By Sonal Shah
04 Jun 2026
After what felt like a particularly hectic first quarter, the second quarter of the year has been very welcome. The pace has remained busy, but with the weather finally starting to improve, there has been a slightly lighter feeling in the air.
In the international tax world, the pace of change has certainly not slowed. The new residence-based regime continues to be a key focus for internationally mobile individuals, particularly around the foreign income and gains regime, Overseas Workday Relief and the Temporary Repatriation Facility.
We are also seeing continued interest in the wider impact of the IHT changes for long-term UK residents, together with ongoing questions around UK property ownership, ATED and the correct structuring of cross-border affairs.
International tax is rarely just about one rule or one jurisdiction. It is about understanding the wider picture, the movement of people and wealth, and the importance of planning ahead.
In this edition, we look at some of the key developments and practical issues currently affecting internationally mobile individuals, families, trustees and businesses. Hope you enjoy the read.
For many property owners, keeping an up-to-date view of a property’s value is useful for monitoring an important asset and understanding the local market. However, for owners of high-value residential property, 2026 and 2027 are likely to be particularly important from a tax perspective.
Chancellor Rachel Reeves’ 2025 Budget introduced the new High Value Council Tax Surcharge, widely referred to as the ‘Mansion Tax’. This will apply to owners of residential properties in England valued at £2 million or more, with annual charges of up to £7,500 depending on the property’s value band. The surcharge is expected to take effect from April 2028 and will be collected alongside council tax, although it is a separate charge.
The surcharge will be based on a property’s value in 2026. The Valuation Office is expected to carry out a targeted valuation exercise, using valuation models, comparable sales data and professional valuer judgement. Where a property may sit close to one of the thresholds, owners should consider obtaining independent valuation evidence in case the valuation is later challenged.
April 2027 is also a key date for companies and other entities holding high-value UK residential property. This relates to the Annual Tax on Enveloped Dwellings, or ATED, which broadly applies to certain entities holding UK residential property valued at more than £500,000. The current ATED cycle is based on values at 1 April 2022 (or the date of purchase, if later), with properties revalued every five years.
The next ATED revaluation date will therefore be 1 April 2027, with that valuation expected to apply from the 2028/29 ATED return period. Although this may feel some way off, obtaining valuation evidence at or around the relevant date is much easier than trying to reconstruct a historic value later.
For owners of high-value residential property, 2026 and 2027 should not be treated as routine valuation years. Timely valuation evidence could make a real difference.
As many will have seen, the UK tax landscape changed significantly from April 2025. Much of the immediate focus has been on the replacement of the remittance basis with the new residence-based regime for foreign income and gains. However, the changes go beyond Income Tax and Capital Gains Tax. There are also important Inheritance Tax implications for internationally mobile individuals and families.
One of the key concepts introduced from 6 April 2025 is whether an individual is a long-term UK resident. This is now particularly important for Inheritance Tax purposes.
Historically, UK Inheritance Tax exposure for non-UK assets was closely linked to domicile. Broadly, individuals who were non-UK domiciled were generally outside the scope of UK Inheritance Tax on their non-UK assets. Similarly, non-UK assets settled into certain overseas trusts could often fall outside the UK Inheritance Tax regime as ‘excluded property’.
That position has now changed. Under the new rules, the focus is on residence rather than domicile. An individual will generally be treated as a long-term UK resident if they have been UK tax resident for at least 10 out of the previous 20 tax years. Once that threshold is met, their worldwide assets may become relevant for UK inheritance tax purposes.
Leaving the UK does not necessarily bring an immediate end to UK Inheritance Tax exposure. A long-term UK resident can remain within the scope of UK Inheritance Tax on worldwide assets for a period after departure. This is commonly referred to as the ‘IHT tail’, and can last for up to 10 years depending on the individual’s UK residence history.
For internationally mobile clients, this means residence history, future plans, succession planning, trust structures and asset ownership should all be reviewed carefully. The question is no longer simply whether someone is UK domiciled, but whether they are, or could become, a long-term UK resident.
Cryptoassets have often been viewed as operating outside traditional financial reporting systems, but that position is changing quickly. The UK has introduced rules under the Cryptoasset Reporting Framework, or CARF, requiring UK-based reporting cryptoasset service providers to collect user and transaction data and report it to HMRC.
HMRC guidance confirms that UK-based reporting cryptoasset service providers, including exchanges, brokers and dealers, may need to collect information about users and their transactions. The first reporting window runs from 1 January 2027 to 31 May 2027, covering the 2026 calendar year. Future reports will generally be due by 31 May each year for the previous calendar year.
