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Legal News | 7.03.24

Spring Budget 2024 – a spring clean of the UK tax system?

Spring Budget 2024

Although Inheritance Tax was not high on the agenda (once again!) in yesterday’s Spring Budget, it did make a cameo appearance and there were some notable changes to the UK tax system that were outlined by Chancellor Jeremy Hunt. Please find below a summary of these:

Domicile v Residence
This change sees a move away from basing the non-UK domicile tax regime on domicile and more on residency in the UK.

There has been much publicity about non-doms being able to elect to pay UK tax only on UK source income and capital gains, and those remitted to the UK. From 6 April 2025 these rules will disappear to be replaced by a residence-based approach.

Something that has received less publicity is the fact that non-doms are only subject to UK inheritance tax on UK situated assets.

The UK Government will begin consultations on options to alter the current Inheritance Tax regime so that it moves away from its focus on domicile to a focus on residence. Any changes will likely not be implemented until 6 April 2025 at the earliest.

Capital Gains Tax
The higher rate of capital gains tax applied to the sale of residential property will be reduced from 28% to 24% from 6 April 2024. This is likely to be welcome news to trustees and personal representatives selling residential property at a gain.

UK ISA
A new ISA will be introduced which will provide an additional £5,000 allowance to invest in “UK focused assets” tax free. Further details, including when this ISA is going to be offered, are yet to be released.

Stamp Duty Land Tax
Multiple Dwellings Relief, which is a relief from SDLT, will be abolished from 1 June 2024.

IHT – Agricultural Property Relief
This relief will be extended from 6 April 2025 to include land managed under an environmental agreement with, or on behalf of, the UK government and other public organisations.

Other notable changes included that National Insurance Contributions will be reduced for employees (from 10% to 8%) and the self-employed (from 9% to 6%) from 6 April 2024 and the child benefit income threshold will also be increased.

If you’d like more information on how best to plan for the future, please get in touch with the Private Client team on wealth@wansbroughs.com

 

Posted By Our Wills, Tax, Trusts & Probate Team