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Finance Act 2025 introduced a general right to recovery for individuals who are liable to a charge to tax under ITA07/721.ÌýThe right to recovery legislation can be found at ITA07/S725A.Ìý

The right to recovery came into effect from 6 April 2025 and gives an individual who is assessable on the income of a person abroad as a result of ITA07/S720 the right to recover the tax paid from the person abroad.ÌýÌýÌý

For the purposes of recovering the tax the individual can request a certificate from an officer of HMRC specifying the amount of income tax paid.ÌýAny tax recovered from the person abroad will not be treated as a benefit for the purpose of the benefits charge under ITA07/S731Ìýor ITTOIA05/S643A should either be in point. Likewise, any tax recovered will not be treated as a capital payment for the purpose of TCGA92/S87.

As a result of the right to recover the settlor will not be treated as having an interest in a settlement or reserving a benefit where this would otherwise not have been the case. 

ExampleÌý

Mr A is the settlor of a Jersey Trust which holds shares in a British Virgin Islands company, A Ltd. In 2025-2026 A Ltd receives income of £500,000 and Mr A is charged to income tax on this income under ITA07/S720. Mr A pays tax on this income of £225,000. Mr A can ask A Ltd to re-imburse him for the tax paid of £225,000. In support of his claim for reimbursement Mr A can ask HMRC to provide him with a certificate that specifies how much tax Mr A has paid in respect of the income of the person abroad that is treated as his.Ìý