For individual users, the change is also significant. HMRC guidance explains that users may need to provide identifying details to cryptoasset service providers, including their name, date of birth, address and tax identification number, such as a National Insurance number or Unique Taxpayer Reference. This information is intended to help link cryptoasset activity to the individual’s tax record.
This does not create a new tax on cryptoassets. However, it does mean that HMRC will have access to more structured data about cryptoasset transactions. Individuals who have bought, sold, exchanged, gifted or used cryptoassets to make purchases may already have UK tax reporting obligations, particularly for Capital Gains Tax. Crypto received from employment, mining or other activities may also have Income Tax and National Insurance implications.
For clients with cryptoasset portfolios, the message is simple: historic informality is coming to an end. Accurate records, transaction histories, wallet information, and exchange reports should be gathered and reviewed. Where historic tax reporting has been missed, voluntary disclosure should be considered before HMRC raises questions to avoid potentially large penalties being levied in the event of an enquiry.
Pillar 2 is now firmly part of the international tax compliance landscape for large groups. The rules are designed to ensure that large multinational and domestic groups pay a minimum effective tax rate, with the UK regime covering Domestic Top-up Tax and Multinational Top-up Tax.
The UK registration requirement applies where a group has at least one UK entity and consolidated annual group revenues of €750 million or more in at least two of the previous four accounting periods. HMRC guidance makes clear that a group must register even where no top-up tax is ultimately payable. Registration must generally take place no later than six months after the end of the group’s first accounting period in which it meets the criteria.
Pillar 2 is not only a tax payment issue; it is also a governance, data and reporting issue. Groups may need to identify a filing member, gather information across jurisdictions, assess whether they fall within domestic or multinational top-up tax, and understand what internal systems are needed to support compliance.
For UK-only groups, the registration may relate only to Domestic Top-up Tax. For groups with entities both inside and outside the UK, registration may be required for both UK Pillar 2 taxes. HMRC’s registration guidance also confirms that details of the ultimate parent entity, filing member, accounting period, contact details and group structure will be needed as part of the process.
Even where the numbers suggest no immediate top-up tax liability, groups should avoid treating Pillar 2 as a year-end technical exercise. The data requirements can be significant, and responsibility for registration and reporting should be agreed early.
UK businesses, landlords and high-income individuals often incur VAT overseas on hotels, exhibitions, professional fees, fuel and local services. Yet many never reclaim it, either because the process is misunderstood, considered too complex or simply overlooked.
Overseas VAT cannot be recovered through a UK VAT return. Instead, claims must be made directly to foreign tax authorities, each with their own rules, deadlines and evidential requirements.
In principle, overseas VAT recovery offers a valuable cash-flow opportunity. Businesses may be able to recover VAT incurred on business-related overseas costs, reducing unnecessary expense leakage and improving profitability.
In practice, however, reclaiming overseas VAT is rarely straightforward.
Eligibility rules vary significantly between countries, supporting documentation must often meet local requirements and strict deadlines apply – missed claims can mean lost refunds. Since Brexit, UK businesses can no longer use a single EU portal, with separate submissions required under the 13th Directive framework.
For internationally active businesses and property investors, overseas VAT recovery should not be treated as an afterthought. The real value comes from identifying reclaim opportunities early and embedding VAT recovery into wider commercial and operational processes.
Recoverable VAT exists, but only when it is identified and managed properly. Read the full article here.
For UK-based shareholders and entrepreneurs, relocating to Germany can present attractive commercial and lifestyle opportunities. However, becoming German tax resident may also trigger important tax consequences that warrant careful planning before any move is made. One of the most significant is Germany’s exit tax regime.
The regime applies to individuals holding at least a 1% interest in a corporate entity who have been subject to German tax residence for a qualifying period. On departure from Germany or where Germany loses taxing rights over the shares, unrealised gains may be taxed as though the shareholding had been sold at market value, even if no actual disposal occurs.
Germany remains an attractive destination for internationally mobile individuals and business owners. However, the interaction between residence rules, private company shareholdings and future mobility can create unexpected tax exposure.
In practice, determining residence status, valuing privately held shares and assessing treaty interaction under the Germany-UK Double Tax Convention can all add complexity. For founders, executives and investors with significant corporate interests, early planning is often essential.
Understanding potential exposure before establishing German residence, including reviewing holding structures and obtaining coordinated UK and German tax advice can help avoid unexpected liabilities and provide greater certainty over future tax outcomes.
Read the full article here or please reach out to Schlecht und Partner.
Last updated: 04.06.2026
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