Budget 30 October 2024 – key tax changes
Budget 30 October 2024 – key tax changes
This is a short memo on the UK‘s Budget as announced by the new Labour Party’s Chancellor on 30/10/2024. We have been approached by many professional contacts for details on the key developments for their clients with international links as well as entrepreneurial businesses. With so many UK Budget posts online and emails being sent around we were concerned that readers had got bored of the repetition and thus could not focus. The following items appear to be the most important to those that have been in touch:
Non-Domicile rules from April 2025 => Tax Residence-Based Taxation
(a) The transition which was expected is still starting on 6 April 2025. Confirms the abolition of the Non-Dom regime/status in the UK and therefore the Remittance Basis of taxation for those tax resident here for 4 years.
(b) All UK residents are expected to pay UK taxes on their worldwide income and gains, subject to electing for the new Foreign Income & Gains (FIGs) regime, available for up to 4 tax years (to ‘new arrivers’). The Remittance Basis ends, so 2024/25 is the last tax year for that.
(c) A Temporary Repatriation Facility (TRF) will run as announced previously, to encourage UK residents with FIGs previously un-taxed in the UK (due to the Remittance Basis applying), to repatriate those here. A special 12% income tax rate for 2025/26 & 2026/27 will apply, and then a slightly higher rate at 15% for 2027/28. *This is one year in addition to that announced by the previous government. **We expect there is useful work to be done here for UK clients who have un-taxed FIGs including Mixed Funds overseas who want to benefit from this TRF. Existing ‘clean capital’ looks safe to repatriate here free of taxes if its reasonably identifiable.
(d) Significant new exposure on UK resident ‘settlors’ of offshore trusts after those first 4 tax years. They will no longer be able to shield foreign assets from UK taxes. *Planning ought to be available for these UK resident settlor-beneficiaries.
(e) Long-term residents i.e. tax resident in the UK for at least 10 out of the last 20 tax years, will be subject to UK IHT on their non-UK assets. and remain in scope for between 3 and 10 years after leaving the UK. *Historic UK-India tax treaty planning & similar appears to be lost going forwards.
(f) Helpfully, rebasing of foreign assets for Non-Doms is available. Residents may rebase their non-UK assets to their market values as of 5 April 2017, again to encourage UK tax and repatriations (on current un-crystallised/pregnant gains).
Inheritance Tax (IHT) exposure
(a) IHT on Unspent Pensions; from April 2027 unspent pension funds e.g. defined contribution products will be subject to UK IHT as part of the resident saver’s Estate. This is a critical change for IHT planning involving pensions.
(b) Agricultural Relief and Business Relief adjustments are effective from April 2026, such that only the first £1 million (combined as appropriate) assets/property will receive 100% relief, but with a new reduced rate of only 50% for value above this threshold.
Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) for CGT exposure
(a) BADR and IR tax rates will increase – from 10% – to 14% in April 2025, and reach 18% in April 2026.
(b) The lifetime allowance limit for IR will be reduced to £1 million (from £10 million) from April 2025, aligning it with the existing BADR limit.
Property Tax changes
(a) Higher SDLT Rates on additional dwellings, effective immediately from 31 October 2024. E.g. on second homes, buy-to-let properties, etc. Extra SDLT payable will increase from 3% to 5% which is in addition to the extra 2% Non-Resident buyers already pay since April 2021.
Crypto taxation and reporting
(a) New Crypto Asset Reporting Framework (CARF) from 1 January 2026, where UK holders will be required to report crypto asset ‘holdings’ in alignment with international standards. This is significant, because currently investors only need to report gains/losses/ income etc but not their holdings.
Additional HMRC Staff (*something we are particularly interested in)
(a) Starting in 2024, HMRC will reportedly receive funding for 5,000 Compliance and 1,800 Debt Management staff, along with IT upgrades to improve tax collection and enforcement. We consider this will likely be a mixture of recruitment and re-training staff.
(b) Mandatory registration for tax advisers from April 2026, but its unclear whether this will be a material move or is just gesturing.
