Key Compliance Changes Since April 2025
- Remittance basis abolished: All UK residents are taxed on foreign income and gains as they arise, unless eligible and claiming under the 4-year FIG regime. No more remittance basis option (gov.uk).
- PAYE changes for globally mobile employees: Employers must use the new notification process for Overseas Workday Relief; existing PAYE directions (Section 690) before 6 April 2025 no longer have effect (gov.uk).
- OWR eligibility and documentation: Records of overseas working days, residential status and employment contracts now critical; offshore bank accounts are no longer a requirement (except for certain historical income) (assets.publishing.service.gov.uk).
- Inheritance Tax forms & trusts: Updated schedules like IHT401a, D31a, D31b must be used; trustees must monitor whether settlors and beneficiaries are long-term UK residents, as it may trigger inclusion of overseas assets or exit charges (gov.uk).
Example Compliance Scenarios
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Employer example: A US digital nomad working part-time for a UK employer and part overseas. Employer must file new notification to HMRC if intending to apply PAYE on only UK portion under OWR—old Section 690 directions no longer valid after 6 April 2025. Employee’s overseas duties and residence must be documented to support relief claim (gov.uk).
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Trustee example: Trust assets including overseas investments were previously excluded property. Now, if settlor becomes long-term UK resident, those assets may lose exclusion status and could be subject to IHT—trustees must evaluate residence status and consider whether to restructure or report accordingly (gov.uk).
Checklist for Individuals and Employers
- Review your residential history for last 20 years to determine long-term UK residence status.
- Calculate eligibility for FIG regime if arrival in the UK is recent.
- Maintain records of overseas workdays, contract terms, travel logs for OWR claims.
- Update trust governance if settlors or beneficiaries change residence status.
- Use updated tax forms and ensure use of correct schedules for IHT. Seek advice if uncertain about interplay with double tax treaties.
- Consult a tax professional for impacted individuals (non-doms, settlors, employers with globally mobile employees).
Staying ahead of these compliance shifts can help minimize risk, take advantage of reliefs, and avoid penalties under the new residence-based system.