web development slot pragmatic can be a sought-after skill, which can open the door to many opportunities for earning money. However, being a web developer can be stressful and demanding particularly when you are required to meet deadlines, complex projects, and demanding clients. If you’re trying to diversify your sources of income and decrease your dependence on active income, you might think about pursuing passive income.

Top Passive Income Ideas for Web Developers

Passive income can be a great way for web developers to generate additional revenue streams without constant active effort.

Start a SAAS Product Developer Business

A SaaS solution could be an ideal method for Web developers to earn regular income. It is possible to build a large customer base and earn a steady revenue from membership fees by creating a solution that addresses the same issue that is common to other companies. After your product has been developed and launched, it will continue to earn money without needing an ongoing effort and allow you to focus on other business tasks.

Start an Affiliate Marketing

You can earn money by making use of affiliate marketing to promote the services or products of other individuals. Each time a purchase is made using your affiliate link, you’ll earn a commission. Your expertise can be utilized as a web designer to create content that draws people to your site and promotes the products that you’re associated with. When your content is finished you can then be able to generate passive income.

Also read: Top 15 Unique Website Ideas

Start an Online Jewelry Store

It is possible to sell your items to a huge client base and earn income from passive sources by setting up an online jewelry store. An appealing and user-friendly online store that showcases your items can be built with your skills as a web designer. After your store is set up, it can continue running and earning revenue without requiring an endless amount of work.

Start a Content Writing Company

As a web developer, starting a content writing business could be an excellent option to earn a passive income. It is possible to delegate work and focus on business growth while also earning a share of the profits by hiring additional editors and writers. If your team is on the job the business will continue to earn money with no direct involvement, which gives you the opportunity to move to other tasks.

Start a Subscription Box Business

Customers who subscribe to receive a particular set of products every month from a subscription-box business. Because customers love getting a variety of items from different brands Subscription boxes are in fashion in the present.

Sell Digital Products

Digital assets, such as stock images and 3D models are developed and sold by web developers. Digital assets are easy to use and could generate earnings for many years. The most highly rated items are those that can be made digital. They are easy to create and share and are a great way to increase your business.

Start a Tech Blog

Blogging has become an income-generating venture for those with the appropriate expertise and who are able to effectively communicate with their readers. Through sharing useful information bloggers are able to earn money through a variety of ways, including affiliate marketing sponsorships or Google Ads.

Start A WordPress Template Business

Web developers are able to design templates for their websites and sell them on marketplaces for digital goods like ThemeForest. After a template has been created it can be used to continue earning revenue without any additional effort from the designer.

Also read: Top 30 Money Making Apps for Extra Income

Start A Website Hosting Platform

Web developers are able to offer website hosting services to their customers or offer hosting packages for sale on websites. Hosting could be a lucrative passive income stream because customers regularly pay to host services.

Start an Etsy shop

Etsy is a popular platform for artists to sell their products and web designers are able to profit from this opportunity by creating a visually appealing and user-friendly shop. After you’ve established your shop, you’ll be able to create multiple passive income streams by implementing actions like refining the product listing, using social media to promote the shop, and collaborating with influencers to enhance its visibility.

Final Word

Web developers can generate passive income through digital products, affiliate marketing, ad revenue, mobile apps, online courses, and more. Diversifying income streams can lead to financial stability and growth.

Being named as an executor feels like an honour, but it comes with real tax responsibilities that many people are not prepared for. HMRC collected over £7.5 billion in Inheritance Tax in 2023 to 2024, according to HMRC statistics, and mistakes on estate returns are one of the main reasons families end up paying more than they should. 

Getting the numbers wrong, missing a relief, or filing late can lead to penalties and extra costs. Some executors even end up personally liable for taxes that were not paid correctly. The good news is that most of these mistakes are avoidable once you know what to look out for.

What Does an Executor Actually Have to Do?

When someone dies in the UK, the people left in charge of sorting out their estate are called executors. One of the biggest jobs is working out if any Inheritance Tax is owed. 

According to HMRC, IHT is charged at 40% on anything above £325,000, which is called the nil-rate band. The tax usually has to be paid within six months of the person’s passing away. Miss that deadline and interest starts building up straight away.

As an executor, you are responsible for:

• Working out the total value of all assets owned
• Completing the correct HMRC forms
• Paying any tax that is owed on time
• Keeping records of all decisions made

Estates can include a wide range of assets . Property, savings, investments, pensions, life insurance, business assets, and even cryptocurrency all count. Each one may be treated differently under UK tax rules. That is what makes this job harder than most people expect.

Getting the value of an asset wrong, missing a tax relief, or filing the return late can all cause serious problems. HMRC does check these returns, and errors can lead to penalties and extra costs. Executor IHT mistakes in the UK happen more often than most people think, and they can affect both the estate and the executor personally.

If you are dealing with a complex estate, our private client tax team can help you stay on the right side of HMRC from the very beginning.

What Are the Most Common Executor IHT Mistakes in the UK?

Executor IHT mistakes in the UK tend to follow the same patterns. Knowing what they are makes it much easier to avoid them.

Undervaluing Assets

This is one of the most common mistakes. It often happens with property, where an informal estimate is used instead of a proper valuation. HMRC expects open market valuations, meaning the price the asset would realistically sell for on the date of death. If they think a value has been underreported, they can open an investigation.

Missing Gifts Made in the Last Seven Years

UK tax rules say that gifts made in the seven years before death must be reported. These are called potentially exempt transfers. Many executors simply do not know this rule exists, or they cannot find the records needed to trace these payments.

Failing to Claim Available Reliefs

Several reliefs can reduce the IHT bill, but they are often missed. Business Property Relief and Agricultural Property Relief are two of the most valuable. Executors who are not aware of these can end up paying more tax than necessary.

Getting the Nil-Rate Band Wrong

A surviving spouse can inherit the unused nil-rate band from their partner, meaning up to £650,000 may be sheltered. There is also an additional £175,000 allowance when a family home passes to direct descendants. Missing these can lead to a much higher tax bill than is actually owed.

Filing Late

IHT must be paid within six months of the end of the month in which the person died. Delays happen, especially in complicated estates, but HMRC will charge interest from the day the payment is overdue.

If any of these apply to you, specialist support with tax disputes can help you correct the situation before it gets worse.

For further guidance, read our article: 7 Common Mistakes When Completing an IHT400. 

Why Do Executors Undervalue Assets?

Undervaluing assets is one of the most common executor IHT mistakes in the UK, and it is rarely done on purpose. It usually comes down to a lack of professional valuations and a limited understanding of what HMRC actually expects.

Common Reasons It Happens

• Using an old bank statement to value shares or investments
• Estimating the value of jewellery or personal belongings without expert input
• Relying on a rough idea of what a property is worth rather than a formal assessment
• Not knowing that digital assets like cryptocurrency need to be included at all

HMRC expects what is called an open market valuation. This means the realistic price the asset would achieve if sold on the open market on the date of death. Anything less detailed than that leaves the return open to challenge.

Cryptocurrency and Digital Assets

This is a fast-growing problem area. Many executors do not know the deceased held crypto, or they have no idea how to value it. Under UK tax rules, all digital assets must be reported as part of the estate. Our crypto tax specialists can help identify and correctly value these holdings.

