

if— (a) the trustees are resident in the United Kingdom immediately before the beneficiary’s death, (b) the settlor is alive and is a long-term UK resident immediately before the beneficiary’s death, (c) the settlor died on or after 6 April 2025 and was not a long-term UK resident immediately before they died, or (d) the settlor died before 6 April 2025 and was not domiciled in the United Kingdom when the property became comprised in the settlement.

22

In section 218 (non-resident trustees), in subsection (1)(a), for “domiciled in the United Kingdom” substitute “a long-term UK resident”.

23

Omit section 267 (persons treated as domiciled in United Kingdom).

24

• (1) Section 267ZA (election to be treated as domiciled in the United Kingdom) (as it has effect before its repeal by paragraph 26) is amended as follows.

• (2) In subsections (3) and (4), for “on or after 6 April 2013 and” substitute “before 6 April 2025 but”.

• (3) Omit subsection (5).

• (4) In subsection (8)—

• (a) for “is or was domiciled” substitute “was domiciled”;

• (b) after “section 267” insert “(deemed domicile)”.

25

In section 267ZB (section 267ZA: further provision about election) (as it has effect before its repeal by paragraph 26), in subsection (4)(a), for “6 April 2013 or a later date” substitute “5 April 2025 or an earlier date”.

26

Omit sections 267ZA and 267ZB (election to be treated as domiciled in the United Kingdom).

27

Before section 267A insert—