UK: Finance Bill Report Stage amendments to the non-dom reforms

The latest Finance Bill amendments correct some technical errors and include a few helpful changes to the Temporary Repatriation Relief.
The Finance Bill 2025 Report Stage amendments were published mid-afternoon on Tuesday 25 February. The Committee Stage amendments had been somewhat lacklustre – but following inviting comments around the Temporary Repatriation Relief (TRF) made by the Chancellor at the World Economic Forum at Davos, hopes were high for some softening of the changes to the taxation of non-UK domiciled individuals to stem the surge of wealth leaving the UK.

The relevant Report Stage amendments can be found at: Gov 5 to Gov 17 (13 in total) and then Gov 21 to Gov 66 (46 amendments). There is no substantive change in policy, the adjustments instead largely correct technical drafting oversights.

Mercifully, the changes made in Sch 9 para 5 to the definition of ‘remitted to the UK’ will no longer render cash in an offshore bank account ‘remitted’ to the UK by default! In addition, it seems that capital payments/benefits from any TCGA 1992 s 89 so-called migrant settlements will be able to benefit from the TRF where matching is to pre-6 April 2025 income or gains.

Meaning of ‘remitted to the UK’: The Report Stage amendments fortunately alleviate concerns that money in non-UK bank accounts will result in inadvertent remittances, however, there is still significant concern with respect to the other extensions to the meaning of ‘remitted to the UK’. The ICAEW and CIOT both called for Sch 9 para 5 to be withdrawn in full, but this has not happened. In the absence of clearly drafted legislation, it seems inevitable that the impending issued HMRC guidance will come to be heavily relied on in this arena which in turn creates significant uncertainty and difficulty for those affected who are trying to structure their affairs.

Trust legislation: Various technical amendments (Gov 50 to Gov 55) have been made to Sch 12 which governs the treatment of trust income/gains under the new rules. The technical adjustments hopefully ensure that trust pooling works as intended.

TRF amends: The TRF amendments are contained at Gov 28 to 49 (22 in total). The changes make helpful changes to the way that the TRF will operate. Specifically:

In a welcome extension, the TRF will no longer only apply to currently offshore trusts but will also be available to onshore (formerly offshore) trusts that come within TCGA 1992 s 89 (so called ‘migrant settlements’). In the same way as offshore trust capital payments/benefits matched to pre-6 April 2025 income and gains can utilise the TRF, s 89 migrant trusts will also be able to benefit from the TRF in this context.
The concerns of the professional bodies that offshore income gains attributed would not enjoy the same TRF treatment as capital gains have been addressed.

Helpful changes have also been made for TRF matching purposes such that, for TRF purposes only, special matching rules are deemed to apply. Broadly, the rules work to give the best chance of matching capital payments/benefits received in TRF years to pre-6 April 2025 income and gains trust pools, so the special TRF rates can be accessed.
Conclusion: The great speed with which the Government is acting to abolish a long-established set of tax rules will inevitably mean that errors will be made. It is hoped that the changes on the horizon in relation to the personal offshore anti-avoidance legislation (the call for evidence having closed on 19 February) receive adequate consultation and are not also enacted with such haste.