Property

Property is the most common trigger for an HMRC dispute. If the declared value looks too low compared to local market prices, or if the property sells for more shortly after death, HMRC is likely to ask questions. A formal RICS valuation is the best way to protect against this. Property tax advice is worth getting early if real estate is involved in the estate.

According to GOV.UK, the value used for IHT purposes can also affect Capital Gains Tax if the asset is later sold, making accuracy even more important.

What Happens If an Executor Gets It Wrong?

Executor IHT mistakes in the UK can have serious consequences, and not just for the estate. The executor themselves can face personal financial risk if things are not handled correctly.

HMRC Can Open an Enquiry

If HMRC believes an estate return is incorrect or incomplete, they can open a formal investigation. This can result in:

• An additional tax being charged on top of what was already paid
• Interest on any unpaid amounts
• Financial penalties, which can be significant if HMRC believes information was withheld

These enquiries can happen even after the estate has been distributed, which is why getting it right from the start matters so much.

Executors Can Be Personally Liable

If the estate is distributed to beneficiaries before all the tax is paid, and it later turns out more was owed, the executor may have to cover the difference from their own money. This is one of the less well-known risks of the role.

What to Do If Something Has Gone Wrong

The earlier a problem is spotted, the easier it is to deal with. If you think an error has been made on an estate return, it is important to act quickly rather than wait for HMRC to raise it. Support with tax disputes and investigations can help you understand your options and respond in the right way.

You can also find general guidance on what HMRC expects from estate returns on GOV.UK, though, professional advice is usually needed for anything complex.

Protecting yourself as an executor means making sure the return is accurate, complete, and filed on time. Our private client tax team works with executors to do exactly that.

Can You Claim Reliefs to Reduce the IHT Bill?

Yes, and claiming the right reliefs is one of the most important parts of completing an estate return. Many executor IHT mistakes in the UK come from simply not knowing these reliefs exist.

The Main Reliefs Available

Business Property Relief (BPR)

This can reduce the value of qualifying business assets by either 50% or 100%. It applies to things like shares in unlisted companies or interests in a trading business.

Agricultural Property Relief (APR) 

This applies to farmland and certain buildings used for agriculture. Like BPR, it can reduce the taxable value significantly.

Charity Exemption 

Any gifts left to registered UK charities are completely free from IHT, no matter the size.

Spouse and Civil Partner Exemption 

Assets passed directly to a surviving spouse or civil partner are generally exempt from IHT altogether.

Residence Nil-Rate Band 

This gives an additional £175,000 allowance when a family home is left to direct descendants such as children or grandchildren.

Each of these reliefs comes with conditions. HMRC looks at them carefully, and a claim that does not meet the criteria will be challenged. Our private client tax specialists can check which reliefs apply and make sure they are claimed correctly.

If the estate includes business shares or company interests, corporate and business tax advice may be needed to confirm whether Business Property Relief applies. Getting this wrong in either direction, claiming too much or missing it entirely, can be costly.

Does HMRC Check Estate Tax Returns?

Yes, and more thoroughly than many people expect. One of the most important things to understand about executor IHT mistakes in the UK is that they rarely go unnoticed.

How HMRC Reviews Estate Returns

HMRC has a dedicated team that looks at estate returns as a matter of routine. They do not simply accept the figures that are submitted. According to HMRC guidance, they can open an enquiry up to five years after a return has been filed if they believe something is missing or incorrect.

They cross-reference information from multiple sources, including:

• Banks and building societies
• HM Land Registry
• Financial institutions and investment platforms
• Probate records

This means that assets that were not declared are often picked up through these checks. Executors who think something might be missed are usually wrong.

What Triggers a Review?

Property is the most common trigger. If the value declared on the estate return looks low compared to similar properties in the same area, or if the property sells for significantly more shortly after death, HMRC is likely to ask questions.

Other common triggers include estates with business assets, large cash gifts made before death, or returns where no reliefs have been claimed despite the estate appearing to qualify.

How to Protect Yourself

The best protection is a thorough, accurate return supported by proper valuations and clear records. If HMRC does raise questions, specialist support with tax disputes can help you respond correctly and avoid unnecessary penalties.

Accuracy from the start is always better than trying to correct things later. Our property tax team can help where real estate is involved in the estate.

When Should You Get Professional Help?

Some executors manage simpler estates without professional support, and that is fine. But executor IHT mistakes in the UK are far more likely when the estate is complex, and the cost of getting it wrong can far outweigh the cost of getting help early.

Signs You Probably Need Professional Advice

• The estate includes property, whether residential or commercial
• There are business assets or shares in a private company
• The deceased made significant gifts in the seven years before death
• The estate includes investments, pensions, or digital assets like cryptocurrency
• The deceased owned assets outside the UK
• There are disputes between beneficiaries

Any one of these factors can make an estate significantly more complicated. Trying to handle them without expert guidance increases the risk of errors that HMRC may later pick up.

When Executors Are Also Beneficiaries

This is a situation worth paying particular attention to. If you are both an executor and someone who benefits from the estate, there is a potential conflict of interest. Having an independent adviser involved protects everyone and helps make sure decisions are made fairly and correctly.

Our private client tax team works with executors in exactly these kinds of situations. We help make sure the return is accurate, all reliefs are claimed, and HMRC requirements are met from start to finish.

Where overseas assets are involved, specialist international tax advice may also be needed, as the rules around non-UK domicile and foreign assets can be particularly complex.

For a full overview of what executors are expected to report, GOV.UK provides useful guidance on personal tax obligations that often run alongside estate administration.

Protect Yourself From Executor Tax Mistakes Today

Executor IHT mistakes in the UK can be expensive and stressful to fix, especially once the estate has already been distributed. Small errors in asset values, missed reliefs, or a late filing can quickly turn into a much bigger problem with HMRC.

The good news is that none of this has to fall entirely on your shoulders. ETC Tax helps executors, families, and advisers get estate returns right from the start. From valuing assets correctly to making sure every available relief is claimed, the right support makes a real difference.

If you are acting as an executor and want to make sure everything is handled properly, contact ETC Tax today. Our private client tax team is ready to help.

When people talk about inheritance tax planning, they often bundle everything together under the heading of “protecting family wealth”.

In reality, there’s a big difference between passing on wealth and passing on a business.

Both may form part of your estate, but the challenges, risks and planning opportunities can be completely different. What works for an investment portfolio may not work for a family company, and vice versa.

Understanding that distinction is often the difference between a smooth transition to the next generation and a very expensive lesson.

The traditional Inheritance Tax problem

Let’s start with family wealth

This is the side of the balance sheet most people think about when inheritance tax comes up: investment portfolios, property, savings, and other assets accumulated over a lifetime.

The challenge is relatively straightforward. Unless a relief applies, those assets could be exposed to inheritance tax at 40% on death.

That doesn’t necessarily mean families lack wealth. The problem is often that they lack cash.

A portfolio of properties might be worth millions, but HMRC doesn’t accept bricks and mortar as payment. Families can find themselves having to sell assets, disrupt long-term investment plans or liquidate holdings simply to settle the tax bill.

