UK chancellor of the exchequer, Rachel Reeves, attended the World Economic Forum’s Annual Meeting in Davos on 22 – 23 January, aiming to reassure business leaders and investors that the UK remains a prime destination for investment. Reeves emphasised that the Government’s primary focus is driving economic growth, says Sean Bannister, partner, head of tax, at Edwin Coe.
This message contrasts with the ongoing concerns of wealthy internationals, who have been leaving the UK following proposed changes to the non-domiciled individual tax regime. These changes were first introduced in the Spring 2024 Budget by the previous government and further expanded by the Labour Government in the Autumn Budget.
Reeves acknowledged these concerns, stating, “We’ve been listening to the feedback from the non-dom community,” and hinted that some of the proposed changes would be relaxed.
There was anticipation that further details on these changes would be provided during the committee stage, particularly regarding potential amendments.
Temporary Repatriation Facility (TRF)
One of the key transitional measures designed to ease the implementation of new rules is the Temporary Repatriation Facility (TRF). This facility allows non-domiciled individuals to bring historical foreign income and gains into the UK at a lower tax rate. There had been speculation that the Chancellor would announce amendments to the TRF as part of the proposed relaxations.
While Reeves reiterated that the changes aim to simplify the system and make it more attractive, little additional information was provided during the committee stage. This raised questions about why these crucial amendments, which are expected to be a significant source of revenue, were not put forward for further scrutiny.
Other Updates
Additional updates include a minor adjustment to the new Foreign Income and Gains (FIG) regime. This allows qualifying new residents to remain free from tax on foreign income and gains for up to four years. The change specifically impacts income received by settlors of trusts as a result of capital payments, enabling them to benefit from the FIG regime as well.
Another update concerns overseas workday relief. Starting April 6, 2025, employers will no longer need to wait for HMRC approval before operating PAYE on income related to work performed in the UK. Instead, they will be able to proceed once HMRC acknowledges their application, reducing delays.
Edwin Coe’s view
While these changes are welcome, it’s disappointing that there’s no further clarity on additional relaxations as we approach 5 April 2025. If the UK aims to remain a prime destination for global investment and talent, it must address the growing concerns of wealthy individuals leaving the country in record numbers.
By Sean Bannister, partner, head of tax, Edwin Coe
