Our experts respond to the Spring Budget 2024
On Wednesday 6 March 2024, Chancellor Jeremy Hunt announced the Spring Budget, outlining various changes including cuts to National Insurance, causing it to fall from 10% to 8%, and increasing the child benefit threshold.
Hunt also announced plans to abolish the non-domicile status and tax system, though stated that new arrivals to the UK will still not pay taxes on foreign income for four years. Experts from across our private wealth and property teams respond to the changes in comments below.
Judith Millar
Commenting in an article for IFA Magazine, partner Judith Millar provides her insight:
‘Having confirmed that he had asked the Treasury to look at the financial impact of abolishing non-dom tax status in November 2022, the Chancellor announced yesterday that it would be scrapped in favour of a different regime based on tax residency. He was at pains to emphasise the need to protect the attractiveness of the UK to foreigners, but it is difficult to see how the UK will now fare when compared to, say, Italy if the benefits of the new UK system are to be available only for the first four years following arrival in the UK.
Whilst we expected some modification to the non-dom rules on the basis of recent press reports, the changes that were announced in the Budget speech appear to go much further and will be of concern to anyone considering a move to the UK.’
Jonathan Colclough
‘It is a surprise that the non-dom regime is to be “abolished” in favour of a residence test so that non-dom individuals will be taxed like everyone else after four years, subject to some “transitional rules” for existing non-doms. This does answer the call from some commentators that we need to get rid of the confusing domicile rules and make the UK tax system easier to understand. Whether this will result in the increase in revenues anticipated is unknown, as is how the rules relating to offshore trusts will be affected. The devil will be in the detail.’
Liz Neale
‘The abolition of the non-dom regime could be seen as a political move which pull the rug from under a future government minded to make similar changes. The legislation required will not be straightforward and will require significant consultation with professional advisers. Would an incoming government want to make other changes that would risk delaying implementation beyond 2025?’
Sophie St John
‘The Government’s preliminary thoughts around changes to the inheritance tax for non-doms is of particular note: after 10 years in the UK an individual’s worldwide estate will attract IHT and their worldwide estate will remain in scope for a further 10 years after the individual has left the UK. The length of the tail after departure feels excessive. The consultation on the plans for IHT will be interesting.’
Tristan Ward
Partner in our property team, Tristan Ward comments on the announcement of the abolishment of tax breaks on holiday lets:
‘The Government intends to create a new planning use class for residential property not used as a sole or main home. A property used for ‘short term lets’ for less than 90 days a year will not require planning consent, and, helpfully, existing dedicated short-term lets will automatically be reclassified into the new use class without a formal planning application.
Additionally, there is a proposal to create a mandatory national register intended to help local authorities understand “the extent of short-term lets in their area, the effects on their communities, and underpin compliance with key health and safety regulations.”
For some landlords, the abolition of the furnished holiday let tax regime and the additional compliance will mean it is just not worth the hassle. I think that will be rare. It should also be remembered that where a holiday home is for personal enjoyment these changes are unlikely to make much of an impact.’
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