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The IRS reminded disaster victims in nine states that their 2024 tax filing and payment deadlines are automatically extended until May 1, 2025, and clarified that those seeking to electronically request an additional extension should submit requests by April 15, 2025. (IR 2025-41, 4/4/2025). The automatic May 1 extension is available to taxpayers in the states of Alabama, Florida, Georgia, North Carolina, and South Carolina.

Requesting further extension:

Though taxpayers in these nine states can request a tax filing extension between April 15 and May 1, 2025, the requests cannot be filed electronically after April 15, the IRS explained. Instead, extension requests made after April 15 must be filed only on paper using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

The IRS also emphasized that requests for an extension beyond the May 1 deadline are not an extension of time to pay.

Relief for taxpayers in other disaster areas:

Taxpayers in other areas also eligible for automatic extensions, the IRS noted. This includes:

• California – Los Angeles County: These taxpayers have until October 15, 2025, to file 2024 returns and pay taxes due.
• Kentucky – all: These taxpayers have until November 3, 2025, to file 2024 returns and pay taxes due.
• West Virginia – Boone, Greenbrier, Lincoln, Logan, McDowell, Mercer, Mingo, Monroe, Raleigh, Summers, Wayne, and Wyoming counties: These taxpayers have until November 3, 2025, to file 2024 returns and pay taxes due.
• Israel terrorist attacks: Relief is available to taxpayers that live or have a business in Israel, Gaza, or the West Bank, and certain other taxpayers affected by attacks. These taxpayers generally have until September 30, 2025, to file and pay returns for taxes due between October 7, 2023, and September 30, 2025.

Please contact our team if you require further information.

Key Changes

• Foreign Earned Income Exclusion (FEIE): Increased to $130,000 (from $126,500 in 2024), allowing expats to exclude more foreign-earned income from U.S. taxation.
• Standard Deduction:
  • Single filers: $15,000
  • Married filing jointly: $30,000
  • Head of household: $22,500
• Retirement Contribution Limits:
  • 401(k) and 403(b): Increased to $23,500
  • IRA: Remains at $7,000

Income tax rates 2025

Filing Deadlines for Expats

• April 15, 2026: Deadline to pay any taxes owed.
• June 15, 2026: Automatic filing extension for expats.
• October 15, 2026: Extended deadline with Form 4868.
• December 15, 2026: Further extension possible with written request.

Note: Extensions to file do not extend the time to pay taxes owed.

The Internal Revenue Service issued a reminder that retirees who turned 73 in 2024 were required to start receiving payments from Individual Retirement Arrangements (IRAs), 401(k)s, and similar workplace retirement plans by Tuesday, April 1, 2025.

Required minimum distributions (RMDs) are typically due by the end of the year. However, individuals who turned 73 in 2024 could delay their first RMD until April 1, 2025. This special rule applied to IRA owners and participants born after December 31, 1950.

Two RMD payments possible in the same year The April 1 RMD deadline applied only to the first year. For subsequent years, the distribution was due by December 31.

Taxpayers receiving their first required distribution for 2024 in 2025 (by April 1) needed to take their second RMD for 2025 by December 31, 2025. The first distribution was taxable in 2025 and reported on the 2025 tax return, alongside the regular 2025 distribution.

The long-established non-domicile system allows individuals who live in the UK but are domiciled elsewhere for tax purposes to avoid paying UK tax on overseas income and capital gains for up to 15 years.

However, during the October budget, the government announced that the regime would be abolished from 5 April 2025, making long term residents liable for inheritance tax on their global assets, including those held in trusts.

Since then, Chancellor Rachel Reeves revealed that an amendment to the Finance Bill would be introduced to improve the temporary repatriation facility (TRF). This scheme enables non-doms to transfer funds to the UK at a reduced tax rate of 12% for both individuals and now trusts.

Overseas investors were also reassured by Reeves that the UK’s double taxation agreements would remain unchanged. A Treasury spokesperson confirmed that the government aims to encourage non-doms to transfer their funds to the UK to stimulate investment and spending.

