Policy paper

Post departure trade profits

Published 26 November 2025

Who is likely to be affected

This measure will affect individuals who are subject to the temporary non-resident anti-avoidance rules who received a dividend from a UK close company during the period of temporary non-residence.

General description of the measure

The ‘temporary non-residence rules’ (TNR) are anti-avoidance rules designed to prevent individuals from undertaking tax-motivated non-residence in order to avoid Income Tax and Capital Gains Tax. These rules charge individuals tax on certain income and gains, including distributions, when they return to the UK after a period of temporary non-residence.

There is currently no charge to tax if the distribution or dividend is made from ‘post departure trade profits’ (profits that accrue to the company after the individual left the UK). The extent to which a dividend or distribution is related to post departure trade profits is determined on a just and reasonable basis.

This measure removes the concept of ‘post departure trade profits’ from the TNR rules and ensures all distributions or dividends received from a close company whilst temporarily non-resident will be chargeable to UK income tax if caught by TNR rules.

Policy objective

The measure will close a loophole in the UK tax system to ensure that UK resident individuals are unable to undertake tax-motivated non-residence in order to avoid a UK tax charge.

Background to the measure

This measure was announced at Budget 2025.

Detailed proposal

Operative date

The measure will have effect for individuals returning to the UK on and after 6 April 2026.

Current law

The current law is included in Chapters 3, 4 and 5 of Part 4 of the Income Tax (Trading and Other Income) Act 2005.

Section 401C in Chapter 3 of Part 4 provides the TNR rules for dividends etc. from UK resident companies and tax treated as paid in respect of certain distributions.

Section 408A in Chapter 4 of Part 4 provides the TNR rules for dividends from non-UK resident companies.

Section 413A in Chapter 5 of Part 4 provides the TNR rules for stock dividends from UK resident companies.

It is also included in section 812A, Chapter 1 of Part 14 of the Income Tax Act 2007, which provides the TNR rules for limits on liability to income tax of non-UK residents.

Proposed revisions

Legislation will be introduced in Finance Bill 2025-26 to amend sections 401C, 408A and 413A of the Income Tax (Trading and Other Income) Act 2005 and section 812A of the Income Tax Act 2007.

The legislation will remove references to ‘post departure trade profits’ and new sections will be introduced to prevent individuals from bypassing the TNR rules.

Additionally, new sections will be added that will apply to those that have been taxed in the state they were resident in when receiving a distribution, whilst also paying tax in the UK under the TNR rules. This will relieve any double taxation on this income that is not relievable under double taxation agreements or unilateral relief.

Summary of impacts

Exchequer impact (£ million)

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
—	-5	+110	+155	+140	+110

The costing for this measure has been incorporated, alongside other measures, into the overall ‘Cap trust charges at £5 million for pre-30 October 2024 excluded property trusts for charges applying from 6 April 2025 and close post-departure trade profits loophole from 6 April 2026’ costing. More details can be found in Table 4.1 of Budget 2025.

Macroeconomic impact

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

This measure will impact on a small number of individuals who receive a distribution or dividend whilst temporarily non-resident and then return to the UK within five years of leaving.

Individuals will continue to report the distribution or dividend to HMRC as they would have done prior to the measure. They will, however, now have to provide detail of any foreign tax suffered on the distribution or dividend whilst temporarily non-resident to ensure they do not incur double taxation. This measure is not expected to otherwise impact customers’ experience of dealing with HMRC.

The measure is not expected to impact on family formation, stability or breakdown.

Equalities impacts

The population impacted by this measure are likely to be wealthy individuals, who tend to have an overrepresentation of males and older age groups.

HMRC does not currently hold data on the protected characteristics of individuals impacted by this measure and so cannot make an assessment of the impacts on those with shared protected characteristics.

Administrative impact on business including civil society organisations

This measure will have a negligible impact on businesses as it concerns the taxation of individuals.

Businesses that provide tax advice to individuals will need to be aware of the impact of this measure on their clients.

One-off costs will include familiarisation with the changes. It is not anticipated they will incur any continuing costs.

Customer experience is expected to remain broadly the same as this measure does not alter how businesses interact with HMRC.

This measure is not expected to impact civil society organisations.

Operational impact (£ million) (HMRC or other)

Changes to IT systems and forms including the Income Tax Self Assessment, will be made.

These changes are anticipated to cost in the region of £3.61 million.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be monitored through information collected from tax returns and internal HMRC compliance risk evaluation work.

Further advice

If you have any questions about this change, contact the Personal Tax International Policy Team by email: personaltaxinternational@hmrc.gov.uk.