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Policy & Law

Spring Budget 2024 - The end of the non-dom regime

Today the Chancellor of the Exchequer, Jeremy Hunt, announced a pre-election Budget that sought to turn the tide on Labour’s commanding lead in the polls by presenting a package of ‘tax cuts’, alongside the cancellation of the UK Resident, non-domicile regime and the introduction of a new residence-based test for new arrivers from April 2025.

Post-Budget Webinar – Wednesday 13 March at 2:30pm

On Wednesday 13 March at 2:30pm we will host the latest in our series The Future of Tax in the UK – The end of the non-dom regime where we will hear the views of Nimesh Shah, the CEO of Blick Rothenberg on the Spring Budget 2024, the cancellation of the non-dom regime, its impact on existing non-doms and their structures and the proposed new residence-based test. An invitation will sent out shortly.

Spring Budget 2024 - key points to note

2p cut to National Insurance

The Chancellor’s main headline was a cut of 2p to employees’ National Insurance, from 10% to 8% from 6 April 2024. Alongside this, the main rate of self-employed National Insurance will be cut from 9% to 6%, with the stated objective of ‘rewarding work’1

This belies the fact as noted by Paul Johnson, Director of the Institute of Fiscal Studies that “come the election, tax revenues will be 3.9% of national income, or around £100 billion, higher than at the time of the last election. This remains a parliament of record tax rises2.” This is primarily the result of the effect of so-called ‘fiscal drag’ - the freezing of the thresholds at which individuals pay basic, higher and the additional rate of tax in the UK, plus the significant increase to the rate of Corporation Tax from 19% to 25%.

That being said, the Government argues (and the IFS agrees3) that in 2024-25, the median full-time employee will pay less tax as a share of their earnings than they did in 2010-11 by 4.6ppts.4

Cancellation of the non-dom regime from April 2025

In cancelling the non-dom regime and remittance basis, the Chancellor attempted to steal a march on one of Labour’s key pre-election policy commitments, albeit whilst claiming that credit should go to the Conservative Chancellor Nigel Lawson for having the idea way back in 1984. 

The Labour Shadow Chancellor, Rachel Reeves had said she would introduce a new regime ‘fit for the modern world’ and the Chancellor today said that he is - from April 2025 (if the Conservatives remain in power) - introducing a regime that is ‘modern, simpler and fairer’ with the removal of the ‘outdated’ concept of domicile.5

New Arrivals to the UK

  • The introduction of a residence-based test from April 2025.
  • The new regime will allow new arrivals to the UK (specifically those who have been non-UK residents for 10 consecutive years before they arrive) to bring to the UK their foreign income and gains tax free for their first four years of UK residence.
  • From the start of their fifth year of UK tax residence, those benefiting from the new regime will pay UK tax on their worldwide income and gains at the prevailing rates of income tax and capital gains tax.

Existing non-domiciled individuals – transitional provisions

  • There will be a set of transitional arrangements for existing non-doms; these individuals will have a two-year window (2025-26 and 2026-27) where they can bring to the UK their foreign income and gains that arose before 6 April 2025 at a flat rate of 12%.
  • Existing tax residents who have been resident for fewer than four tax years and are eligible for the new residence-based exemption will also benefit from the relief from tax on their foreign income and gains until the end of their 4 year of tax residence.
  • There will be a temporary 50% reduction in the personal foreign income subject to tax in 2025–26 for non-doms who will lose access to the remittance basis on 6 April 2025 and are not eligible for the new 4-year exemption.
  • Existing non-doms who have claimed the remittance basis will be given the opportunity to ‘re-base’ their capital assets to 5 April 2019 value for disposals that take place after 6 April 2025.

Non-UK Trusts

  • New income and gains that arise within a non-resident trust will be subject to tax from 6 April 2025. This in effect means the partial loss of the trust protections brought in during the 2017 non-dom reforms.
  • Foreign income and gains that arose within trusts before 6 April 2025 will not be taxed unless distributions or benefits are paid to UK resident who have been here for more than 4 years.

Inheritance Tax (IHT)6

While the cancellation to the UK RND regime and the subsequent replacement with a “modern” regime based on residency was well documented in the notes to the Budget, the Chancellor provided less information regarding any changes to IHT. Government guidance currently indicates an intention to move to a residence-based system, subject to consultation and applying only from 6 April 2025.

