Business Investment Relief: Funding a Development Company With Non-Dom Foreign Income

A non-dom client with money sitting offshore and an appetite to back a development company in the North West used to have a straightforward route in: Business Investment Relief. The remittance basis it was built on was abolished from 6 April 2025, and it would have been reasonable to assume BIR went with it. It didn't — but it now comes with an expiry date, and the funds it can shelter are frozen at a point in the past rather than growing with new offshore income.

What Business Investment Relief actually does

Business Investment Relief, set out in ITA 2007 sections 809VA to 809VO, allows an individual who has claimed the remittance basis to bring foreign income or gains into the UK without triggering the remittance charge that would otherwise apply, provided the money is invested in a qualifying UK company within 45 days of the funds arriving in the UK. Before April 2025 this was a live planning tool for any non-dom wanting to fund a UK business without the usual cost of remitting offshore wealth. It's the reason a development SPV raising equity from an overseas family office could sometimes access that money on better terms than a UK-resident investor working from already-taxed funds.

What counts as a qualifying company

The target has to be, or become within five years, an "eligible trading company": one that carries on one or more commercial trades, where carrying on those trades makes up substantially all of what the company does — HMRC generally treats "substantially" as 80% or more of its activity. The point worth knowing for a property client is that HMRC's guidance for BIR purposes specifically extends "trade" to include a property development business, and in some circumstances a property rental business, as capable of meeting the eligible-trading-company test. That's a wider definition than the trading tests used for reliefs like Business Asset Disposal Relief or EIS, where straightforward property letting is generally treated as investment activity rather than trading and excluded outright. It means a development SPV is squarely within scope, but the position for a company holding investment property for rental income still needs checking against the specific BIR conditions rather than assumed from how other reliefs are drawn.

The transitional rules since the remittance basis was abolished

From 6 April 2025 the remittance basis was replaced with a new foreign income and gains regime giving qualifying new UK arrivals full relief on foreign income and gains for their first four years of residence, with no equivalent relief once that window closes. Because BIR is built on the old remittance basis mechanics, the government preserved a transitional route rather than withdrawing it overnight: Business Investment Relief remains available against foreign income and gains that arose on or before 5 April 2025, while the remittance basis was still being claimed, and that transitional protection runs until 5 April 2028. New foreign income and gains arising after 5 April 2025 don't have the same route into BIR — they fall to be considered under the new regime's own rules instead. From 6 April 2028, BIR is withdrawn completely, including for anyone wanting to reinvest proceeds that were previously sheltered under it.

The clawback risk that comes with the relief

BIR isn't a one-off exemption that ends once the investment is made; it's conditional on the investment continuing to meet the qualifying tests. HMRC's rules identify a number of "potentially chargeable events" — the company ceasing to be an eligible trading company, a breach of the five-year rule for a company that was still preparing to trade, or the investor extracting value from the company, whether by way of loan, distribution, or the company buying an asset from the investor. Where a chargeable event doesn't itself generate cash proceeds, the investor typically has 90 days to dispose of the investment, and then a further 45 days to either remove the resulting funds from the UK or reinvest them in another qualifying company. Miss both windows and the remittance charge the relief was deferring becomes due after all, on the original amount brought in.

What this means in practice for a development company raising non-dom capital

For a property development company looking to raise equity from a non-dom investor, BIR is still a genuine route in for funds that were sitting offshore before 6 April 2025, and the extension of "eligible trade" to cover development activity makes the qualifying test easier to meet than for most other trading-company reliefs. What's changed is the shelf life: this isn't a relief to structure around as if it will always be there. Any raise relying on BIR should be modelled against the 5 April 2028 cut-off from the outset, with a clear plan for what happens to the investment, and the investor's exit route, once that transitional window closes.

Common questions

Is Business Investment Relief still available now the remittance basis has been abolished?

Yes, but only in a transitional form. The remittance basis of taxation was abolished for tax years from 6 April 2025 and replaced with a four-year foreign income and gains regime for new UK arrivals. Business Investment Relief can still be claimed against foreign income and gains that arose while the remittance basis applied, up to 5 April 2025, and transitional rules keep that route open for investments and reinvestments made up to 5 April 2028. From 6 April 2028, the relief is withdrawn entirely, including for reinvesting proceeds that were previously sheltered under it.

Does a buy-to-let or rental investment qualify as a target company for Business Investment Relief?

Ordinary property letting isn't usually treated as a trade for most UK tax purposes, but HMRC's guidance for Business Investment Relief specifically extends the eligible-trading-company test to include property development, and in some circumstances a property rental business, as capable of counting as a commercial trade. That's a materially wider definition than the trading tests used for reliefs such as Business Asset Disposal Relief or EIS, where pure property letting is generally excluded, so the structure of the target company still needs checking against the specific BIR conditions rather than assumed from how other reliefs treat property businesses.

What happens if the invested funds are later withdrawn from the company?

Certain events are treated as potentially chargeable events under the Business Investment Relief rules, including the company ceasing to be an eligible trading company, a breach of the five-year start-up rule for a company that was preparing to trade, or the investor receiving value back from the company. Where a chargeable event produces no cash proceeds, the investor generally has 90 days to dispose of the investment and a further 45 days to remove the resulting funds from the UK or reinvest them in another qualifying company; missing both windows can trigger the tax charge the relief originally deferred.

What is the deadline for using Business Investment Relief?

Under the transitional rules following the remittance basis abolition, Business Investment Relief remains available on new investments and reinvestments of pre-6 April 2025 foreign income and gains up to 5 April 2028. From 6 April 2028, it will no longer be possible to make a new BIR claim, including on money that is being moved out of one qualifying company and into another, so any structure relying on the relief needs to be in place well ahead of that date rather than at the deadline itself.

This article is general information, not personal tax or legal advice, and the rules referred to can change. Your own position depends on facts we cannot see from here — please take advice before acting on anything above.

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