Autumn 2024 Budget Review

Altum Insights

The Autumn Budget Review, 2024, outlines significant changes to the UK’s tax regime, including the abolishment of the current non-dom status, adjustments to inheritance tax, and revisions to capital gains tax. Our latest thought leadership by Paul Tomlinson, Head of Family Office at Altum Group provides a high level overview of these changes and their implications.

Key changes

• Abolishment of the Current Non-Dom Status: From 6 April 2025, the existing remittance basis regime will be replaced with a four-year residence-based exemption regime known as the “four-year FIG regime”. This will exempt most forms of foreign income and gains from UK tax for individuals. The FIG regime will be available for individuals moving to the UK to claim during the first four years of tax residency and who have been resident outside the UK for at least 10 consecutive years.
• Inheritance Tax (IHT): From 6 April 2025, individuals who have been UK residents for at least 10 out of the last 20 tax years will be subject to IHT on their worldwide assets.
• Scope after leaving the UK: The duration an individual remains in scope after leaving the UK depends on their length of residence. For those who have been resident for between 10 and 13 years, they will remain in scope for three years, with the IHT tail increasing by one year for each additional year of residence. For example, an individual who has been UK resident for 17 years will remain in scope for seven years after leaving the UK.
• Relief for agricultural and business property: From April 2026, the first £1m of agricultural and business property will remain tax-free, with assets over £1m receiving 50% relief.
• Capital Gains Tax (CGT): The rates will increase to 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers, effective from 30 October 2024. Current and past remittance basis users can elect to rebase ‘personally held’ foreign assets for CGT purposes to its market value at 5 April 2017. The tax on gains qualifying for Business Asset Disposal relief will increase to 14% from 6 April 2025 and 18% from 6 April 2026.
• National Insurance Contributions: Employers’ contributions will increase by 1.2% to 15% from April 2025, with the threshold for payments starting at £5,000, down from the current £9,100.
• Stamp Duty: The surcharge for second homes will increase by 2% to 5%.
• Carried Interest: Carried interest for private equity will be taxed at 32% from April 2025. From April 2026, the carried interest regime will be reformed to make it “simpler, fairer and better targeted”.
• Taxation of Non-UK Resident Trusts: From 6 April 2025, the protection from UK tax on foreign assets held via a trust that may otherwise arise to settlor-interested non-UK resident trust structures will be removed. This means that unless a UK resident settlor of a non-UK resident trust qualifies for the four-year FIG regime, from 6 April 2025, the settlor of that trust will become taxable on the income and gains arising on non-UK situs assets arising to the trust. Additionally, IHT will be charged on non-UK assets comprised in a trust at times when the settlor is a long-term resident. This means that settled assets are likely to come in and out of scope of the charge, alongside assets owned outright by the settlor and based on long-term residence at the time of the charge, rather than the status being fixed at the time the property became comprised in the trust. Assets held by a settlor-interested trust will now form part of the settlor’s estate for IHT purposes if the settlor is a long-term resident. However, assets settled into trust prior to 30 October 2024 will not form part of the settlor’s estate, even where the settlor can benefit from the trust. Assets held by a trust where the settlor is a long-term resident will be subject to IHT charges on the trust’s 10-year anniversary, and when assets leave the trust or when the long-term residence status of the settlor changes. These charges will apply regardless of when the trust was created.
• Recommendation for Specialist Advice: Given the complexity surrounding the amendments to the taxation of offshore trusts, it is recommended that specialist advice is taken as soon as reasonably practicable.
• Full Review of Potential Impacts: A full review of the potential impacts of these changes is recommended. Having up-to-date records and information available to base these decisions upon will be a prerequisite to a successful outcome.
• Support from the Team: Our team is on hand to help you navigate through the coming months.

How can we help

At Altum Group, we understand the complexities and challenges family offices face. Our dedicated team is here to provide expert guidance and solutions. Whether you need assistance with governance, succession planning, risk management, or engaging family members, we have the experience and expertise to help you navigate these challenges successfully.

Contents of this document does not constitute tax or financial planning advice.