That’s why planning often focuses on gifting strategies, trusts and other ways of reducing the eventual tax exposure whilst still ensuring the older generation remains financially secure.

Family businesses bring a different challenge

A family business changes the conversation entirely.

Yes, tax still matters, but for many business owners it isn’t the biggest concern. The real question is often:

What happens when I’m no longer here?

Who takes over?

Do the children actually want to run the business?

If one child works in the company and the others don’t, should ownership be split equally?

How do you preserve family harmony whilst also protecting the future of the business?

These are often far more difficult questions than calculating an inheritance tax liability.

The Business Relief advantage

One major difference is the potential availability of Business Relief.

Where the conditions are met, qualifying business interests can attract relief from inheritance tax, potentially reducing the taxable value by up to 100%.

For some families, that can mean the difference between a substantial inheritance tax bill and no inheritance tax at all on the business. However, relief isn’t automatic and shouldn’t be taken for granted.

The nature of the business, its assets, ownership structure and future legislative changes can all affect whether relief is available. A business that qualifies today may not necessarily qualify forever.

That’s why regular reviews are so important.

Tax isn’t always the biggest risk

One of the biggest misconceptions in succession planning is that tax is the main threat.

In our experience, succession failures often destroy far more value than inheritance tax ever could.

A business can survive a tax bill. However, it may struggle to survive family disagreements, unclear leadership, competing interests or the absence of a succession plan.

We’ve seen situations where a family spent years focusing on tax efficiency but very little time discussing who would actually run the company in the future. Those conversations are often uncomfortable, but they’re usually the ones that matter most.

The families who need both types of planning

Many successful families have both business interests and personal wealth. That’s where things become more interesting.

A family might have a trading company worth £10 million that qualifies for Business Relief, alongside investment properties and investment portfolios worth several million pounds that don’t.

The business may be relatively protected from inheritance tax, while the personal wealth remains fully exposed.

If planning only focuses on the company, a significant inheritance tax liability could still arise elsewhere. Equally, focusing solely on tax could mean critical succession questions are left unanswered.

The most effective planning looks at the whole picture rather than individual assets in isolation.

A simple example

Imagine a family with a successful manufacturing company worth £10 million, alongside £5 million of investments and property.

The company may qualify for Business Relief, meaning little or no inheritance tax is payable on that part of the estate. The £5 million of personal investments and property, however, could still create an inheritance tax liability running into millions.

At the same time, the family still needs to answer some fundamental questions:

• Who will run the business?
• Who will own it?
• Should ownership and management sit with the same people?
• How can future disputes be avoided?

The tax planning and succession planning are connected, but they aren’t the same exercise.

Final thoughts

When it comes to inheritance tax planning, family wealth and family businesses shouldn’t be viewed through the same lens.

With personal wealth, the focus is often on preserving assets and reducing future tax liabilities.

With family businesses, preserving continuity, leadership and long-term success can be just as important as achieving tax efficiency.

The families who tend to achieve the best outcomes are those who recognise both challenges and plan for them early.

After all, preserving wealth is important. Preserving the thing that created that wealth in the first place can be even more important.

Next Steps

If you have a question regards IHT planning or exit planning please get in touch.

For most people, a tax return sits firmly in the “jobs I’d rather not do” category.

It’s something that needs to be completed, submitted to HMRC and then promptly forgotten about until the following January.

But in reality, a tax return is often far more interesting than that.

For business owners, property investors and families with growing wealth, a tax return can reveal far more than just how much tax is due. Hidden within those pages are clues about future opportunities, potential risks and, quite often, conversations that need to happen sooner rather than later.

The best tax advice rarely starts with a clever tax planning scheme. More often, it starts with a careful look at what the numbers are already telling us.

An annual financial MOT

A tax return brings together almost every aspect of someone’s financial life.

Employment income, dividends, rental profits, investments, pension contributions, capital gains and charitable donations all end up in one place.

When you step back and look at the bigger picture, it often raises questions that haven’t been considered before:

• Are you paying more tax than necessary?
• Are all available allowances being used?
• Have you drifted into a higher tax bracket without realising?
• Are pension contributions keeping pace with your income?
• Is too much of your wealth tied up in one area?

Much like an annual health check, a tax return can highlight issues long before they become problems.

Spotting problems before HMRC does

One of the most valuable parts of the tax return process is identifying risks early.

We’ve seen landlords whose rental portfolios have grown far quicker than they realised, only to be surprised by the resulting tax bill. Equally, we’ve seen business owners facing unexpected tax consequences from money withdrawn from their company, while investors may build up substantial gains over many years without ever considering the Capital Gains Tax position that could arise when those assets are eventually sold.

None of these situations appear overnight.

They tend to develop gradually in the background until someone takes the time to review the bigger picture.

A well-prepared tax return provides the perfect opportunity to do exactly that.

The unexpected starting point for inheritance tax planning

Inheritance tax planning isn’t always triggered by a dedicated estate review.

In many cases, it starts with a tax return.

A return can quickly reveal:

• Large investment portfolios
• Significant cash reserves
• Valuable business interests
• Property portfolios
• Previous gifts made to family members

Whilst these assets may not create an immediate income tax issue, they can have a significant impact on the eventual value of an estate.

It’s not unusual for clients who have spent decades building successful businesses and investments to discover that their estate has grown well beyond the available inheritance tax allowances.

That discovery often leads to wider discussions around gifting, trusts, succession planning, business reliefs and how wealth will ultimately pass to the next generation.

Business Owners: Looking beyond this year’s tax bill

For business owners, personal and business finances are rarely separate conversations.

A profitable year may result in a larger tax bill, but it can also raise some much bigger questions:

• Is the current company structure still fit for purpose?
• Are profits being extracted in the most efficient way?
• Should pension funding be increased?
• What does retirement look like?
• Is there a plan for eventually passing on or selling the business?

These aren’t compliance questions. They’re strategic decisions that can have a lasting impact on both the business and the family behind it.

The tax return simply provides the information needed to start the conversation.

Life changes usually leave a paper trail

One thing we’ve noticed over the years is that major life events nearly always show up on a tax return.

A marriage, divorce, retirement, business sale, inheritance, property purchase or significant investment decision will often leave a tax footprint somewhere.

Sometimes, a large capital gain points towards the need for investment planning. Sometimes a change in income suggests retirement is approaching. Sometimes a substantial gift prompts a review of inheritance tax exposure.

The tax return often becomes a snapshot of where someone’s life is heading, not just where it’s been.

A real-life example

Take David.

At 62, he owned a successful engineering business and viewed his annual tax return as little more than a necessary administrative task.

During a routine review, a few things stood out:

• Company dividends had increased significantly over several years.
• Investment portfolios had grown substantially.
• Pension contributions had reduced.
• No estate planning review had been carried out for some time.

A conversation followed.

David explained that he hoped to retire within five years and eventually hand the business over to his children.

What started as a straightforward tax return review quickly became a much broader planning exercise. Working alongside legal and financial advisers, we reviewed succession plans, pension funding, inheritance tax exposure and the future ownership structure of the business.

The outcome wasn’t created by the tax return itself. The tax return simply highlighted the questions that needed answering.