The October Budget’s non-dom crackdown was part of a broader set of policies aimed at high net-worth individuals, including increased taxation on private equity executives, private schools, second homes, and private jets. Critics warned at the time that such measures could lead to an exit of wealthy individuals, potentially undermining investment and economic growth.

Temporary Repatriation Facility (TRF)

As mentioned above, an amendment to the Finance Bill would be introduced to improve the temporary repatriation facility (TRF) which will enable non-domiciles to transfer funds to the UK at a reduced tax rate of 12%.

Most eligible HNW taxpayers will wish to make full use of the temporary repatriation facility and will welcome the news that the scheme is to be enhanced further.

James Austen, tax partner at Collyer Bristow, noted that “The government’s proposed amendment to the Finance Bill is not a significant change to its plans, and many of the concerns about the new regime, particular in relation to trusts and IHT, remain. I don’t expect this will ‘move the dial’ for most non-doms,” he added.

Matthew Braitwaite, head of Wedlake Bell’s private client offshore team, shared similar sentiments, stating, “The TRF is welcome news to the non-dom community still in the UK who may now stay a while longer, although this may only delay but not prevent their plans to leave, and for others it may be too little too late”.

Taxation of carried interest in the UK

There will be no change to UK taxation of carried interest proceeds received in the year ended 5th April 2025. The 2025/26 tax year will be a transition year, with a tax rate increase from 28% to 32% for carried interest capital gains. Other than this, there are no changes to current UK rules for taxation of carried interest.

From 6th April 2026, more significant changes to UK taxation of carried interest are set to be effective and to affect all carried interest proceeds received on or after 6th April 2026.

What changes to carried interest taxation are proposed from 6th April 2026?

• Carried interest proceeds – taxed as trading income of individual receiving the carried interest. Income tax and self-employed (Class 4) national insurance will apply.
• Default rule – carried interest subject to tax at the recipient’s marginal rate of income tax and Class 4 national insurance.

The current marginal rate for income tax and Class 4 national insurance for additional rate taxpayers is 45% and 2%, respectively, this means the default tax rate for carried interest proceeds from 6th April 2026 will be 47% for additional rate taxpayers.

Qualifying carried interest

A special rate will apply to carried interest which is “qualifying carried interest”, which is stated to be 72.5% of the current rates.

E.g. this special rate will be 34.075% for additional rate taxpayers, i.e. 47% multiplied by 72.5%.

In order to be “qualifying carried interest” to which this 72.5% multiplier applies:

• Carried interest must fall within the existing definition of carried interest within “disguised investment management fee” (DIMF) rules;
• Carried interest must not be treated as “income based carried interest” (IBCI)

Whilst 2025/26 rules that we have detailed above seem to be confirmed, there was a consultation on the changes that apply from 6th April 2026, which ended recently on 31st January 2025, therefore, there may be further revisions to changes of carried interest taxation from 6th April 2026.

Please contact our team for further information.

HMRC has reversed its controversial tax clampdown on members of limited liability partnerships (LLPs), following pressure from the private equity and professional services sectors. The move comes after concerns that the changes could have triggered hundreds of millions of pounds in backdated tax liabilities.

Last year, HMRC unexpectedly altered its interpretation of the rules for LLPs – commonly used by private equity, legal, and accountancy firms – and began investigations into firms past tax arrangements. However, after industry lobbying and in an effort to rebuild ties with the business community post-Budget, HMRC confirmed it will withdraw the changes.

“Having conducted a thorough review and listened carefully to industry representatives, we’ve decided that the anti-avoidance rule does not apply where top-ups are genuine, intended to be enduring and give rise to real risk.” said HMRC, following a review and talks with industry bodies.

The Chartered Institute of Taxation (CIOT) welcomed the decision. Technical officer Christopher Thorpe said: “We’re pleased HMRC has revised its view of condition C, as their previous interpretation could have equated perfectly innocuous and commercial investments with abusive actions.”

