Frontier Budget Summary 2024

After much speculation Jeremy Hunt has now announced major changes to the non dom rules and remittance basis of taxation as we know it. The government will abolish the current remittance basis of taxation for UK resident non-domiciled individuals and this will be replaced with a new 4 year foreign income and gains regime. These changes will impact many who have come, or are planning, to live and work in the UK. Below is a summary of the key changes that will take place from 6^th April 2025:

 

Non Dom Changes

 

• The new 4 year foreign income and gains (FIG) regime will be available to individuals who become resident after a period of 10 years of non-residence. Qualifying individuals will not pay tax on FIG arising in the first 4 years of becoming UK tax resident and will be able to bring these funds to the UK free from any additional charges.
• Individuals who on 6^th April 2025 have been tax resident in the UK for less than 4 years will be able to use this regime for any tax year of UK residence in the remainder of those 4 years.
• Individuals who are not eligible for the new regime and who will move from the remittance basis to the arising basis on 6^th April 2025 will, for 2025/26 only, pay tax on 50% of their foreign income. This reduction will not apply to foreign chargeable gains.
• Individuals who have claimed the remittance basis of taxation will have the option to rebase the value of capital assets they held personally at 5^th April 2019 to the value of the asset at that date.
• Those who have been taxed on the remittance basis will be able to elect to pay tax at a reduced rate of 12% on remittances of pre-6^th April 2025 foreign income and gains under a new Temporary Repatriation Facility.
• Overseas workday relief will continue to be available for the first 3 years of UK residence for those who are eligible for the 4 year FIG regime.  The relief will be simplified for those who are eligible, allowing relief even if earnings related to overseas work are brought to the UK.

 

 

Trusts

 

There are also major changes taking place to settlor-interest trust structures. Under the current rules, trusts settled by non-UK domiciled individuals benefitted from a ‘protected’ trust status whereby income and gains within the trust were free from UK income tax and CGT. From 6^th April 2025 this protected trust status will be removed for all current non-domiciled and deemed domicile individual who do not qualify for the 4 year FIG regime.

 

 

IHT

 

It is also important to note that the government intends to moved IHT from a domicile-based system to a residence-based system. This will be subject to consultation and we will be able to provide more detail on how this may impact you in due course.

 

Other changes to other aspects of taxes have also been announced and you will be able to find more details on this in our budget summary below:

 

Frontier Budget Summary 2024

 

Should you wish to discuss any of these changes or would like to understand how the changes may impact you, please do get in touch.