Following Keir Starmer’s assumption of office as Prime Minister in July 2024, the United Kingdom has embarked on a profound economic reform, highlighting the modernization of the tax system for non-domiciled individuals and entities. This transformation, focused on residence rather than domicile, seeks to simplify and clarify tax obligations.
Who is affected?
- Individuals and workers: especially those non-domiciled and newcomers, with foreign assets and income.
- Employers operating under the PAYE (Pay As You Earn) system for UK employment income.
- Trustees: assets held in trust by individuals who held or changed their non-domiciled status.
Key points of the new regime:
- Transition to a residence-based regime: replaces the previous domicile-based system from April 6th.
- 100% exemption for new residents: newcomers will enjoy a full exemption on foreign income and gains for the first 4 years, provided they have not been tax residents in the previous 10 years.
- Changes in trust structures: trust structures with settlor participation lose the exemption on foreign income and gains.
- Asset revaluation for capital gains tax: revaluation of foreign assets to the date of April 5, 2017, is permitted.
- Temporary repatriation facility: a reduced tax rate is offered for the repatriation of foreign income and gains during 3 fiscal years (2025-2026).
- Inheritance tax reform: a residence-based system is adopted, modifying the scope of non-UK assets subject to tax.
- Extension of foreign workday relief: extended to 4 years, with a financial limit of £300,000 or 30% of total employment income.
- Simplification of PAYE applications: employers can operate PAYE without prior HMRC approval.
- Elimination of income tax relief: for taxable income earned abroad from 2025.
- Reduction of travel expense exemption: limited to 4 years, aligning with the new foreign income and gains regime.
These reforms aim to ease the tax burden on non-domiciled companies in their early years. The attraction of foreign talent and investment is therefore encouraged by these various legal and tax changes.
Therefore, if you are interested in taking advantage of some tax deductions, count on Auxadi for managing your accounting, payroll and taxes in United Kingdom and more than 50 jurisdictions.
Can Auxadi help?
Auxadi can become your ideal partner. We offer a one stop shop value added outsourcing services in the areas of accounting and reporting, tax compliance, payroll management and representation services, among others.
Local Knowledge – International Coverage
Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance and payroll services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 22 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.
All information contained in this publication is up to date on 2024. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.