Personally Held Assets

It is envisaged under the consultation that worldwide assets held in an individual’s personal name, post 6 April 2025, will be subject to UK IHT, once a person has been resident in the UK for 10 years (“the residence criteria”). This comes with a provision that the person will be in scope for UK IHT for 10 years after leaving the UK (“the tail provision”).

The taxation of UK situs assets, at present, will remain unchanged.


It is anticipated that the current IHT treatment will continue for any non-UK property that is settled by a non-domiciled settlor, into trust, prior to 6 April 2025. Whereas new trusts and additions to existing trusts will be subject to the new residence-based rules after this date.

For non-UK situs assets settled pre 6 April 2025 (or date of Deemed Domicile if earlier), subject to any future changes or anti-avoidance provisions will: 

  • Continue to benefit from an exemption from UK IHT; and 
  • the interaction between the gift with reservation provisions and excluded property trust rules will also remain, meaning excluded property will not be brought into charge on the settlor’s death even if the settlor retains a benefit in the trust assets. 

The exception to this is that the treatment of non-UK property comprised in a settlement that currently comes back into scope where the settlor is a formerly domiciled resident will be subject to consultation.

Initial observations

It is worth bearing in mind that there will be an election in 2024 before the Conservative Government is due to cancel the non-dom regime and introduce the new residence-based test.

If Labour win the election, it remains to be seen whether they will adopt the Conservative proposals in full, amend them or scrap them altogether. Labour have not yet provided any detailed commentary on the Conservative’s proposal.

Property Taxes

The government has made several changes to the property tax system, claiming this makes it “fairer and more efficient”7. They have abolished the Furnished Holiday Lettings tax regime from 6 April 2025, with the goal of levelling the playing field between short-term and long-term lets and to encourage locals to live in their local area.

In a surprise move, from 6 April 2024, the Chancellor has reduced the higher rate of Capital Gains tax on residential property from 28% to 24%, claiming that the Treasury and the OBR have determined that this would encourage more residential disposals. The lower rate will remain at 18% for any gains which fall within an individual’s basic rate band. Principle Private Residence Relief (PRR) will remain in place, meaning this tax should only apply to individuals disposing of properties which are not their main home. Hunt has claimed that the Treasury and the OBR agree that the government will raise more money by reducing the higher rate of property CGT. Quipping that both the Treasury and the OBR have discovered “their inner Laffer curve”8.

Finally, he announced that on 1 June 2024 Multiple Dwellings Relief (MDR) would be abolished, (a bulk purchase relief in the Stamp Duty Land Tax regime). There will be transitional rules meaning that MDR can still be claimed for contracts which are exchanged on or before 6 March 2024, regardless of when completion takes place. This will be subject to some exclusions, the key one being that any variations to existing contracts will not count.

Restrictions to Agricultural Property Relief and Woodlands Relief for IHT

In addition to the measures announced above, from 6 April 2024, the Government will restrict the scope of Agricultural Property Relief and Woodlands Relief to property located in the UK. Property located in the European Economic Area (EEA), the Channel Islands and the Isle of Man will be treated the same as other property located outside the UK.


A new UK ISA will be introduced with its own allowance of £5,000 per annum, this is in addition to the current ISA allowance. The government will consult on the details at a later date. In addition, the government has announced the launch of “British Savings Bonds” which will be delivered via National Savings and Investments and will launch in April 2024. This product will offer a guaranteed interest rate, fixed for three years.

Other policies at a glance

  • Starting rate for savings income will be retained at its current level of 0% for the first £5,000 for 2024/25;
  • Corporation tax rates will be maintained;
  • The Transfer of Assets Abroad legislation will be amended to prevent the avoidance of a liability to tax where an asset has been transferred to a person abroad using a “closely-held company”;
  • The government will extend the end date of the Energy Profits Levy to 31 March 2029;
  • From 1 April 2024, personal representatives of estates will no longer need to have sought commercial loans to pay IHT before applying to obtain a “grant on credit” from HMRC;
  • Alcohol duty will be frozen from 1 August 2024 until 1 February 2025;
  • VAT threshold, which determines whether a person must be registered for VAT will increase from £85,000 to £90,000 and the threshold to deregister will increase from £83,000 to £88,000. This applies from 1 April 2024;
  • The current freeze to Fuel Duty will be maintained for a further 12 months;
  • As a part of wider reforms to seek to boost the competitiveness of the UK, the government is consulting on the Private Intermittent Securities and Capital Exchange System (PISCES), a new market that will allow private companies to scale and grow, and will seek to boost the pipeline of future IPOs in the UK;
  • The government also plans to bring forward requirements for Defined Contribution pension funds to publicly disclose the breakdown of their asset allocations, consulting with the FCA in the Spring.
  • In an addition to the so-called ‘sin taxes’ (see also Alcohol Duty, Tobacco Duty et al), the Government will introduce a new duty to vapes from October 2026 and will make a one-off adjustment to rates of Air Passenger Duty on non-economy passengers.