Turning compliance into something more valuable

It’s easy to see a tax return as a compliance exercise.

After all, HMRC requires one, deadlines exist, and nobody enjoys paperwork.

But every tax return tells a story.

It shows how wealth is being created, where potential risks are developing and where opportunities may exist.

When viewed in that way, a tax return becomes far more than a historical record of the previous year. It becomes a planning tool that can help shape future decisions, improve tax efficiency and support long-term financial goals.

Finally

A tax return should never be viewed as just another form to complete.

Behind every figure is a wider story about someone’s finances, family, business and future plans.

Some of the most valuable advice we provide doesn’t come from calculating the tax liability. It comes from asking the question that follows: What are these numbers really telling us?

Next Steps

If you have an interesting tax return or want to discuss your situation, please get in touch.

The taxation of image rights has long been a central feature of remuneration structures in professional sport, particularly football. Athletes and other public figures have relied on arrangements whereby payments for the commercial exploitation of a player’s image are received separately from employment income through dedicated image rights companies.

Reforms announced in the 2025 Budget signal a significant shift in HMRC’s approach. From April 2027, image rights payments connected to employment will be treated as taxable employment income and subject to income tax and national insurance contributions (NICs) through the PAYE system.

The change will affect not only the individual receiving the income but also the employer, who may face increased costs due to employer NICs.

The implications for football clubs, athletes and advisers could be significant. Existing contractual structures may require renegotiation, the role of image rights companies may diminish substantially, and uncertainty remains around the treatment of genuine sponsorship arrangements. As a result, the reforms could significantly reshape remuneration structures across professional sport.

The reform represents a shift away from HMRC’s historical acceptance of certain image rights structures and towards a statutory framework that treats employment-related image rights payments as remuneration.

Buried in the Budget

Within the detailed provisions of the 2025 Budget is a measure that could fundamentally alter established practices in the sports industry. While the government’s wider tax reform package aims to raise approximately £2.3 billion, the changes targeting image rights payments may have disproportionate consequences for football clubs and players.

HMRC estimates the reform will raise around £40 million annually. Although relatively modest in fiscal terms, the measure could have substantial practical implications for player contracts, club finances and long-standing tax planning strategies within professional sport.

New Rules from April 2027

From 6 April 2027, image rights payments connected with employment will be treated as employment income. As a result, such payments will be subject to income tax and both employer and employee NICs through PAYE.

This would represent a significant departure from current practice. Football clubs have traditionally entered into separate agreements with players’ image rights companies for the licensing of personal brand and intellectual property rights.

Provided these arrangements reflected genuine commercial exploitation of a player’s image, payments were generally made outside the PAYE system.

Under the proposed legislation, however, where a connection exists between employment and the image rights payment, the tax advantages associated with these structures will no longer apply.

Although HMRC has yet to publish detailed guidance, early indications suggest that existing arrangements may also be affected from April 2027, potentially requiring widespread restructuring of current contracts.

A Landmark Case Reduced to History?

Image rights arrangements have long relied on the reasoning established in Sports Club PLC (2000).

The case accepted that payments made for the commercial exploitation of a player’s image could, in appropriate circumstances, be separated from employment income. While not strictly binding, the decision has been influential due to the limited case law in this area.

Once new legislation takes effect, however, the relevance of this precedent may diminish significantly. Where statutory rules clearly define the tax treatment of image rights payments, those provisions will override previous reliance on case law.

Counting the Cost

The financial consequences of the reform could be significant.

Football clubs will become liable for employer NICs of around 15% on image rights payments that were previously outside the NIC regime. This alone could increase payroll costs considerably.

In addition, many player contracts are structured on a net-of-tax basis. If players face higher tax liabilities as a result of the new rules, clubs may need to increase payments to maintain agreed net income levels.

Players themselves will also face higher taxation. Income previously received through an image rights company and taxed initially within a corporate structure may instead be taxed as employment income at as much as the additional rate band (45%).

As a result, many existing contractual arrangements may need to be renegotiated or restructured.

The Grey Areas

One key issue that remains unresolved is the treatment of genuine third-party sponsorship arrangements.

In principle, commercial agreements that are entirely independent of a player’s employment contract should remain outside the employment income rules. However, complexities arise where sponsors are also commercial partners of the player’s club.

This overlap creates a potential grey area. Where sponsorship payments are linked, directly or indirectly, to a player’s employment with a club, HMRC may seek to treat those payments as employment income.

Further guidance will therefore be necessary to clarify how genuinely independent endorsement arrangements will be treated.

Beyond Image Rights: Wider Tax Changes

The image rights reforms form part of a broader series of tax developments affecting high-earning individuals.

From April 2029, some taxpayers who receive both PAYE income and self-assessment income may be required to settle a greater proportion of their tax liabilities through PAYE during the year.

For professional athletes with significant investment income, this could result in HMRC seeking to collect additional tax through PAYE coding adjustments. The practical operation of this system remains uncertain.

A further change is the mandatory payrolling of benefits in kind from 6 April 2027. For footballers and other high earners, this may create practical difficulties where PAYE deductions approach the 50% regulatory limit on deductions from earnings, particularly where agent fees are also involved.

Although HMRC has issued guidance in this area, employers are not required to follow a single prescribed approach, which may lead to inconsistencies in practice.

Reading Between the Lines

The language used in the Budget documentation is notable. The measure is described as addressing “the use of image rights to avoid employment income tax and NICs”.

This suggests that HMRC views many existing structures as primarily tax motivated.

However, image rights payments often reflect genuine commercial value. Professional athletes frequently generate substantial income from endorsements, sponsorships and promotional activities linked to their personal brand.

Nevertheless, the wording of the announcement may signal a shift in HMRC’s compliance strategy. Since April 2021, enforcement activity has focused largely on clubs rather than individual players, but this focus may broaden in the future.

Technical Considerations and Planning Points

Several technical issues will require careful analysis once draft legislation is published.

The definition of “connected with employment” will be particularly important. If interpreted broadly, the test could capture arrangements where clubs facilitate sponsorship opportunities or where players engage with brands associated with the club.

The treatment of existing contracts will also be significant. If no transitional rules are introduced, long-term agreements negotiated several years earlier could suddenly become substantially more expensive for clubs.

The reforms may also reduce the importance of valuation disputes that historically centred on whether payments to image rights companies reflected the genuine market value of a player’s image. Instead, disputes may focus on whether a payment is truly independent of employment.

The changes may also affect the future viability of image rights companies. If most payments from clubs are treated as employment income, these companies may become commercially redundant. This could lead to corporate restructuring, liquidation, or the transfer of intellectual property to alternative commercial entities managing endorsement income.

Another area that may require consideration is the potential interaction with the settlement’s legislation (ITTOIA, 2005). Historically, image rights companies have often been owned by players, sometimes alongside family members as shareholders. If income from commercial endorsements continues to be routed through such companies, questions could arise as to whether the arrangements constitute a settlement where income is effectively diverted from the individual who generated the underlying value of the image rights. While the settlements provisions have not typically been central to HMRC’s challenges in this area, the narrowing of the employment income rules may lead to greater scrutiny of how endorsement income is distributed through corporate structures.

