EIM43667 - Globally mobile employees: Overseas Workday Relief: pre-6 April 2025 tax years: Special mixed funds
From 2013/14, the Special mixed fund rules were introduced (at section 809RA to section 809RD ITA 2007) to broadly replicate the simplified treatment allowed under Statement of Practice 1/09. An individual who claimed the remittance basis of taxation, met the conditions at section 26A ITEPA 2003 and received general earnings from an employment for a tax year which included earnings within both section 15 (UK duties) and section 26 (non-UK duties), could apply the special mixed fund rules if certain conditions were met. This simplified treatment allowed the mixed fund rules to be operated on an annualised basis to transfers out of a ‘qualifying account’, instead of the ordinary transaction-by-transaction basis. A qualifying account must have been nominated by written notice to the Commissioners and broadly must have only contained section 15 and section 26 earnings. The annualised basis meant that all the transfers out of the qualifying account during the course of a year were treated as a single remittance at the end of the year, and all the offshore transfers during the year were treated as a single offshore transfer after the deemed single remittance.
As the special mixed fund rules only applied to transfers out of a qualifying account, they could not apply to non-cash benefits, and could only apply to cash benefits which were paid into the qualifying account.
From 6 April 2025, it is no longer possible to use the remittance basis of taxation, though the ordinary mixed fund rules continue to apply to remittances of pre-6 April 2025 foreign income and gains. However, the special mixed fund rules no longer apply because an individual will not have any section 26 earnings for a tax year from 2025-26 onwards. Therefore all previous qualifying accounts are ordinary mixed fund accounts from 6 April 2025 onwards.
For further information on the special mixed fund rules – see RDRM35810.