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Freshfields Risk & Compliance

| 4 minutes read

Spring Budget 2024: The Hunt for Blue October

In an unusually rowdy House of Commons, the Chancellor delivered what will be his last Spring Budget before a UK general election widely expected to take place in autumn this year. Further details on some of these measures are expected to follow on Tax Administration and Maintenance Day 2024 – confirmed as taking place on 18 April – but there were plenty of interesting points (and politics) in the tax policies included in this wave of announcements.

In our latest podcastJill GatehouseEmily SzaszJosh Critchlow and David Haughey from our London tax team discuss some of the tax measures they found the most noteworthy in the Spring Budget 2024. Highlights from the podcast discussion are summarised in this blog post.

Replacement of the ‘non-dom’ tax regime

Under the current rules, individuals who are resident in the UK but domiciled abroad (so-called ‘non-doms’) can elect to be taxed on the remittance basis, with the result that they will only be subject to UK tax on their foreign income and gains to the extent they remit those sums to the UK.

The Chancellor announced in the Spring Budget 2024 that this will cease to be the case from April 2025, with such individuals instead subject to UK tax on their worldwide income and gains.  Sitting behind that headline, though, are a number of points of detail designed to maintain the UK’s international competitiveness and ensure moving to the UK to live and work remains an attractive option.  

Importantly, for individuals who become tax resident in the UK after they have been tax resident elsewhere for at least ten years, there will be no UK tax on their foreign income and gains during the first four years of their UK residence – even if they bring those sums into the UK. 

As discussed in further detail in the podcast, these changes are accompanied by various transitional provisions, including (i) to reduce the immediate impact of the changes for ‘non-doms’ who are already UK tax resident and (ii) to address the position in relation to historic income and gains via:

  • the option to rebase foreign assets for capital gains tax purposes to April 2019 (so that UK tax on gains will only accrue from this date); and 
  • the introduction of a limited Temporary Repatriation Facility under which ‘non-doms’ will be able to remit into the UK foreign income and gains personally earned before the new regime came into effect at a reduced rate of tax (12 per cent).

Changes to the transfer of assets abroad rules

The transfer of assets abroad (ToAA) rules are a set of anti-avoidance rules which bring income within the UK tax net where, very broadly, a UK resident individual has transferred assets to a non-resident entity with the result that income arises to that non-resident entity and the transferor or another UK resident individual is entitled to income or receives a capital sum that is connected with the transfer, where the relevant transfer has a tax avoidance purpose.

It was announced at the Spring Budget 2024 that measures will be introduced to deem a transfer to be made by an individual for the purposes of the ToAA rules if it is made by a ‘close’ company (or a company which would be ‘close’ if it were UK resident) in which the individual has a ‘qualifying interest’.

In the podcast, the team discuss the background to this measure: the Supreme Court’s decision at the end of last year in HMRC v Fisher which rejected the idea that an individual taxpayer could be deemed to be the transferor of assets for the purposes of the ToAA rules by virtue of their shareholding relationship with the legal transferor. The scope of the impact of this change is also considered, noting that the definition of a ‘close’ company is broad and may result in the ToAA rules needing to be considered in a larger number of commercial asset transfers than is currently the case.

Introduction of Reserved Investor Funds 

Following a consultation last summer, it was confirmed in the Spring Budget 2024 that the UK government intends to take forward proposals to introduce a new form of investment fund aimed at professional and institutional investors: a Reserved Investor Fund (RIF). 

RIFs take the form of an unauthorised contractual scheme. They will be subject to less regulation than Co-ownership Authorised Contractual Schemes (CoACSs), and be available to a wider pool of investors, but will be taxed in a very similar manner – that is, transparent for income but opaque for capital gains, and treated as a company for SDLT purposes (such that transfers of RIF units will not be subject to SDLT, even if the fund holds UK real estate).

The podcast discussion considers the strengths and limitations of this new fund structure, including identifying the types of investments and investors it may best suit. 

Other key tax takeaways

In the podcast, the team also considers a number of other key tax takeaways from the Spring Budget 2024, including:

  • a further reduction in the rate of certain classes of National Insurance Contributions (NICs), benefiting both employed and self-employed workers;
  • new guidance on recently-enacted legislation amending the circumstances in which the stamp duty/SDRT 1.5 per cent charge will apply;
  • a one-year delay to the sunsetting of the Energy Profits Levy, so that it will end in 2029 (or earlier if energy prices fall below levels set by the previously-announced Energy Security Investment Mechanism);
  • the establishment of a new research and development (R&D) tax relief expert panel tasked with ensuring relevant HMRC guidance remains up-to-date as industry develops; and
  • the launch of a consultation on the introduction of a new UK ISA, giving individuals a £5,000 annual allowance to invest in certain UK-focussed assets on a tax-free basis.

Our Spring Budget 2024 podcast is available here.


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