Advisers may also need to consider whether broader anti-avoidance principles could apply where endorsement income is structured to fall outside the new rules. HMRC is likely to scrutinise whether arrangements are genuinely independent commercial transactions or instead arise by reason of employment.

From an employment tax perspective, the rules may operate similarly to existing anti-avoidance provisions targeting employment-related payments routed through intermediary structures. Payments connected with employment but made through corporate structures could therefore be treated as employment income for tax purposes.

There are also similarities with rules that apply to employment-related benefits provided through corporate arrangements. Under these principles, benefits received because of an individual’s employment may still be taxed as employment income, even where they arise indirectly through companies or other structures.

Finally, practical difficulties may arise in relation to PAYE operation and the 50% regulatory limit on deductions from earnings. Where players already face significant deductions and agent fees, the reclassification of image rights payments as employment income may result in liabilities that cannot be fully collected during the tax year, increasing the likelihood of year-end underpayments.

What Happens Next?

Although image rights companies may continue to play a role in genuine commercial activities outside the employment relationship, the direction of travel is clearly towards greater alignment of image rights payments with employment taxation.

Before April 2027, clubs, players and advisers will need to review existing contractual arrangements carefully to ensure compliance with the new rules. Sponsorship agreements may need to be clearly separated from employment structures, and remuneration models across the industry may require substantial restructuring.

For advisers, the priority will be reviewing existing contractual arrangements well in advance of April 2027 and identifying payments that may fall within the new employment income definition. Early restructuring may be essential to manage the increased employment tax and NIC exposure.

Next Steps

With significant changes on the horizon, now is the time for clubs, players and advisers to review existing image rights arrangements and assess how the reforms may affect current contracts and commercial structures. ETC Tax can assist clients in understanding the implications of the new rules and planning ahead of April 2027. Click here to get in touch.

Why more taxpayers are paying Capital Gains Tax than ever before

HMRC’s latest figures show that Capital Gains Tax receipts reached £24.3 billion during the 2025/26 tax year. Whilst rising asset values have undoubtedly contributed to this increase, the growth in receipts is also a consequence of successive reductions to available reliefs and allowances.

As a result, many individuals who would historically have fallen outside the Capital Gains Tax regime are now finding themselves exposed to unexpected tax liabilities when disposing of shares, investment properties or business interests.

In our experience, the issue is often not that reliefs are unavailable. Rather, it is that advice is sought after a transaction has already been agreed, at which point many planning opportunities have disappeared.

Timing matters more than many taxpayers realise

One of the most common misconceptions surrounding Capital Gains Tax is that the tax position only becomes relevant once a sale is imminent.

In reality, the decisions made months or even years before a disposal can significantly influence the eventual tax outcome.

For example, where an individual intends to dispose of a sizeable investment portfolio, the timing of disposals may determine whether more than one Annual Exempt Amount can be utilised. Whilst the exemption has reduced considerably in recent years, it can still represent a worthwhile saving when used effectively.

Similarly, taxpayers frequently overlook historic capital losses which could be available to offset future gains. We regularly encounter situations where losses have arisen but have not been properly reported to HMRC, creating uncertainty over whether relief will be available when needed.

Ownership structures should not be ignored

For married couples and civil partners, the way in which assets are held can have a material impact on the eventual Capital Gains Tax liability.

Because transfers between spouses and civil partners generally take place on a no gain/no loss basis, there can be opportunities to spread gains between individuals and make better use of available exemptions, losses and tax bands.

This is particularly relevant where one spouse is already a higher-rate taxpayer and the other has unused allowances or lower levels of taxable income.

Of course, tax should not be the sole driver of ownership decisions. Legal ownership, commercial objectives and wider estate planning considerations also need to be taken into account.

Tax-efficient investments remain important

Whilst Capital Gains Tax planning often focuses on disposals, equal attention should be given to how investments are structured from the outset.

Investments held within tax-efficient wrappers such as ISAs can grow free from Capital Gains Tax. Over a number of years, consistently utilising available ISA allowances can significantly reduce future tax exposure and simplify reporting obligations.

For individuals with substantial investment portfolios, periodic reviews can help ensure that assets are being held in the most appropriate structure for their circumstances.

Business owners face additional considerations

Where a disposal involves shares in a trading company, partnership interests or other business assets, the analysis becomes considerably more complex.

Questions frequently arise around the availability of Business Asset Disposal Relief, company reorganisations, share rights, family ownership structures and succession planning.

In these situations, the tax consequences can differ dramatically depending on how a transaction is structured. Seeking advice only after heads of terms have been agreed may mean valuable planning opportunities have already been lost.

The importance of early advice

The increasing amount of Capital Gains Tax being collected by HMRC serves as a reminder that tax should form part of the transaction planning process, rather than being viewed as a compliance exercise after the event.

Whether you are considering the sale of an investment property, a share portfolio or a business, understanding the tax implications before a transaction progresses can often lead to a significantly better outcome.

At ETC Tax, we advise business owners, investors and private individuals on Capital Gains Tax planning and transaction structuring. Where appropriate, we can help identify available reliefs, review ownership structures and assess the tax consequences of a proposed disposal before commitments are made. Get in touch here!

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Frequently Asked Questions

What is Capital Gains Tax?

Capital Gains Tax is charged on the profit realised when an individual disposes of a chargeable asset. Common examples include investment properties, shares, business interests and certain personal assets.

The tax is generally charged on the gain arising, rather than the sale proceeds themselves.

Is my main residence subject to Capital Gains Tax?

A disposal of an individual’s only or main residence will often qualify for Private Residence Relief, which can eliminate or significantly reduce any CGT liability.

However, relief may be restricted in certain circumstances, including periods of non-occupation or where part of the property has been used exclusively for business purposes.

Are gifts subject to Capital Gains Tax?

In many cases, gifts are treated as disposals for CGT purposes and may give rise to a taxable gain, even where no cash consideration is received.

The availability of reliefs will depend on the nature of the asset being transferred and the circumstances of the transaction.

How are Capital Gains Tax rates determined?

The applicable CGT rate depends on a range of factors, including the nature of the asset disposed of and the individual’s wider tax position.

Different rates may apply to residential property, carried interest and other chargeable assets.

When should I seek Capital Gains Tax advice?

Ideally, advice should be sought before a transaction is agreed or becomes legally binding. Early engagement allows potential reliefs, exemptions and planning opportunities to be identified and considered while options remain available.

The taxation of image rights has long been a central feature of remuneration structures in professional sport, particularly football. Athletes and other public figures have relied on arrangements whereby payments for the commercial exploitation of a player’s image are received separately from employment income through dedicated image rights companies.

Reforms announced in the 2025 Budget signal a significant shift in HMRC’s approach. From April 2027, image rights payments connected to employment will be treated as taxable employment income and subject to income tax and national insurance contributions (NICs) through the PAYE system.

The change will affect not only the individual receiving the income but also the employer, who may face increased costs due to employer NICs.

The implications for football clubs, athletes and advisers could be significant. Existing contractual structures may require renegotiation, the role of image rights companies may diminish substantially, and uncertainty remains around the treatment of genuine sponsorship arrangements. As a result, the reforms could significantly reshape remuneration structures across professional sport.

