NEW Articles11 Nov 2024
Autumn Budget 2024: Impact of Changes on Investors 英國秋季預算案:資本增值稅、遺產稅及居留與非本國居民(domicile) 稅制變動對投資者的影響
A new era is emerging, with significant changes that are reshaping how UK investors view their situation
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The concept of Domicile will be removed from the legislation and replaced with a residence-based regime, the immediate impact of this is the withdrawal of the remittance basis
The Chancellor had already announced that the concept of domicile will be removed from the legislation and replaced with a residence-based regime. This has been confirmed and more details have now been published.
The immediate impact of this is the withdrawal of the remittance basis.
Very briefly, the soon-to-be defunct remittance basis allowed those who were not long-term UK residents to not pay UK tax on overseas income and gains arising during their early UK residence provided they did not bring that money into the UK (or spend it in such a way to benefit them while in the UK, i.e. “remit” it). So they were only taxed on UK-arising income and gains and any remittances.
Initially, using the remittance basis only costs them their personal allowance (first 7 years), then it additionally costs £30,000 per year (next 6 years), then £60,000 per year before it is withdrawn when they have been resident for 15 of the previous 20 years. At which point they are “deemed domiciled” in the UK.
The new measure instead gives new arrivals to the UK full tax relief on their overseas income and gains – no UK tax to pay at all – for the first 4 years of UK residence. This will kick in from 6 April 2025. They can bring these funds to and spend these funds in the UK with no additional tax charge.
After these four years they will be taxed in the UK on their worldwide income and gains. These individuals must have been non-UK resident for 10 consecutive years prior to arrival to the UK to qualify.
This is comparable to the famous ‘Beckham law’ in Spain, where newly arrived individuals could be taxed as though non-resident for their first few years of residence there.
The Government has also announced their transition measures for this change:
The government are also following up with an overhaul of the IHT system to a residence-based regime. Non-UK assets will be in scope of UK IHT if the individual was resident for at least 10 of the previous 20 years prior to the IHT event.
There are also various measures relating to offshore trusts that will be the subject of a further blog.
THE AUTHOR
Manager, Mixed Tax
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