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Autumn Budget 2024
Hoxton Tax • Autumn Budget 2024
Autumn Budget 2024
30 October 2024 announced substantial changes to the non-dom regime, with the UK Government confirming that the remittance basis would be abolished from 6 April 2025 and replaced with a new residence-based system. This represented one of the most significant shifts in UK personal taxation in recent decades, fundamentally changing how foreign income and gains are taxed for internationally mobile individuals.
Under the new framework, individuals arriving in the UK after a period of non-residence became eligible to access a 4-year foreign income and gains regime, allowing those funds to be received without UK tax during that window. Beyond this period, worldwide income and gains would generally fall within the UK tax net, removing the long-standing ability to defer UK taxation by keeping funds offshore. For existing non-doms, a series of transitional provisions were introduced, including rebasing of certain foreign assets and a Temporary Repatriation Facility designed to encourage the remittance of historic foreign income and gains at reduced tax rates.
The reforms extended beyond income tax and capital gains tax. The Budget confirmed a move to a residence-based inheritance tax regime, replacing the concept of domicile for these purposes. This included changes to how long individuals remained within the scope of UK inheritance tax after leaving the UK and significantly altered the treatment of offshore trust structures, particularly where protections had previously applied. For many, structures that had historically been effective from an inheritance tax perspective required careful reassessment.
Taken together, these changes created a very different landscape. Historic planning based on domicile and the remittance basis no longer operated in the same way, and decisions around where income arose, how assets were held, when funds were brought to the UK, and how long an individual remained UK resident carried greater weight. For internationally mobile families, business owners and individuals with offshore structures, early review became essential - not only to understand the impact of the new rules, but to identify opportunities within the transitional regime and avoid unintended tax exposures as the new system took effect.
How does this impact you?
The remittance basis was replaced with a residence-based system, including a 4-year foreign income and gains regime for qualifying new arrivals. During this period, foreign income and gains can generally be brought to the UK without a remittance charge. However, there are important exceptions, and once outside the regime, the ability to control UK tax by keeping funds offshore largely falls away.
Individuals must have been non-UK resident for at least the previous 10 tax years before becoming UK resident to qualify. The regime is therefore targeted at genuinely new arrivals, rather than those returning to the UK after shorter periods of absence.
The regime must be claimed through the UK Self Assessment tax return and applies on a year-by-year basis. Importantly, claiming the regime can result in the loss of the personal allowance and annual exempt amount, and individuals will generally be unable to claim relief for foreign losses, meaning the decision to claim requires careful consideration.
Once the 4-year period ends, individuals are generally taxed on their worldwide income and gains as they arise, regardless of whether funds are brought to the UK. This removes the ability to defer UK tax by retaining funds offshore and places greater importance on timing and structuring.
Transitional provisions included the ability to rebase certain foreign assets to their value at 5 April 2019 (subject to conditions), alongside access to the Temporary Repatriation Facility. These rules were designed to provide a bridge from the remittance basis into the new regime.
The Temporary Repatriation Facility allows individuals to remit previously unremitted foreign income and gains at reduced tax rates, broadly 12% in 2025/26 and 2026/27, increasing to 15% in 2027/28. The facility is time-limited and is intended to encourage the remittance of historic funds that would otherwise be taxed at full rates.
The Budget introduced a residence-based inheritance tax regime, with individuals becoming within scope after 10 years of UK residence and remaining within scope for a “tail” period of up to 10 years after leaving the UK (depending on length of prior residence). This represents a significant shift from domicile and can extend UK inheritance tax exposure well beyond departure.
Offshore trusts are now more closely aligned with the relevant property regime, with exposure driven by whether the settlor is a long-term UK resident (LTR). Protections that previously applied have been significantly reduced, meaning trusts may now fall within the UK inheritance tax net during the settlor’s lifetime, requiring careful reassessment.
Historic foreign income and gains remain taxable if remitted to the UK. However, the Temporary Repatriation Facility provides a limited opportunity to bring these funds to the UK at reduced tax rates, offering a potential window to restructure historic positions.
Overseas Workday Relief continues in a modified form, allowing qualifying individuals to obtain relief on earnings relating to duties performed outside the UK during the initial years of UK residence. However, the rules have been tightened and aligned with the new regime, meaning conditions, timing of claims, and interaction with the 4-year regime require careful planning.
Why Hoxton?
At Hoxton Tax, we provide clear, practical advice in complex situations. We work with individuals and families across borders, helping them understand how the new rules apply and, importantly, what actions are required.
We help clients plan proactively, identifying both risks and opportunities within the new regime, including the use of transitional provisions.
Our approach is technical, joined-up and forward-looking, ensuring tax is considered as part of a wider strategy rather than in isolation.
We support clients with:
Understanding how the new regime applies to their position – including eligibility for the 4-year foreign income and gains regime, and the practical implications of moving away from the remittance basis.
Advising on the use of transitional provisions – including asset rebasing and the Temporary Repatriation Facility, and how these can be used effectively as part of wider planning.
Reviewing foreign income and gains exposure – helping clients understand how and when overseas income and gains will be taxed under the new rules.
Planning the timing of remittances, disposals and income flows – ensuring decisions are taken with full visibility of the UK tax impact.
Assessing inheritance tax exposure under the new residence-based system – including the impact of long-term residence and the application of the “tail” following departure from the UK.
Reviewing offshore trusts and holding structures – particularly where the settlor may be a long-term UK resident and structures are brought within the relevant property regime.
Advising on Overseas Workday Relief – including eligibility, structuring of employment income, and interaction with the 4-year regime.
Providing ongoing compliance and reporting support – including Self Assessment filings, claims under the new regime, and managing HMRC reporting obligations.
Case study – UK resident remittance basis user and FIG regime
An individual relocated to the UK in the 2023/24 tax year and initially claimed the remittance basis, with significant foreign income and gains arising within offshore investment portfolios.
Following the announcement of the new regime, we carried out a detailed review of their position, including eligibility for the 4-year foreign income and gains (FIG) regime. This involved assessing their prior period of non-UK residence and modelling the impact of continuing under the remittance basis versus transitioning into the new regime.
Working closely with their investment adviser, we reviewed the composition of their overseas portfolios to ensure alignment with the new rules - including the timing of disposals, future income flows, and the interaction with UK taxation once the FIG period ends.
We also identified an opportunity to utilise the Temporary Repatriation Facility (TRF) in respect of historic foreign gains realised in 2023/24, allowing those funds to be brought to the UK at a reduced rate of tax. This formed part of a wider strategy to simplify their position and reduce exposure to future remittance charges.
The result was a clear, forward-looking plan, combining use of the FIG regime, proactive investment structuring, and targeted use of transitional provisions to manage both immediate and longer-term UK tax exposure.
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