In an email seen by the Financial Times, HMRC informed professional bodies earlier this month that it would effectively reverse the changes made in February 2024.

The British Private Equity & Venture Capital Association (BVCA) and the CIOT both welcomed the reversal.

The dispute centred on rules introduced in 2014, which determine whether LLP members are treated as self-employed or employees. A key test – known as condition C – requires members to contribute capital equal to at least 25% of their profit share to be considered self-employed. Falling short of this threshold triggers employer National Insurance contributions.

Chancellor of the Exchequer, Rachel Reeves, held the Spring Statement on Wednesday 26th March 2025. In the run up to the event, the Chancellor stated that she ‘remains committed to one major fiscal event a year to give families and businesses stability and certainty on upcoming tax and spending changes and, in turn, to support the government’s growth mission’.

The Chancellor did meet her commitment that there would be no major tax announcements but tax is only one side of the equation.

The other is spending and the Spring Statement confirmed a number of the measures recently announced, namely:

• cuts to the welfare state
• cuts to the civil service
• an increase in defence spending

There were also announcements about the rollout of the Making Tax Digital (MTD) for Income Tax project.

For more information see the full statement Here.

Please do not hesitate to contact our team here at Frontier Group if you have any questions.

As we are fast approaching the 5 April 2025 fiscal year end, now is a good time to consider your circumstances for general year-end tax planning for UK purposes. Particularly of note are certain changes for the treatment of non-UK domiciled individuals.

There are actions you may want to take before the end of the tax year. Detailed below are the main issues to consider for all taxpayers at this time of year. Note that for US persons there may be further considerations: –

Changes to the UK Non-Dom rules

From 6 April 2025 the non-dom regime will officially come to an end, being replaced with a residency-based system whereby an individual who is resident for 10 of the last 20 years will be considered a “Long Term Resident”.

The remittance basis of taxation will no longer apply and this is being replaced by a 4 year foreign income and gain exemption, where individuals qualify, along with a temporary repatriation facility for individuals that previously benefited from the remittance basis. UK residents that do not qualify for the 4 year income and gains exemption will move to a worldwide basis of UK taxation from 6 April 2025.

Individuals that have been claiming the remittance basis of taxation and will move to worldwide taxation on 6 April 2025 should consider a review of their affairs and foreign investments to ensure this is efficient for UK purposes moving forward.

Offshore trust arrangements should also be reviewed for any required actions before 6 April 2025.

For further details on the upcoming changes, please see our website article Here

Business Investment relief

• This allows the remittance of income taxable on the remittance basis.
• It is possible to invest into EIS or SEIS companies using this relief.
• It is possible to invest into your own business.
• It is possible to make investments into a property rental business.
• We are able to obtain HMRC advance clearance on transactions, thus attaining certainty on the non-taxation of remittances to the UK

Note that Business Investment relief is due to expire for any new investments on 5 April 2028.

Pensions

Many individuals utilise pensions as part of their overall tax planning strategy. At the end of the UK tax year, it is worth reviewing your pension contributions for the year and consider any optimisation as well as ensure you have not overstepped the mark, especially since HMRC have drastically reduced the amounts from historic levels that are relievable for tax for higher earners. Some of the key things to note are as follows:

• You are entitled to pay in up to £60,000 tax free per year, but this is tapered once your income exceeds £260,000 to a minimum of £10,000 allowance when your income exceeds £360,000.
• Unused allowances are carried forward for three years.
• Tax relief for pension contributions is claimed on your tax return where contributions are made net of tax.
• If you or your employer overpays into your pension you could be liable to an additional tax charge.
• From 6 April 2023 the lifetime allowance no longer applies.
• Note that the Government intends to include pensions in a taxpayers estate for UK Inheritance Tax from 6 April 2027.

It is advisable to review your position to avoid any pitfalls and optimise where necessary.

US mutual funds and other non-UK funds

Those individuals that will newly become subject to UK tax on a worldwide basis from 6 April 2025 should review their offshore investments.

