UK Autumn Budget 2024: What are the key tax changes for expats?

Since Labour’s first budget was announced on 30th October 2024, there have been budget summaries published in every national newspaper.  

While a number of significant tax changes have been announced – including changes inheritance tax and capital gains tax – it’s not been made clear how many of those changes will affect expats living in the UK, or UK citizens living abroad.

This is what we aim to explain in this brief overview.  

This content does not constitute advice, and you shouldn't rely on it to make any decisions. Always seek tailored advice from trusted professionals. 

Abolishment of the non-domicile tax regime 

As announced in the Tories’ budget last spring, the non-dom tax regime is being abolished and will be replaced by the new foreign income and gains regime (FIG).  

The Labour budget has provided the clarity and detail around this which was missing from the initial Tory announcement, enabling non-doms to seek more informed advice.  

The main change for non-doms is that from 6th April 2025 onwards, the ability to claim the remittance basis to shelter foreign income and gains from UK tax will disappear.

However, the change has been introduced with some transitional reliefs including the ability to rebase the value of your overseas assets to 6^th April 2017 values for capital gains tax purposes, plus the ability to remit overseas funds, previously sheltered from UK tax by a remittance basis claim, into the UK by paying a fixed rate of tax.  

In the first two years of the new regime, non-doms can designate funds they would like to remit to the UK and pay a 12% tax rate. In the third year, they will pay a 15% tax rate. This facility will be called the Temporary Repatriation Facility (TRF).

Introduction of the foreign income and gains regime (FIG) 

The foreign income and gains (FIG) regime will be introduced on 5^th April 2025 and is most relevant for expats moving to the UK for the first time, and in some cases those who have been living in the UK for three years or less at 6 April 2025.

The new FIG regime simplifies many of the previous tax rules. Under FIG rules, when an expat comes to the UK for the first time, for the first four-year-period of UK tax residence 100% of their foreign income and gains will be exempt from UK tax and can be brought into the UK without any further tax charge.

We also now have clarity on which types of income the foreign income and gains regime will apply to, which makes tax planning more straightforward for those moving to the UK. 

There have been complications in the past with regards to certain overseas investments not being efficient for UK purposes and vice versa. This four-year-window provides a period of time for expats to restructure and ‘clean up’ their investments to avoid some of these issues.

The treatment of Overseas Workday Relief (OWR)  

Expats that come to the UK for the first time will be able to claim an exemption from UK tax in respect of their non-UK workdays.  

Under the old non-dom tax regime, this relief was restricted to a three-year period. Now, this is a four-year period – which is aligned with the new FIG regime.

Employment income which is relief under these provisions can be brought into the UK without further tax charges.

Private equity 

For private equity executives moving to the UK for the first time, carried interest will form part of the FIG regime.  

This means you will be able to exempt some of your carried interest gains or private equity income from UK tax within that four-year-period. 

Capital gains tax 

There was a lot of speculation around the increase to capital gains tax (CGT) rates pre-budget. While CGT has increased, it’s not nearly as bad as people were fearing. 

The UK now has a higher capital gains tax rate of 24% which applies to both investment and real estate gains, with special rules introduced for business assets. 

Capital gains rate tax for carried interest 

This current tax year, there is a special capital gains tax rate for carried interest of 28%. This will increase to 32% from 6th April 2025.  

Then, from 2026/27 there will be a reform of how carried interest is taxed in the UK.  

Inheritance tax 

The UK is moving to a residency-based inheritance tax regime. If you have been UK resident for 10 years out of a 20-year window, you are now subject to UK inheritance tax.  

Pensions will also now be brought into the UK inheritance tax ‘net’ from 2027 onwards, whereas previously they have been exempt for inheritance tax.

Watch our 2024 Budget Webinar

In early November 2024, we brought a panel of experts together to discuss the implications of the budget for expats and foreign nationals living in the UK.

Request assistance from our trusted partners

We have created a specific introduction service to help British expats, foreign nationals, and anybody affected by the changes announced in the UK Budget and changes to the Non-Dom status. As part of our free introduction service, our partners will offer an initial discovery call during which you can discuss your situation and determine if and how you'll be affected by the changes announced.

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