Autumn Budget 2024 Replaces the Non-Dom Regime and Widens Inheritance Tax

The new foreign income and gains regime

The remittance basis, which depends on domicile status, will be replaced. New arrivals will receive 100% relief on foreign income and gains for their first four years of UK tax residence, provided they have not been UK resident in any of the previous ten consecutive years. Protection for foreign income and gains arising in settlor-interested trusts will end for those who do not qualify for the four-year regime.

A Temporary Repatriation Facility will allow former remittance basis users to bring in pre-6 April 2025 foreign income and gains at a reduced rate of 12% in the first two tax years and 15% in the third. Current and past remittance basis users will be able to rebase foreign assets held on 5 April 2017 for Capital Gains Tax. Overseas Workday Relief will be extended to four years but capped at the lower of £300,000 or 30% of employment income.

Inheritance tax moves to residence

The domicile-based inheritance tax system will be replaced with a residence-based test. An individual will be in scope on non-UK assets once resident in the UK for at least 10 of the last 20 tax years, and will remain in scope for between three and ten years after leaving. The Budget press release said offshore trusts will no longer be able to shelter assets from inheritance tax, with transitional arrangements.

Other changes for private wealth

• Inherited pension pots will be subject to inheritance tax from April 2027.
• From April 2026, 100% agricultural and business property relief will apply only to the first £1 million of combined assets, with 50% relief above that.
• Inheritance tax thresholds will be fixed until April 2030.
• Capital Gains Tax main rates rise from 10% to 18% and from 20% to 24%, and carried interest will be taxed at 32% before a new regime from April 2026.

What it means

The government expects the non-dom reforms to raise £12.7 billion according to the Office for Budget Responsibility. Internationally mobile individuals, trustees and family offices will need to review residence histories, trust structures and pension planning before the new rules take effect.

Sources

• GOV.UK: Reforming the taxation of non-UK domiciled individuals
• GOV.UK: Chancellor chooses a Budget to rebuild Britain