IN FOCUS6-8 min read

A pre-election budget…of sorts

Sluggish UK growth has limited the extent of pre-election giveaways in the Spring Budget. However, the Chancellor of the Exchequer may still have managed to come up with something for nearly everybody.

Spring Budget 2024 1104x720px


James Gladstone
Head of Wealth Planning

Heading towards a general election, this year’s Spring Budget needed to balance many competing interests: protecting NHS budgets, managing the oversized national debt and offering a brighter future to UK workers, who are suffering the highest rates of marginal taxation in decades. It was always going to be a tough ask with such limited fiscal headroom.

To help workers, the Chancellor delivered a further 2p cut to National Insurance (NICs). There will also be a 4% reduction in the top rate of CGT for property gains, alongside a big technology spending promise for the NHS. This Budget launches the British ISA, worth up to an additional £5,000 per year for savers, as part of a broader strategy to stimulate much-needed investment in the UK stock market.

Perhaps the most interesting change was the abolition of the non-dom taxation regime as we know it. This arguably moves the UK to a tax system that many will see as fairer and more transparent. As with any change of legislation, it is important for individuals to review their position to understand the implications and identify any planning opportunities.

Revisiting the non-dom tax regime

It is common for countries to use their tax system to attract wealthy foreign investors. However, the current UK system, which is based on complicated rules around an individual’s domicile, is complex and often results in capital being locked offshore. In part, this is due to resident non-domiciles being subject to tax on a “worst first” basis when remitting funds from an offshore fund that is mixed, i.e. it contains untaxed foreign income and capital gains, with remittances being taxed at the highest rate.

This system will be replaced by a simpler, residency-based approach, from April 2025. From this date, new arrivals to the UK will enjoy tax advantages for the first four years of UK residency, during which they will not be taxed on their foreign income or gains (FIGs). After this period, they will be subject to UK taxation on worldwide assets in the same way as long-term UK residents. This option can apply to anyone arriving in the UK who has been non-resident for 10 years or more, regardless of their previous domicile status.

A significant change under this new framework is that remitting foreign income and gains for those who have previously claimed the remittance basis will attract a new, and much more favourable, 12% rate of tax, if brought into the UK in the 2025/26 and 2026/27 tax years. This rate will not apply to funds remitted from offshore trusts.

There is also the option for those who have previously claimed the remittance basis, but who can no longer benefit, to receive a re-basing of assets to April 2019 for funds they wish to remit to the UK, as well as a one-year transitional benefit, where only 50% of foreign income will be taxable in the 2025/26 tax year.  

The hope is that these changes will encourage people to bring more overseas wealth into the UK, unlocking large reserves of offshore capital.  However, before rushing to move offshore capital to the UK, non-dom investors should pause for thought regarding the long-term implications of doing so.

What about IHT?

For many of the 70,000 or so non-doms in the UK, the appeal of keeping assets offshore is the exemption from UK inheritance tax (IHT), rather than the income and capital gains tax benefits. It is possible to plan ahead to protect this IHT position even once an individual has become “deemed domicile” after being resident in the UK for 15 years or more and therefore subject to UK IHT on their worldwide assets.

However, the implications of the Spring Budget reforms for IHT remain uncertain. The government has said it is exploring a residence-based approach to IHT and that a consultation process will follow. Reassuringly, it has already been made clear that any pre-existing trust arrangements, established prior to April 2025, will have their IHT status protected and be out of scope for any future change.

This creates a potential deadline for those non-doms who are currently not yet deemed UK domiciled for IHT purposes and who have not yet undertaken any planning in this area. Anyone in this position should speak to us to understand their options.

Other Spring Budget highlights

The Budget's scope extends beyond non-dom reform, touching on other areas critical to high earners and investors. The reduction in capital gains tax rates for secondary properties to 24% from 28% takes effect from April of this year and provides a new and fifth rate of CGT! The introduction of the new British ISA increases the overall ISA allowance by a very meaningful 25%, to £25,000 per year, with the additional £5,000 for investment into UK companies. We will be following HM Treasury’s consultation with interest.

For those with furnished holiday lets, the news was sadly less positive. The government announced the complete abolition of current tax advantages, removing its classification as a "trade”, which may mean current investments in holiday properties need to be reviewed. However, disposal of these assets will now attract the new 24% CGT rate, as opposed to the previously generous 10% available for disposal of certain business assets.

Navigating the new terrain

This budget marks a significant turn in the UK's approach to taxation, especially concerning UK residents who have a permanent home overseas. There is inevitably more in the detail than can be covered in a note like this, so clients impacted by these changes should actively engage with the new rules, taking advice to ensure they are best placed to navigate the new terrain as effectively as possible.

This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. 

Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.

This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.

All data contained within this document is sourced from Cazenove Capital unless otherwise stated.


James Gladstone
Head of Wealth Planning


The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.