The reform represents a shift away from HMRC’s historical acceptance of certain image rights structures and towards a statutory framework that treats employment-related image rights payments as remuneration.

Buried in the Budget

Within the detailed provisions of the 2025 Budget is a measure that could fundamentally alter established practices in the sports industry. While the government’s wider tax reform package aims to raise approximately £2.3 billion, the changes targeting image rights payments may have disproportionate consequences for football clubs and players.

HMRC estimates the reform will raise around £40 million annually. Although relatively modest in fiscal terms, the measure could have substantial practical implications for player contracts, club finances and long-standing tax planning strategies within professional sport.

New Rules from April 2027

From 6 April 2027, image rights payments connected with employment will be treated as employment income. As a result, such payments will be subject to income tax and both employer and employee NICs through PAYE.

This would represent a significant departure from current practice. Football clubs have traditionally entered into separate agreements with players’ image rights companies for the licensing of personal brand and intellectual property rights.

Provided these arrangements reflected genuine commercial exploitation of a player’s image, payments were generally made outside the PAYE system.

Under the proposed legislation, however, where a connection exists between employment and the image rights payment, the tax advantages associated with these structures will no longer apply.

Although HMRC has yet to publish detailed guidance, early indications suggest that existing arrangements may also be affected from April 2027, potentially requiring widespread restructuring of current contracts.

A Landmark Case Reduced to History?

Image rights arrangements have long relied on the reasoning established in Sports Club PLC (2000).

The case accepted that payments made for the commercial exploitation of a player’s image could, in appropriate circumstances, be separated from employment income. While not strictly binding, the decision has been influential due to the limited case law in this area.

Once new legislation takes effect, however, the relevance of this precedent may diminish significantly. Where statutory rules clearly define the tax treatment of image rights payments, those provisions will override previous reliance on case law.

Counting the Cost

The financial consequences of the reform could be significant.

Football clubs will become liable for employer NICs of around 15% on image rights payments that were previously outside the NIC regime. This alone could increase payroll costs considerably.

In addition, many player contracts are structured on a net-of-tax basis. If players face higher tax liabilities as a result of the new rules, clubs may need to increase payments to maintain agreed net income levels.

Players themselves will also face higher taxation. Income previously received through an image rights company and taxed initially within a corporate structure may instead be taxed as employment income at as much as the additional rate band (45%).

As a result, many existing contractual arrangements may need to be renegotiated or restructured.

The Grey Areas

One key issue that remains unresolved is the treatment of genuine third-party sponsorship arrangements.

In principle, commercial agreements that are entirely independent of a player’s employment contract should remain outside the employment income rules. However, complexities arise where sponsors are also commercial partners of the player’s club.

This overlap creates a potential grey area. Where sponsorship payments are linked, directly or indirectly, to a player’s employment with a club, HMRC may seek to treat those payments as employment income.

Further guidance will therefore be necessary to clarify how genuinely independent endorsement arrangements will be treated.

Beyond Image Rights: Wider Tax Changes

The image rights reforms form part of a broader series of tax developments affecting high-earning individuals.

From April 2029, some taxpayers who receive both PAYE income and self-assessment income may be required to settle a greater proportion of their tax liabilities through PAYE during the year.

For professional athletes with significant investment income, this could result in HMRC seeking to collect additional tax through PAYE coding adjustments. The practical operation of this system remains uncertain.

A further change is the mandatory payrolling of benefits in kind from 6 April 2027. For footballers and other high earners, this may create practical difficulties where PAYE deductions approach the 50% regulatory limit on deductions from earnings, particularly where agent fees are also involved.

Although HMRC has issued guidance in this area, employers are not required to follow a single prescribed approach, which may lead to inconsistencies in practice.

Reading Between the Lines

The language used in the Budget documentation is notable. The measure is described as addressing “the use of image rights to avoid employment income tax and NICs”.

This suggests that HMRC views many existing structures as primarily tax motivated.

However, image rights payments often reflect genuine commercial value. Professional athletes frequently generate substantial income from endorsements, sponsorships and promotional activities linked to their personal brand.

Nevertheless, the wording of the announcement may signal a shift in HMRC’s compliance strategy. Since April 2021, enforcement activity has focused largely on clubs rather than individual players, but this focus may broaden in the future.

Technical Considerations and Planning Points

Several technical issues will require careful analysis once draft legislation is published.

The definition of “connected with employment” will be particularly important. If interpreted broadly, the test could capture arrangements where clubs facilitate sponsorship opportunities or where players engage with brands associated with the club.

The treatment of existing contracts will also be significant. If no transitional rules are introduced, long-term agreements negotiated several years earlier could suddenly become substantially more expensive for clubs.

The reforms may also reduce the importance of valuation disputes that historically centred on whether payments to image rights companies reflected the genuine market value of a player’s image. Instead, disputes may focus on whether a payment is truly independent of employment.

The changes may also affect the future viability of image rights companies. If most payments from clubs are treated as employment income, these companies may become commercially redundant. This could lead to corporate restructuring, liquidation, or the transfer of intellectual property to alternative commercial entities managing endorsement income.

Another area that may require consideration is the potential interaction with the settlement’s legislation (ITTOIA, 2005). Historically, image rights companies have often been owned by players, sometimes alongside family members as shareholders. If income from commercial endorsements continues to be routed through such companies, questions could arise as to whether the arrangements constitute a settlement where income is effectively diverted from the individual who generated the underlying value of the image rights. While the settlements provisions have not typically been central to HMRC’s challenges in this area, the narrowing of the employment income rules may lead to greater scrutiny of how endorsement income is distributed through corporate structures.

Advisers may also need to consider whether broader anti-avoidance principles could apply where endorsement income is structured to fall outside the new rules. HMRC is likely to scrutinise whether arrangements are genuinely independent commercial transactions or instead arise by reason of employment.

From an employment tax perspective, the rules may operate similarly to existing anti-avoidance provisions targeting employment-related payments routed through intermediary structures. Payments connected with employment but made through corporate structures could therefore be treated as employment income for tax purposes.

There are also similarities with rules that apply to employment-related benefits provided through corporate arrangements. Under these principles, benefits received because of an individual’s employment may still be taxed as employment income, even where they arise indirectly through companies or other structures.

Finally, practical difficulties may arise in relation to PAYE operation and the 50% regulatory limit on deductions from earnings. Where players already face significant deductions and agent fees, the reclassification of image rights payments as employment income may result in liabilities that cannot be fully collected during the tax year, increasing the likelihood of year-end underpayments.

What Happens Next?

Although image rights companies may continue to play a role in genuine commercial activities outside the employment relationship, the direction of travel is clearly towards greater alignment of image rights payments with employment taxation.

Before April 2027, clubs, players and advisers will need to review existing contractual arrangements carefully to ensure compliance with the new rules. Sponsorship agreements may need to be clearly separated from employment structures, and remuneration models across the industry may require substantial restructuring.

For advisers, the priority will be reviewing existing contractual arrangements well in advance of April 2027 and identifying payments that may fall within the new employment income definition. Early restructuring may be essential to manage the increased employment tax and NIC exposure.