• It is important to review your investment portfolio, there may be changes required within your portfolio to ensure that your investments are UK efficient. For example, the sale of a US mutual fund (non-reporting fund for UK purposes) leading to a gain, may be liable to income tax (45%) on such income gains, as well as the fact that other losses from other mutual funds may not be allowable against such gains. It is imperative to review your portfolio in such circumstances.
• There may be other tax mitigation strategies that can be enacted before the assets become liable to UK taxation.

Inheritance Tax and US Estate tax implications

UK Inheritance Tax (IHT) is assessed on the estate of a deceased individual as well as certain gifts you make whilst you are alive.

From 6 April 2025 the non-dom regime will officially come to an end, being replaced with a residency based system whereby an individual who is resident for 10 of the last 20 years will be considered a “Long Term Resident” and liable to UK Inheritance Tax. Note that in some cases tax treaty relief may apply and will need to be reviewed.

The US estate and gift tax system works by providing each US domiciled individual a Lifetime allowance of $13.99m (2025) which can be used at death, although is reduced for taxable lifetime gifts. The annual tax-free gift exclusion per done is $19,000 (2025). Note that the current estate exemption is due to lapse on the 31st of December 2025 and will revert to a lower amount unless the provisions are extended.

Both systems need to be navigated to ensure effective planning, however with the generous US lifetime allowance there may be no tax liability of a gift for US purposes, however there are certain filing requirements if a US person makes a gift of more than $19k or receives a gift from a non-US person.

• Broadly, each UK individual has a nil rate IHT allowance of £325,000 (this can be increased to £500,000 where the estate includes your primary residence). Assets in the estate in excess of the tax free allowance are generally charged at 40%.
• Effective planning may include setting up a trust, gifting assets, changing the composition of the estate to include exempt assets.
• Additionally certain gifts can be made tax free each year.

UK Inheritance Tax reliefs for Agricultural Property Relief and Business Property Relief (APR/BPR) are set to be restricted from 6 April 2026.

Family Investment Company (FIC)

A family investment company (FIC) is a private limited company which is used as a long-term investment vehicle. It Can provide an effective way to shelter income and assets from higher rates of taxation and Inheritance Tax. Some of the key benefits of an FIC are as follows:

• The FIC can retain profits for investment rather than those profits being drawn out and being subject to higher rates of personal tax in the hands of the shareholders.
• The FIC can be used as an effective tool to manage the passing down of assets to future generations in a controlled and tax efficient manner e.g. gifting non-voting shares to mature offspring in order to retain control of assets, whilst allowing assets to pass down to children.

Before an FIC is implemented, one must carefully consider if it is an appropriate strategy for you and your family’s long-term circumstances. I would advise that before implementing such a strategy you must seek tax and possibly legal advice.

Excess Foreign tax credits (FTCs) – For US Taxpayers

Excess FTCs arise due to the fact UK tax rates are higher that US tax rates, a US person is able to carry these excess credits forward for a period of 10 years. These excess credits can be useful in a number of scenarios, not limited to the opportunities raised in this article.

In conjunction with much of the planning detailed above and below, a review of your excess FTCs must be carried out to understand the impact from both a UK and US tax perspective.

For example, you may generate a UK tax refund by making an EIS investment, however you could be in scenario where you have to pay some or all of the refund back to the IRS, due to a lack of UK tax paid that year or excess FTCs.

Investors Relief

Investors’ Relief reduces the amount of Capital Gains Tax on a disposal of shares in a trading company that is not listed on a stock exchange. It applies to shares that are issued on or after 17 March 2016 that are disposed of on or after 6 April 2019, as long as the shares have been owned for at least 3 years up to the date of disposal. It is not usually available if you or someone connected with you is an employee of the company. Qualifying capital gains for each individual are subject to a lifetime limit of £10 million.

If you’re entitled to Investors’ Relief, qualifying gains up to the lifetime limit applying at the time you make your disposal, will be charged to CGT at the rate of 10%.

