The October budget introduced £40 billion of tax rises. Over half of this will be met through National Insurance (increasing employer contributions and reducing the threshold when NI becomes payable). The other changes are far-reaching, impacting both UK residents and expatriates with UK assets.

UK budget 2024 – Income and capital gains tax (CGT)

The personal income tax thresholds will remain frozen until April 2028. From that point they will increase in line with inflation, but the fiscal drag over the intervening three years will result in most people paying more tax.

Capital gains tax rates on investment returns have increased to 18% and 24%, to match real estate rates. Rates for personal representatives and trustees are now 20% and 24%. The capital gains tax allowance remains £3,000 (compared to £12,300 in 2022/23). The business assets disposal relief rate will rise to 14% from April 2025, then 18% a year later. The investors’ relief lifetime limit has been reduced from £10 million to £1 million.

UK budget 2024 – Pensions

Pension funds have long been protected from inheritance tax, but this is about to change. With effect from April 2027, any unused UK pension funds and death benefits will be included in the value of your estate for UK inheritance tax purposes. This reform will push more families into the inheritance tax net and increase an estate’s total liability.

The other pension reform is significant for expatriates. While transfers from UK pensions into QROPS (Qualifying Recognised Overseas Pensions Schemes) have been subject to a 25% Overseas Transfer Charge (OTC) since 2017, there was a key exclusion for EEA/Gibraltar residents transferring into a QROPS established in any EEA country or Gibraltar. With effect from 30 October 2024, this exclusion is no longer available, leaving the only practical exclusion of where you live in the same country as the QROPS.

Since QROPS for retired expatriates are only available in Malta and Gibraltar, if you live in France, Spain, Portugal, Cyprus or another EU country, a transfer to QROPS will incur the 25% tax charge. If you were interested in moving your funds into a QROPS, contact Blevins Franks for personalised advice, including guidance on alternative planning strategies to achieve your objectives. We will help you weigh your options, tax liabilities, and potential long-term savings and benefits. Depending on your country of residence and personal circumstances, some people may find that the future UK inheritance tax savings more than compensate for paying the tax charge.

UK budget 2024 – Inheritance tax

The freeze on both inheritance tax thresholds has been extended to 2030. The government’s revenue from this tax will nicely increase as a result, more so when pensions are included in your estate.

Business property relief and agricultural property relief will be reformed from April 2026. This will considerably increase the amount of tax paid when businesses and farms are passed from one generation to the next.

UK budget 2024 – Domicile

From 6 April 2025, the current domicile/non-domicile regime will be replaced by a residence-based system. This affects the tax liabilities of foreign nationals living in the UK and new arrivals, as well as British expatriates in relation to inheritance tax.

For inheritance tax, put simply, an individual will be liable on worldwide assets when they are classified as a long-term UK resident, i.e. living in the UK for 10 of the last 20 years. When someone leaves the UK, they will remain liable to inheritance tax for up to 10 years, depending on how long they had lived there. Assets in the UK, including pensions from 6 April 2027, are always assessed for inheritance tax.

Given the complexity of the domicile system, this reform will simplify inheritance tax planning for British expatriates. Take cross-border estate planning advice to ensure your wealth management is set up to take full advantage of the reform. The new system could also benefit long-term expatriates returning to the UK.

UK budget 2024 – Stamp duty

For those looking to buy a second home or investment property in the UK, the surcharge on stamp duty land tax increases from 3% to 5%.

What next?

While this feels like a significant budget, with £40 billion in tax rises and £70 billion a year in additional spending, many of the tough decisions are still to come. The numbers do not give the Chancellor much leeway, especially if economic growth disappoints. With the additional borrowing and spending plans frontloaded for the first half of this parliament, many analysts expect further tax rises will be necessary to avoid having to impose cuts on essential public services. What the Chancellor needs is real economic growth, which naturally increases tax revenues – spending on hospitals, schools, prisons etc. does not contribute to economic expansion in the same way.

Protecting yourself

Reviewing your financial plans regularly is always important, but this budget was a strong call to action. Now is the time to make a plan to protect yourself from these, and any future, adverse reforms where possible.

Whether you are considering relocating from the UK, or already live abroad, Blevins Franks can help. We have offices in London, France, Spain, Portugal, Cyprus, Malta and Monaco, over 60 professional financial advisers, and teams of highly qualified cross-border tax specialists, UK pension experts and advisers, investment analysts and trust officers. And we have built up almost 50 years of experience and knowledge advising UK nationals moving and living abroad.

MOVING ABROAD

If you already live abroad you can skip to the next section here.

Are you thinking of leaving the UK? We will…

• Explain the tax implications of being resident in your country of interest and weigh this up against UK taxation to help you make an informed choice.
• Help you explore and evaluate your options if you haven’t yet pinned down a country.
• Guide you through the effective tax mitigation opportunities in these countries – you may be surprised at how much tax you can save.
• Make an effective wealth management plan for leaving the UK, such as carefully timing your move and when you sell assets, to keep tax as low as possible.
• Guide you through the succession implications of your new country and advise on how to protect your heirs from forced heirships rules.
• Help you establish an effective estate plan for transferring your wealth to the right hands, at the right time, with as little tax as possible.
• Weigh the pros and cons of the options available for your UK pension as an expatriate so you can establish which best suits your situation and goals.
• Provide investment advice suited to your life as an expatriate and structured to be tax-efficient and pass smoothly to your heirs.
• Explain how to apply for a residence permit.
• Offer other practical advice to help make your move and settling into your country easier.
• Provide proactive ongoing advice and reviews for as long as you or your heirs need us.

Contact us now on (0)20 7389 8133 or
fill up the enquiry form further down and we will get in touch.

ALREADY LIVE ABROAD
If you already live abroad, is it time to rethink your UK assets? We will…

• Analyse your UK assets to weigh how much they cost you in tax compared to what your tax liabilities would be if you moved them or the capital out of the UK.
• Review your assets and wealth management to establish if they are suitable for your situation today and future plans, with a focus on your local tax and succession regime.
• Look at how you can improve your overall tax position – strategic planning can make a significant difference.
• Advise on consolidating assets to help you better understand your overall financial position and make managing your finances easier.
• Work with you to develop a comprehensive, tax-efficient estate planning to pass your legacy to your family according to your wishes.
• Explain the options available for your UK pension as an expatriate and help you determine which is most suitable for you.
• Review your savings and investments to establish if it is designed to suit your circumstances and goals, and structured to be tax-efficient and pass smoothly to your heirs.
• Review your overall wealth management annually to adjust it as necessary to continue meeting your objectives.
• Ensure a tax-efficient move back to the UK, should the time come for you to return.

Contact us now on +44 (0)20 7389 8133 or
fill up the enquiry form further down and we will get in touch.

Don’t risk leaving it too late.
Get in touch today.