What the UK Budget Means to Expats

The pre-budget discussions mainly focused on potential tax cuts, especially National Insurance reductions, and the possibility of tax increases for non-domiciles and holiday let investors. The Chancellor presented a more positive fiscal outlook than expected, with lower inflation, robust growth, and a forecasted decrease in debt relative to GDP.

What the UK Budget Means to Expats

• The end of the non-dom regime, a fixture of the UK tax system for over a century, represents a significant change to the UK’s approach to the taxation of expats. This serves as a roadmap for tax efficiency, underlining the importance of staying informed, proactive, and engaging with a financial adviser to align financial goals with evolving tax and economic contexts.

Other Policy Announcements

• For individuals, the key highlights include a 2% reduction in employee National Insurance Contributions starting April 6, 2024, benefiting working households. Self-employed individuals will also see a reduction in their NIC rate. ISA and JISA contribution limits remain unchanged, and a new UK ISA is proposed to enhance retail investment opportunities. The Capital Gains Tax rate on non-exempt residential property gains will decrease from 28% to 24%.
• Inheritance Tax and Capital Gains Tax structures remain unchanged, contrary to pre-budget speculation. Tax breaks for furnished holiday lettings are abolished, and there is a significant reform in the taxation on non-domiciles. Child benefit provisions are improved to benefit more families.
• For businesses, the budget extends “full expensing” for qualifying capital expenditures to leased assets and raises the VAT registration threshold to £90,000, easing administrative burdens for small businesses.
• While there are no direct changes to the pension regime or tax relief, the abolition of the Furnished Holiday Letting Regime impacts pensionable income, requiring consideration for maximizing savings in the 2024/25 tax year.
• The corporate highlights emphasize the intertwining of personal and business finances, with changes in the dividend allowance and NIC adjustments requiring careful financial planning for fund extraction.

In conclusion, the Spring Budget presents challenges and opportunities. Navigating its complexities requires understanding the implications of changes and consulting a financial adviser to ensure responsive and aligned long-term financial planning.