Budget 2024 – what does it mean for you?

Chancellor Jeremy Hunt announced he’s changing current tax rules for people who live in the UK but consider their permanent home to be abroad – known as ‘non-doms’ – in his Spring Budget this week.

Broadly, people with non-dom status pay UK tax on the money they earn in this country, but not on money they earn overseas unless they bring it into the UK.

The new system means that, from 6 April, 2025, new UK residents won’t have to pay UK tax on the money they make abroad during their first four years here – even if they bring it into the country. This includes anything they make from foreign trusts. But after those four years, they will need to pay UK tax on their worldwide income.

The scope of UK inheritance tax could also change, subject to a government consultation. Currently, non-doms don’t have to pay inheritance tax in Britain on their assets abroad. But in future, they may have to if they’ve lived in the UK for 10 years or longer. Even if they leave the UK, they could still pay inheritance tax here until they’ve been out of the country for at least a decade.

Should non-doms be worried about the new rules?

Coutts Wealth Planning Specialist Irene Wolstenholme said the changes represented “something of a mixed bag” for non-doms because, while they could create challenges, they could bring opportunities too.

“These are major reforms for people with non-dom status but there’s no need for any immediate action at this stage, especially as they’re not coming into effect until next April,” she said.

“The changes could actually be beneficial for some. For example, there will be a window between 6 April, 2025 and 5 April, 2027 for people who have previously sheltered income and gains elsewhere and want to bring them into the UK. During that period they will be able to do so and pay 12% tax, whereas they could have paid up to 45% under current rules.”

A brand new UK ISA

Mr Hunt also announced a brand new UK ISA on Wednesday – one designed to encourage more people to invest in the country.

The new ISA will allow people to invest an extra £5,000 a year in UK investments and enjoy all the usual tax benefits – with no UK income or capital gains tax paid on any money it makes. This is on top of the £20,000 people can already currently put into their ISAs each tax year.

Irene said this could be seen as good news for anyone putting their money to one side for the future.

“It’s effectively a brand new tax allowance,” she said. “It means more of the money you invest could be eligible for the tax advantages of an ISA.”

Lower National Insurance

Other changes announced in the Budget included further National Insurance cuts – the government first reduced the tax in last November’s Autumn Statement. From 6 April:

• the main National Insurance rate for employees will be cut by a further two percentage points, to 8%
• self-employed, ’Class 4’ National Insurance, paid on profits between £12,570 and £50,270, will also be cut by another two percentage points, to 6%

As previously announced, ‘Class 2’ National Insurance, which is also paid by the self-employed earning over a certain amount, will be abolished. That change, again, will come next month.

The Chancellor also signalled that the government wants to make further reductions when it can.

New property rules – good for sellers, bad for holiday homeowners

There was good news for people selling residential property, although some might say it was offset slightly by a couple of specific tax reliefs being scrapped.

The Chancellor said the government would reduce the higher rate of property capital gains tax – the amount you’re taxed on the profit you make from selling a residential property that isn’t your main home – from 28% to 24%.

But he also removed a couple of tax breaks that benefit those who rent out holiday homes – the Furnished Holiday Lettings regime and Multiple Dwellings Relief, a stamp duty relief for those who buy more than one place at once.