Internationally mobile employees

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime Finance Act 2025 (FA 2025) which received Royal Assent on 20 March 2025, implements legislation to abolish the remittance basis of taxation and replace it with a residence-based regime, commencing on 6 April 2025. FA 2025 also replaces domicile as the key factor in establishing liability to inheritance tax. Other changes include amendment of the rules determining excluded property status, the abolition of protected settlements status of offshore trusts, and changes to overseas workday relief.

For information on these changes, see: Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26.

Internationally mobile employees and directors are individuals who work in different jurisdictions around the world (whether concurrently or consecutively). They include:

•
UK residents going overseas to work
•
overseas residents coming to the UK to work, and
•
UK and overseas residents who move in and out of the UK

The taxation of these individuals varies depending upon how they are remunerated

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Latest Tax News

Tax weekly highlights—3 July 2025

This week's edition of Tax weekly highlights includes: (1) the Court of Appeal’s decision in Marlborough DP Ltd (concerning a tax avoidance scheme involving contributions to a remuneration trust), (2) News Analyses on previously reported decisions in JPMorgan Chase Bank NA (on the VAT treatment of certain intra-group supplies), Osmond and Allen (on main purpose under the transactions in securities rules) and Dolphin Drilling (on the meaning of ‘incidental to’ in the oil contractor tax rules), and (3) a proactive CIOT submission to HMRC on the non-domicile taxation reforms.

Upper Tribunal rules on application of purpose tests in the context of Transactions in Securities regime (Osmond and Allen v HMRC)

Tax analysis: In Osmond and Allen v HMRC, the Upper Tribunal (UT) allowed the taxpayers’ appeal, holding that they did not necessarily have a main purpose of obtaining ‘an income tax advantage’ under the Transactions in Securities (TIS) regime simply by virtue of having a main purpose of obtaining the benefit of Enterprise Investment Scheme (EIS) disposal relief. Obtaining EIS relief from capital gains tax created an ‘income tax advantage’ for the purposes of section 687 of the Income Tax Act 2007 (ITA 2007). The First-tier Tax Tribunal (FTT) found as a matter of fact that the taxpayers did not have the subjective purpose of obtaining this income tax advantage. Surprisingly, however, the FTT held that because they had a main purpose of obtaining the EIS benefit (notably, a capital gains tax), it followed that they had a main purpose of obtaining an income tax advantage. Concluding that the FTT had erred as a matter of law, the UT held that the taxpayers’ desire to crystallise their EIS disposal relief did not mean that they necessarily had a main purpose of obtaining an income tax advantage. Written by Susanna Breslin, barrister at 11 New Square.

Court of Appeal confirms that loans made under remuneration trust arrangements were taxable as disguised remuneration and related payments were not deductible (Marlborough DP Limited v HMRC)

Tax analysis: In Marlborough DP Ltd, the Court of Appeal dismissed the taxpayer’s appeal and upheld the decision of the Upper Tribunal (UT), confirming that loans made to a director under a remuneration trust (RT) scheme were taxable under the disguised remuneration legislation in Part 7A of the Income Tax Earnings and Pensions Act 2003 (ITEPA 2003) as being ‘in connection with’ employment. The court also agreed that the related payments were not deductible for corporation tax purposes, as they were not incurred wholly and exclusively for the purposes of the company’s trade.

UT holds that VAT exemption did not apply for single composite supply of financial services (JPMorgan Chase Bank NA v HMRC)

Tax analysis: In JPMorgan Chase Bank NA the Upper Tribunal (UT) dismissed the company’s appeal and upheld the First-Tier Tribunal (FTT) decision that the supply of intra-group services was a single composite taxable supply and the VAT exemption for financial services did not apply.