The UK spring budget 2024: key takeaways for high-net-worth individuals

The UK Chancellor, Jeremy Hunt, delivered his annual budget speech earlier this month, outlining the government's economic plans and proposed changes to the tax system.

Here at Ocorian, we understand navigating these changes can be complex. Now that the dust has settled, our trusted Private Client Executive, Tracey Neuman, has summarised the most significant tax-related announcements.

Property taxes:

Capital gains tax (CGT) cut:

The top rate of CGT on residential property sales and gifts drops from 28% to 24% from April 6th, 2024. However, experts predict this might lead to increased tax revenue overall by encouraging more disposals. Remember, main residence relief often eliminates CGT entirely, and the lower rate for basic rate taxpayers remains at 18%.

Multiple dwelling relief abolished:

From June 1st, 2024, claiming reduced Stamp Duty Land Tax (SDLT) through multiple dwellings relief will no longer be possible. This relief applied when purchasing two or more residential properties simultaneously. However, some pre-March 7th, 2024 exchanges may still qualify, even if completed after June 1st. This change targets what the government deems "abusive" claims.

The good news? The lower SDLT rate for mixed-use properties (commercial and residential) remains available.

UK non-dom regime:

Remittance basis on the chopping block:

A significant shift! The remittance basis for UK residents with non-domiciled status is set for abolishment from April 6th, 2025. This currently allows them to avoid UK tax on overseas income and capital gains unless brought into the UK.

A new dawn, or more questions?

The new regime proposes a four-year tax exemption on foreign income and capital gains for new UK residents. However, unlike the remittance basis, you can bring these overseas assets to the UK without incurring tax charges. There are some complex transitional rules that would apply a 12% tax rate to previously protected non-UK income and capital gains; a reduced rate of income tax in the first year of the new rules for those moving to the arising basis; and an ability to rebase assets.

The end of protected trusts:

Settlors who are not eligible for the new four year regime will have the income and capital gains of their offshore trust attributed to them and taxed on them.

It's important to note these changes haven't been formally included in legislation yet. With an upcoming election, their implementation is not guaranteed.

Inheritance tax (IHT) & transfer of assets abroad rules:

IHT Residence-Based Review:

The government intends to move IHT to a residence-based system, away from the current domicile basis. Those who have been resident for 10 years will be subject to IHT on their worldwide asset and will continue to be for 10 years after they cease residence in the UK.

Excluded property trusts remain:

Non-UK assets settled by non-UK domiciled settlors prior to 6 April 2025 will continue to be protected from IHT.  The status of trusts set up after that date will be determined by the residence of the settlor, including the 10 year tail. Expect consultations and draft legislation later this year with this is a significant undertaking, stay tuned for updates.

Transfer of assets abroad update:

Following a recent court case, the government will amend these anti-avoidance rules. Going forward, UK resident shareholders whose company boards authorise transferring assets outside the UK could be liable for taxes. However, a minimum shareholding threshold needs to be met for this to apply.

How can Ocorian help?

While the full picture is still emerging, these changes could significantly impact tax planning. We'll continue to monitor the situation and provide further insights as they become available.

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