Spring Budget 2024 - key announcements
Spring Budget 2024 - key announcements

Spring Budget 2024 – Non-UK domiciled tax status abolished

One of the key announcements of Chancellor Jeremy Hunt’s speech was  a significant shift in UK tax policy regarding non-domiciled tax status.

The Chancellor announced in the Spring Budget the abolition of the non-UK domiciled (nondom) tax status, which has long been a point of contention within the nation’s tax system. This tax status applied to thousands of affluent foreign residents in the UK, allowing them to limit the taxes they paid on overseas income.

This measure abolishes the remittance basis of taxation for non-dom individuals and replaces it with a simpler residence-based regime. Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-tax residents for the last ten years. This new regime will commence on 6 April 2025 and applies UK-wide.

Mr Hunt said this would create a ‘fairer and competitive’ tax system, replacing the existing framework with a more modern residency system. This move signifies a major overhaul aimed at increasing the government’s tax revenue, with projections suggesting it could raise approximately £2.7 billion annually.

The government will introduce the following transitional arrangements for existing nondoms claiming the remittance basis:

– an option to rebase the value of capital assets to 5 April 2019

– a temporary 50% exemption for the taxation of foreign income for the first year of the new regime (2025/26)

– a two-year Temporary Repatriation Facility to bring previously accrued foreign income and gains into the UK at a 12% rate of tax.

This decision marks a significant shift in the UK’s approach to taxation, aiming to ensure that all residents contribute equitably to the nation’s finances. It also signals a commitment to modernising the tax system and making it more competitive on a global scale. 

Overseas Workday Relief (OWR)
The government will also reform Overseas Workday Relief (OWR). Eligible employees will be able to claim OWR for the first three years of tax residence, benefitting from  Income Tax relief on earnings for employment duties carried out overseas but with current restrictions on remitting these earnings removed.

Please get in touch if you would like to discuss any aspect of the Spring 2024 Budget Announcements 

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