Changes to the UK tax regime

Changes to the UK tax regime: what’s new

3 September 2024
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The UK authorities have announced that on April 6, 2025, the current taxation system for residents without permanent residence in the state will cease. A new 4-year regime for taxing Foreign Income and Gains (FIG) will be introduced.

The new tax regime and its specifics

FIG will allow new residents (foreigners who haven’t held status in the UK for the 10 years preceding 2025-2026) to transfer funds into the country without paying tax for 4 years. They will also be exempt from additional fees.

On October 30, 2024, the UK will introduce the temporary repatriation facility. The government will consider methods to combat tax avoidance through offshore trusts.

According to Jimmy Sexton, the new FIG regime is less attractive than the current one. He noted that most non-domiciled residents won’t fully benefit from the new system. Sexton confidently stated that the UK will lose many affluent foreigners due to these changes—“The money will go where it is welcomed. And it’s certainly not in the UK.”

How inheritance tax will change

UK Chancellor of the Exchequer Rachel Reeves announced that residents without permanent residence in the state will lose their inheritance tax exemption from the day FIG is implemented. From April 6, 2025, inheritance tax will be paid based on the place of residence, not permanent residence. Each applicant will be considered individually, for instance, considering whether they have been a resident of the country for the last 10 years.

Esquire Group founder and CEO Jimmy Sexton said the government has made many decisions in recent years that haven’t benefited the country. Sexton specifically mentioned the abolition of duty-free trade, which resulted in £11 billion in losses for the state as residents began shopping in Paris and Geneva to avoid VAT.

Currently, assets registered outside the UK by non-UK permanent residents aren’t subject to inheritance tax, as they’re considered exclusive property. However, after April 6, 2025, owners of such properties may face tax evasion charges since these properties will be subject to inheritance tax.

Income and gains tax

UK residents who are not permanently resident in the UK and who cannot switch to the FIG system under the legislation will also face changes. From April 6, 2025, they will lose their exemption from income and gains tax. Even if a company was incorporated before FIG’s implementation, from April 6, 2025, the UK government will impose all tax obligations on them.

iWorld specialists can help you choose a jurisdiction with a favorable tax regime for your needs. Contact information for legal advice can be found on the website.

Source: Imidaily

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