Next Steps

With significant changes on the horizon, now is the time for clubs, players and advisers to review existing image rights arrangements and assess how the reforms may affect current contracts and commercial structures. ETC Tax can assist clients in understanding the implications of the new rules and planning ahead of April 2027. Click here to get in touch.

Introduction

Selling a residential property that has increased in value can trigger a Capital Gains Tax (CGT) liability. While many landlords and property owners expect a tax liability may arise, the calculation and reporting requirements are often more complicated than anticipated.

This is particularly common where a property has been owned for several years, improvement works have been carried out over time, or ownership records are incomplete. In practice, many individuals only become aware of the reporting obligations after completion, sometimes when deadlines have already passed.

When Does CGT Apply?

CGT may arise when an individual disposes of a residential property that is not fully covered by Private Residence Relief. This commonly includes:

• Buy-to-let properties.
• Former main residences that have been rented out.
• Second homes.
• Inherited properties that have increased in value before sale.

For residential properties, the taxable gain is calculated by comparing the disposal proceeds against the acquisition cost, while taking into account certain allowable deductions, but the position is rarely as simple as “sale price less purchase price”.

What Costs Can Be Claimed?

When calculating the gain, certain costs connected with buying and selling the property can be deductible for CGT purposes. These can include:

• Solicitor and conveyancing fees on purchase and sale.
• Estate agent fees.
• Stamp Duty Land Tax paid on acquisition.
• Capital enhancement expenditure.

These deductions can reduce the overall taxable gain, provided the costs meet HMRC requirements and appropriate records are retained.  For more information, please see HMRC’s CGT guidance.

Improvement Costs vs Repairs

One of the most misunderstood areas is the distinction between repairs and capital enhancement expenditure. HMRC distinguishes this as follows:

• Repairs and maintenance, which are usually treated as revenue expenses, and may have already been claimed against rental income during the ownership, and
• Capital improvements, which are allowable against the gain where they enhance the property’s value or extend its useful life.

Examples of enhancement expenditure can include:

• Extensions,
• Loft conversions,
• Structural alterations,
• Installation of substantially improved kitchens or bathrooms, beyond a modern like-for-like replacement, or
• Significant upgrades that improve the property beyond its original condition.

Accurate records and supporting documentation are important, particularly where work was carried out many years before disposal.  These include invoices and completion documentation.

CGT rules for UK residential property have become increasingly important in recent years due to changes in reporting requirements and HMRC compliance activity.

The 60-Day Reporting Requirement

One of the most overlooked issues is the requirement to report and pay CGT on UK residential property disposals within 60 days of completion.  

This is a separate online submission from the annual self-assessment tax return, but the disposal must also be included on the year-end self-assessment return to finalise the position.

Where tax is due, individuals are required to:

1. Submit a UK Property Disposal Return to HMRC, and
2. Make a payment on account of the estimated CGT liability.

These steps must be completed within 60 days of the completion, and there is guidance at HMRC on how to report and ways to pay.

If a capital loss arises or no tax is due on the sale, then there is no requirement to submit the additional report, but the sale must still be disclosed on the self-assessment tax return.

Late filing or payment can result in penalties and interest, even where the gain is later reported correctly on the individual’s self-assessment tax return.

The rules can catch taxpayers by surprise, particularly where they have not sold property before or are unaware of the reporting obligations.

Common Issues We See

In practice, errors often arise because:

• Allowable costs are missed.
• Improvement works are incorrectly treated.
• Historic records are incomplete.
• The reporting deadline is not identified until after completion.
• Property owners assume the solicitor will deal with the tax reporting automatically.

A professional review of the figures and supporting records before exchange or completion can help avoid unnecessary issues, reduce the risk of inaccuracies or missed claims, and ensure sufficient records are retained.   It will also give an idea of the CGT arising on the sale.

Related Case Study

Read our related case study on the calculation and reporting of CGT following the sale of a rental property.

Why Specialist Advice Matters

Residential property CGT calculations frequently involve more than a straightforward arithmetic exercise, especially when properties have been owned for many years or substantial work has been carried out during ownership.

The correct treatment of expenditure, reliefs, ownership history, and reporting obligations can materially affect the final position.

Professional advice can help ensure:

• The gain is calculated accurately.
• Allowable deductions are identified properly.
• HMRC reporting obligations are met on time.
• Supporting records are retained appropriately.
• Tax returns are completed consistently.

Need Advice on a Property Disposal?

If you are planning to sell a residential property and are unsure about the Capital Gains Tax implications, specialist advice should be taken based on your personal circumstances. Early review of the position can help avoid missed deadlines, unexpected liabilities, and unnecessary penalties.

If you have any queries about Capital Gains Tax on residential property sales or reporting obligations for rental property disposals, please do get in touch with ETC Tax, and we would be happy to help.

FAQ Section

Frequently Asked Questions

Do I have to pay Capital Gains Tax when selling a rental property?

Potentially yes. CGT will apply where a residential property has increased in value and is not fully exempt from tax reliefs.

What costs can be deducted from a property gain?

Allowable deductions can include legal fees, estate agent fees, SDLT, and qualifying enhancement expenditure.

What is the 60-day CGT reporting rule?

UK residents disposing of residential property that gives rise to CGT need to report and pay the estimated tax within 60 days of completion.

Do repairs reduce Capital Gains Tax?

Routine repairs are not deductible for CGT purposes if they have already been claimed against rental income. Qualifying capital improvements will be deductible against the gain.

Do I still report the sale on my Self-Assessment return?

In many cases, yes. Even where a 60-day property return has been submitted, the disposal will still need to be included on the annual Self-Assessment return.

What happens if the 60-day deadline is missed?

HMRC will charge late filing penalties and interest where reporting obligations are not met on time.

Further reading

Introduction

Ongoing geopolitical conflicts, public health emergencies and international travel disruption can create unexpected UK tax residence issues for internationally mobile individuals.

Non-UK residents may find themselves spending more time in the UK than anticipated due to circumstances outside their control, raising concerns about whether they could inadvertently become UK tax resident.

To explore this, we look at how residence is determined within the UK and the exceptional circumstances relief that is available for these times of crisis.

Residency in the UK is determined under the Statutory Residence Test (SRT) and click here for HMRC internal manual . In practice, when applying this test, you consider both the time spent in the UK and the extent of an individual’s continuing connections to it (sufficient ties test) in a tax year.  The results of this test then determine if an individual is UK or non-UK resident for that tax year.

Exceptional circumstances can sometimes affect how days spent in the UK are counted, particularly during periods of crisis such as war, pandemics, natural disasters or sudden travel restrictions.

These rules became particularly relevant during the COVID-19 pandemic, but they can also apply in other emergencies where individuals are unexpectedly prevented from leaving the UK or are required to return to the UK due to the country they reside in being unsafe.

Understanding how HMRC applies these provisions is important for internationally mobile individuals, business owners, expatriates and non-UK residents who need to monitor their UK day count carefully to ensure they do not become UK resident.

Under the SRT, some days spent in the UK can be ignored if they are due to “exceptional circumstances”. This includes certain situations involving war, civil unrest, or serious illness. HMRC says the rules depend heavily on the facts of each case.

