Non-residents hoping for changes or delays to the new Labour government’s reforms will be disappointed by the UK Treasury’s policy paper released yesterday, according to leading audit, tax and business advisory firm Blick Rothenberg.
“Non-residents calling for changes or a delay to the Conservative government’s original proposals will be disappointed, as the reforms will be largely the same as those announced by Jeremy Hunt in his last spring budget as Chancellor,” said Nimesh Shah, chief executive of Blake Rothenberg.
“The new government has committed to implementing the Foreign Income and Gains (FIG) regime for four years from April 6, 2025, and there is a clear intention to bring this change to fruition as soon as possible,” Shah added.
The policy paper has scaled back some of the original transitional provisions for the move to the FIG system. These include removing the first-year foreign income deduction, proposing an increase in the rate of tax on the temporary repatriation facility, and confirming the removal of the inheritance tax exemption for trusts. “There is a clear signal that this Labour government wants to end the non-domicile system,” Shah noted.
Many non-resident migrants have criticised the proposals, with reports suggesting they are considering moving to countries such as Italy, the United Arab Emirates and Switzerland, which offer tax breaks. The Labour government’s confirmation that it is going ahead with its plans is likely to boost, and in some cases accelerate, plans to leave the UK.
“In some ways, it is helpful for the new government to clarify its position and set a clear line,” Shah noted. “While the final details of the rules will not be known until the Autumn Budget on October 30, 2024, we should not expect any backtracking given the clear tone of the policy document.”