Business Investment Relief (BIR) allows remittance basis taxpayers to invest funds in the UK without triggering a tax charge. However, the relief is subject to certain conditions:
- You must invest in an eligible unlisted trading company
- If the investment is in a new business, it must start trading within 5 years of the investment
- The investment must be within 45 days of you bringing the funds to the UK
- You must not receive a personal (non-investment) benefit from the investment
Provide you meet these conditions, a taxable remittance will not take place.
How are the Business Investment Relief rules changing?
BIR is only of use to remittance basis tax payers. The Government is abolishing the remittance basis from 6 April 2025 (read more here). However, they are not immediately scrapping BIR. If you have previously been a remittance basis taxpayer, you will be able to make new BIR investments until 5 April 2028. The existing BIR rules will apply to any new investments indefinitely. However, after 5 April 2028 you will not be able to make any new BIR investments.
Interaction with the Temporary Repatriation Facility
The TRF is a temporary facility that will be available until 5 April 2028 to allow remittances to the UK at a lower tax rate. For more information on the TRF, see our article here.
The Finance Act 2025 will include special rules that deal with the interaction between BIR and the TRF. There are two important points to note. First, you can designate BIR investments under the TRF. The impact of this is that if you sell the investment, a remittance of your originally invested funds will not occur. The profits can therefore be kept in the UK without additional tax arising. However, what this does not do is avoid a tax charge on any gains you have made on the investment itself. You will likely need to pay Capital Gains Tax on these gains if you are UK resident at the time.
In addition, the new rules dictate that you cannot make new BIR investments with funds that you have already designated under the TRF. I expect that this rule will have no practical impact. If you have already claimed the TRF over certain funds, BIR would be unnecessary. You would already be able to bring those funds to the UK without triggering a remittance charge.
What about existing investments?
Existing BIR investments will continue to be taxed under the existing rules. If you sell a BIR investment after 6 April 2025, you will not be able to reinvest the proceeds in another BIR investment. Therefore, to avoid a tax charge you should remove the sale proceeds from the UK.
