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 repect 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.
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.
Tackling off-shore anti-avoidance
- The government have requested evidence from taxpayers and their advisors which will allow them to simplify the current personal tax off-shore anti-avoidance rules.
- The review will include the transfer of assets abroad, capital gains tax (CGT) and the settlement legislation to seek a better understanding of the current anti-avoidance rules.
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.
Changes to rules for overseas pensions
- 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.
- The exclusion from the charge has been removed from 30 October 2024.
- Additionally, there will be a requirement for all registered pension schemes to have a UK resident scheme administrator from 6 April 2025.
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.
- ORIP will be repealed in respect of income arising from 31 December 2024.
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.