ERSM165100 - International from 6 April 2025: Impact of Finance Act 2025 Changes
Part 2 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)
The Finance Act 2025 brought significant changes including the abolition of the remittance basis and reform of Overseas Workday Relief (OWR).
From 6 April 2025, the remittance basis will no longer be available. OWR will be retained but will operate differently.
Where an employee is eligible for the Foreign Income and Gains (FIG) regime in a tax year (“the qualifying year”), OWR maybe available on their relevant qualifying foreign employment income.
The legislation covering OWR for new residents on foreign employment income is contained in Chapter 5C ITEPA.
This impacted the tax treatment of Internationally Mobile Employees under Chapter 5B ITEPA.
From 6 April 2025, for all Employment-Related Securities and Employment-Related Securities options the calculation of “Foreign Securities Income” under Chapter 5B ITEPA will be modified for any part of the relevant period that falls on or after this date, regardless of the date the ERS were granted.
For any part of the relevant period from 6 April 2025, OWR is no longer given as a deduction from Securities Income under the calculation at s41F(3) ITEPA. Instead, customers may be able to make an election and claim for OWR separately under Chapter 5C ITEPA. Please see EIM4355 onwards.
Commencement
The Finance Act 2025 reforms set out in this guidance apply to any part of the relevant period on or after 6 April 2025, regardless of the date the right or opportunity was granted.
Any parts of the relevant period before 6 April 2025 are unaffected by these changes.