How the Statutory Residence Test Works

UK tax residence is determined under the SRT, and the test considers:

• The amount of time spent in the UK.
• Work carried out in the UK, and
• An individual’s connections or “ties” to the UK.

The SRT includes automatic overseas tests, automatic UK tests and sufficient ties tests, with residence determined based on the individual’s overall circumstances for the relevant tax year.

For many internationally mobile individuals, day counting is critical. Exceeding certain thresholds can result in UK tax residence arising unexpectedly.

Exceptional circumstances provisions may therefore provide limited relief where an individual is forced to remain in the UK due to unforeseen events.

What Are Exceptional Circumstances?

Under the SRT, certain days spent in the UK may be disregarded where an individual is unable to leave the UK because of circumstances beyond their control. 

The maximum number of days that may be disregarded under SRT is 60 days per tax year.  Any days over this limit will count towards the UK day count.

HMRC considers exceptional circumstances to include situations where:

• An individual is prevented from leaving the UK due to war, civil unrest or political instability.
• International borders close unexpectedly.
• Government advice restricts travel.
• Serious illness or public health emergencies prevent departure.
• Natural disasters or other major disruptions affect travel arrangements.

The legislation applies narrowly and generally only where the circumstances are:

• Beyond the individual’s control.
• Unexpected or unforeseeable, and
• The reason the individual cannot leave the UK.

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HMRC also emphasises that the application of the rules depends heavily on the facts of each case and will not accept claims relating to ordinary travel disruption, elective or routine medical treatment, foreseeable events, personal preferences to remain in the UK or situations where the individual could have reasonably left the UK.  Click here for manual rfig22270

HMRC generally expects individuals to leave the UK as soon as circumstances permit.

When Days Spent in the UK May Be Ignored

National Emergencies and War

War, military conflict or political unrest can create sudden travel disruption that prevents individuals from leaving the UK safely or legally and returning to their country of residence.

For example, recent airspace closures and travel restrictions affecting parts of the Middle East temporarily prevented some individuals from returning to their country of residence.  As such, they had to stay in the UK until the restrictions were lifted and it was safe to travel back home again.

In such circumstances, HMRC may accept that additional days spent in the UK arose due to exceptional circumstances beyond the individual’s control.

HMRC guidance specifically refers to situations as above where the Foreign, Commonwealth & Development Office (FCDO) advice recommends against travel.

Following the outbreak of the conflict involving Ukraine, HMRC confirmed that individuals returning to the UK from affected territories such as Ukraine, Russia and Belarus could potentially qualify for exceptional circumstances treatment, subject to the normal statutory conditions and the 60-day limit.

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Pandemics and Public Health Restrictions

The COVID-19 pandemic highlighted how exceptional circumstances rules can apply during global health emergencies.

During the COVID-19 pandemic, the following led to many individuals having to remain in the UK longer than expected:

• Travel bans and international border closures.
• Cancelled flights.
• Quarantine restrictions.
• Official public health advice and restrictions; and
• Self-isolation requirements.

HMRC issued specific guidance during this period confirming that COVID-related restrictions could potentially qualify as exceptional circumstances in some situations and accepted that some individuals were unable to leave the UK because of the above circumstances.

However, HMRC also made clear that not every pandemic-related delay would qualify automatically.  Each case depends on its particular facts and evidence.

Also, HMRC stressed that simply choosing to remain in the UK during the pandemic would not automatically qualify as an exceptional circumstance.

Natural Disasters and Civil Unrest

Events such as earthquakes, volcanic eruptions, hurricanes or widespread civil disorder may also create circumstances beyond an individual’s control.

Where travel is disrupted unexpectedly and departure from the UK becomes impractical or unsafe, HMRC may consider whether the exceptional circumstances provisions apply.

Serious illness or injury

HMRC states there can be “limited situations” where days spent in the UK may be disregarded because of a sudden illness or a life-threatening injury affecting:

• The individual.
• Their spouse or partner, or
• Their dependent child.

The circumstances must generally be unexpected or unforeseeable and genuinely outside of the individual’s control that prevents them from leaving the UK.

Routine medical treatment, elective treatment, ordinary travel disruption and foreseeable events are examples of circumstances that HMRC will not accept as qualifying as exceptional circumstances in this case.

Acceptable examples provided include:

• travelling to the UK because a child suffered a major injury, or
• remaining in the UK because someone is hospitalised after an accident.

HMRC states that the person must intend to leave the UK as soon as the circumstances allow.

The 60-Day Rule Explained

The exceptional circumstances provisions are limited.

In most cases, a maximum of 60 days can be disregarded for residence purposes, even where the disruption lasts longer.

This means individuals who spend significant additional time in the UK during a prolonged crisis may still become UK tax resident despite the relief provisions.

Careful analysis of UK ties and overall residence status remains essential.

Importantly, exceptional circumstances relief does not apply universally across all parts of the SRT. Whether days can be disregarded depends on the particular residence test being considered.

Evidence and Record Keeping

Individuals seeking to rely on exceptional circumstances should maintain detailed records to support their position and any claim they make.

Relevant evidence may include flight cancellations and correspondence with airlines or embassies, government travel announcements, medical documentation, border closure notices and quarantine requirements.

HMRC may request evidence demonstrating that the individual intended to leave the UK and was genuinely prevented from doing so.  Simply choosing to remain in the UK during a crisis may not be sufficient.

As a result, residence cases involving exceptional circumstances often require careful factual analysis, particularly for individuals with complex international arrangements or multiple UK connections.

Good record keeping is therefore extremely important.

Conclusion

Exceptional circumstances provisions within the UK SRT can provide valuable relief where individuals are unexpectedly prevented from leaving the UK during periods of crisis. However, the rules are narrowly applied, subject to strict evidential requirements and limited to a maximum of 60 disregarded days per tax year.

Careful monitoring of UK day counts, detailed record keeping and professional advice are often essential to managing UK residence risks effectively.

Frequently Asked Questions

What counts as exceptional circumstances for UK residence purposes?

Exceptional circumstances generally involve events beyond an individual’s control that prevent them from leaving the UK, such as war, pandemics, natural disasters or government travel restrictions.

How many days can be ignored under the exceptional circumstances’ rules?

Typically, up to 60 days may be disregarded under the Statutory Residence Test provisions.

Did COVID-19 qualify as an exceptional circumstance?

In some situations, yes. HMRC issued guidance confirming that certain COVID-related travel restrictions and quarantine measures could qualify.

Does HMRC automatically accept exceptional circumstances claims?

No. HMRC considers each case based on its facts and supporting evidence.

Can I become UK tax resident despite the exceptional circumstances’ relief?

Yes. Even where some days are disregarded, an individual may still become UK tax resident depending on their overall circumstances and UK ties.

What evidence should I keep?

You should retain travel records, cancellation notices, government guidance, medical evidence and any documentation showing why departure from the UK was not possible.

Next Steps

If you have any queries about anything covered in this article, please do contact us at ETC Tax. Our team would be happy to help you understand how the UK residence rules may apply to your circumstances.

Further Reading on a recent case relating to exceptional circumstances click here