Economic and Market Implications

Use what you’ve got

More investment. More jobs. Better public services. Lower taxes. That was the punchline of Chancellor Jeremy Hunt’s Spring Budget earlier today. Here are some of the details:

The Office for Budget Responsibility laid out a more optimistic outlook for the UK economy today. With inflation expected to fall back to target levels sooner than expected, they also suggested that growth would rebound from last year’s technical recession at a faster pace than previously anticipated. Hunt stated that GDP is now expected to grow by 0.8% in 2024 (vs. 0.7% prior) and 1.9% in 2025 (vs. 1.4% prior).

The OBR expects a rebound in the UK economy

UK annual GDP growth, %

Sources: OBR, ONS, Bloomberg Finance L.P. Data as of March 6, 2024.

Over the longer-term though, the OBR left its outlook for potential GDP growth unchanged at 1.7%.

Incentivising people back into the workforce was a feature of several policies to boost potential growth in the long run, though. The cumulative impact of national insurance cuts today and at the Autumn Budget is expected to bring around 200,000 additional workers into the labour force (around 20% of current vacancies), according to the Chancellor. Not only that, but Hunt also expects the increase in child support to add a further 60,000 parents to the working population in the next four years9.

Similarly, productivity is essential for driving long-term growth and living standards. The public sector productivity programme rolled out today looks to address that head on (starting with the NHS), and policies to attract investors and business to the UK (many of which we discussed in the previous section) were highlighted as the most effective way to raise productivity.

But how can the government afford these policy changes? The Conservatives didn’t have much room to work for tax cuts or spending increases coming into the Budget, and they have come with even less of it. By opting for national insurance cuts over income tax cuts and pulling back on spending elsewhere, the tax revenue generated by the likes of abolishing the non-dom scheme (worth £2.7bn) and extending windfall taxes (worth £1.5bn) were ultimately enough to keep the government within its fiscal constraints. When all was said and done though, the £8.9 billion buffer that was left to achieve the government’s key fiscal rule (to have debt falling as a share of GDP over five years) is just a third of the post-financial crisis average. And with the risks to OBR projections appearing skewed towards lower growth and higher interest rates (more below), that could paint a difficult picture for whichever party is at the helm at the time of the next fiscal event.

As we stand today, our views err on the side of caution relative to the OBR. While the economy has held better than most had anticipated, there has been next-to-no growth over the past two years and we don’t expect to see a sharp rebound this year either. Why? We think the Bank of England will likely keep policy restrictive for some time. Although headline inflation in expected to fall below the 2% target in the near future, progress on central bankers’ favourite indicators of underlying inflation (labour market and services inflation) has been slower to take hold in the UK. The potential for later cuts means that shorter-dated UK bonds look to be a more tactical opportunity for investors today, while the pound might benefit should the BoE prove to be a late cutter relative to its peers. The market didn’t give us much to go off in the aftermath of the Budget, though.

Over the longer term, the UK government’s focus on boosting potential GDP growth for the long run is promising. Policy measures aimed at increasing the size and productivity of the labour force and efforts to attract more investment might make the UK equity market more attractive in the coming years. Domestic stocks look reasonably priced today and tend to offer a higher dividend than in other regions, but we prefer to be selective rather than buying the broader UK market until we see certain cyclical factors turning in the country’s favour.

All forward-looking statistics are sourced from the Spring Budget 2024 speech delivered by the Chancellor Jeremy Hunt on March 6, 2024.

The non-dom regime is no more, but there are some potentially generous transitional provisions available to existing non-doms and a new regime for new arrivers from April 2025.


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