The conditions for qualification are broadly:

• They are ordinary shares in the company

• You subscribed for them in cash and they were fully paid up when issued

• The company is a trading company or the holding company of a trading group

• None of the company’s shares are listed on a stock exchange

• Neither you nor any person connected with you is an employee of the company or of a company connected with it

It is essential that a detailed review of the investment is undertaken to confirm qualification for this relief.

Other Opportunities

If you are interested in further tax planning, then the following tax-efficient investments are also available. If you are considering any tax planning opportunities for the future, please get in touch. We have provided an overview below but please note that there are qualifying conditions and limits on these investments. In addition, clients that are US citizens may need further considerations.

Please do not hesitate to contact our team here at Frontier Group and we are happy to arrange a consultation.

Frontier Fiscal Services Limited

The UK government is set to soften some of its planned changes to the non-domicile tax regime following concerns about a potential departure of wealthy individuals, the Treasury has confirmed.
The long-established non-domicile system allows individuals who live in the UK but are domiciled elsewhere for tax purposes to avoid paying UK tax on overseas income and capital gains for up to 15 years.

However, during the October budget, the government announced that the regime would be abolished from April 2025, making long term residents liable for inheritance tax on their global assets, including those held in trusts.
Since then, Chancellor Rachel Reeves revealed that an amendment to the Finance Bill would be introduced to improve the temporary repatriation facility (TRF). This scheme enables non-doms to transfer funds to the UK at a reduced tax rate of 12%,

Double Tax Agreements remain unchanged

Overseas investors were also reassured by Reeves that the UK’s double taxation agreements would remain unchanged. A Treasury spokesperson confirmed that the government aims to encourage non-doms to transfer their funds to the UK to stimulate investment and spending.
The October Budget’s non-dom crackdown was part of a broader set of policies aimed at high net-worth individuals, including increased taxation on private equity executives, private schools, second homes, and private jets. Critics warned at the time that such measures could lead to an exit of wealthy individuals, potentially undermining investment and economic growth.

Temporary Repatriation Facility (TRF)

As mentioned above, an amendment to the Finance Bill would be introduced to improve the temporary repatriation facility (TRF) which will enable non-domiciles to transfer funds to the UK at a reduced tax rate of 12%,
Most eligible HNW taxpayers will wish to make full use of the temporary repatriation facility or at least ensure that the correct steps are taken before April 5, 2025 to ensure they are eligible for the TRF post April 5, 2025.

Please contact our team for further information.

Federal Tax

The 2025 cost-of-living adjustments that affect pension plan dollar limitations and other retirement-related provisions have been released by the IRS. The changes have been implemented as the increase in the cost-of-living index, due to inflation, met the statutory thresholds. However, other limitations will remain unchanged.

Highlights of Changes for 2025

1. The contribution limit has increased from $23,000 to $23,500. for employees who take part in:

• -401(k),
• -403(b),
• -most 4 5 7 plans, and
• -the federal government’s Thrift Savings Plan

2. The annual limit on contributions to an IRA remains at $7,000.

Phase-Out Ranges

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. The deduction phases out if the taxpayer or their spouse takes part in a retirement plan at work. The phase out depends on the taxpayer’s filing status and income.

• For single taxpayers covered by a workplace retirement plan, the phase-out range is $79,000 to $89,000, up from between $77,000 and $87,000.
• For joint filers, when the spouse making the contribution takes part in a workplace retirement plan, the phase-out range is $126,000 to $146,000, up from between $123,000 and $143,000.
• For an IRA contributor who is not covered by a workplace retirement plan but their spouse is, the phase out is between $236,000 and $246,000, up from between $230,000 and $240,000.
• For a married individual covered by a workplace plan filing a separate return, the phase-out range remains $0 to $10,000.

The phase-out ranges for Roth IRA contributions are:

-$150,000 to $165,000, for singles and heads of household,

-$236,000 to $246,000, for joint filers, and

-$0 to $10,000 for married separate filers.

The income limit for the Saver’ Credit is:

-$79,000 for joint filers,

-$59,250 for heads of household, and

-$39,500 for singles and married separate filers.