Proposals affecting UK tax for non-residents during the Autumn Budget 2024 include a reform of the non-UK domiciled rules, tackling offshore tax avoidance and changes to rules on overseas pensions.
The Chancellor, Rachel Reeves announced the following measures:
- The non-UK domiciled regime will be abolished from 6 April 2025.
- A new temporary repatriation facility will be available for certain qualifying individuals.
- The government aims to tackle offshore tax avoidance and non-compliance.
- There are updates to overseas pension transfers.
- There will be a repeal of offshore receipts in respect of intangible property (ORIP).
Non-UK domiciled regime
The current non-UK domiciled regime which allows for income to be taxed on a remittance basis for non-UK domiciled taxpayers will be abolished and replaced with a new regime based on residence status.
Here we are provide a summary of budget measures, see our Client briefing for Non-dom' changes, now that draft legislation has been published.
From 6 April 2025:
- 100% tax relief will be available for new arrivals to the UK on their foreign income and gains.
- The relief will be available for the first 4 years of their UK residence provided they have not held residence within the UK in any of the 10 consecutive years prior to their arrival in the UK.
- For past remittance basis users, foreign assets will be rebased at 5 April 2017 for capital gains tax (CGT) purposes.
- Foreign income and gains arising prior to 5 April 2025 will continue to be taxed under the remittance basis rules even if the individual is eligible for the new 4-year regime.
- The current domiciled based inheritance tax (IHT) system will be replaced with a residence based system.
A temporary repatriation facility will be available for individuals who have previously claimed using the remittance basis.
This facility will:
- Only be available for a transitional period for 3 years.
- Allow individuals to be able remit income and gains arising before 5 April 2025 at a reduced rate.
- Be available at 12% for the first two years and 15% for the last year.
Overseas workday relief will be:
- Retained but extended from 3 years to 4 years in line with the new measures.
- Limited to the lower of £300,000 or 30% of the individuals total employment income.
Budget documents and draft legislation, see Policy paper: Reforming the taxation of non-UK domiciled individuals and Tax changes for non-UK domiciled individuals Policy paper
See Non-Doms & Remittance 2024 Proposals: Client Briefing
Tackling off-shore anti-avoidance
-
The government seeks to better understand where there is ambiguity, undue complexity and inconsistency in the application of the offshore anti-avoidance rules in the following areas:
- Settlements legislation
- Transfer of Assets Abroad legislation
- Capital Gains Tax legislation
It has issued a call for evidence, focuses on specific areas of legislation, but the government welcomes wider comments and recommendations on other areas of personal tax offshore anti-avoidance legislation which could be consulted on as part of this review. Budget documents: Call for evidencePersonal Tax offshore avoidance
-
See Simplifying Offshore avoidance legislation: Call for evidence
Tackling off-shore non-compliance
- HMRC will tackle offshore non-compliance by delivering transparency through international cooperation. The aim is to assist taxpayers in getting tax right the first time and minimising errors.
-
At Autumn Budget 2024, the government announced a suite of changes to increase access to, and improve our use of, transparency data. This includes:
- extending CARF reporting to UK crypto-asset users, in order to make it easier for HMRC to systematically collect this information
- making changes to the penalty regime for failure to report CRS data, to ensure reporting institutions are meeting their obligations
- publishing a consultation on ways to help tackle problems arising from the mismatch of overseas interest data provided on a calendar year rather than UK tax year basis. The consultation seeks to make it easier for taxpayers to declare the correct tax, and for HMRC to help them, and detect non-compliance
In addition to taking domestic action, the UK will continue to work with international partners to further extend the global transparency system and address remaining gaps, such as non-financial assets. The G20 has mandated the OECD to explore new initiatives to increase transparency on real estate holdings and transactions, and to improve access to beneficial ownership information across jurisdictions.
- See Policy paper: Tackling offshore tax non-compliance
Changes to rules for overseas pensions
- From 30 October 2024: The Overseas Transfer charge is a 25% charge that applies to individuals who transfer all or part of their pension to a qualifying recognised overseas pension scheme (QROPS). There is an exclusion from the charge when certain conditions are met.
- From 6 April 2025: conditions relating to Overseas Pension Schemes and Recognised Overseas Pension Schemes established in the EEA will be aligned with similar schemes established in the rest of the world.
- From 6 April 2026: There will be a requirement for all registered pension schemes to have a UK resident scheme administrator.
- See Policy Paper: Changes to rules for overseas pensions and scheme administrators
Repeal of offshore receipts in respect of intangible property (ORIP)
- ORIP was originally a short term measures aimed at removing the incentive for large multinational enterpriese (MNE)s holding intangible property in low tax jurisdicition where the property is used to generate UK income.
- This legislation is no longer required because the Organisation for Economic Co-operation and Development (OECD) and G20 Inclusive Framework’s Pillar 2 global minimum tax will more effectively address.
- ORIP will be repealed in respect of income arising from 31 December 2024.
See Repeal of the Offshore Receipts in Respect of Intangible Property (ORIP) rules - Policy Paper
Simplifying the Taxation of Offshore Interest
- Individuals are taxed on investment income, including interest, arising in a tax year.
- Where the investment income is from a non-UK investment the individual will often receive details on a calendar year basis.
- HMRC also receives details on a calendar year basis under international exchange of information agreements.
- The 'mismatch' between the UK tax year and the calendar year reporting causes issues for both HMRC and taxpayers.
The number of taxpayers affected by this is likely to increase with the reform to the treatment of non-domiciles (non-dom reform) in the UK tax system and removal of the remittance basis. These changes are likely to increase the number of taxpayers required to report non-UK investment income to HMRC via self-assessment.
See Consultation: Simplifying the Taxation of Offshore Interest
Useful guides on this topic
Autumn Budget 2024: At a glance
Our At a glance view to the Autumn Budget 2024
Our Autumn Budget 2024: Live Speech highlights
Our live feed summary of the highlights of the Chancellor's Autumn Budget speech.
