Client Alert: UK Autumn Budget Summary

Welcome to our summary of the key taxation measures announced in the UK Autumn 2024 Budget. More detail can be found in our Deloitte publications, which you can find on our dedicated webpage?here?and at the links below.

The Chancellor of the Exchequer Rachel Reeves MP yesterday delivered the first Budget Statement of the new Labour Government, announcing an overall package of ￡40bn a year in tax increases and ￡74bn a year of additional spending by 2029/30.? Key revenue raising measures include a 1.2% increase in employers’ national insurance contributions.

A summary of key measures from a Channel Islands perspective is included below.

Changes to the Taxation of Non-UK Domiciled Individuals

The UK Government will abolish the existing regime for taxing non-UK domiciled individuals and introduce a new residence-based regime for foreign income and gains (“FIG”) from 6 April 2025. Transitional rules will apply to those who are already paying tax under the UK’s existing regime. A new residence-based system for inheritance tax will also apply from 6 April 2025.

In addition, changes will be made to the taxation of trusts settled by non-UK domiciled individuals. These are to include:?

• Removal of the existing regime for taxing income and gains received by trusts (the protected trust regime) for individuals who have settled assets on trusts from which they can benefit and who are not eligible for the new four-year regime for FIG, and
• Extension of inheritance tax to non-UK assets held in trust, to the extent these are not already taxable. From 6 April 2025, the excluded property status of non-UK settled assets will not be fixed at the time the assets are added to the settlement. Instead, they will only be excluded property (and so not subject to inheritance tax charges) at times when the settlor is not long-term UK tax resident (as defined). When a settlor is long-term UK tax resident, any assets they have settled (even when not long-term UK tax resident) will be subject to inheritance tax.

Read more?here.

Carried Interest Taxation Reform

With effect from 6 April 2025, the capital gains tax rate for carried interest?will increase to 32% (a 4% increase, from 28%, for additional rate taxpayers).

Other than the rate change, the existing capital gains regime will apply until 5 April 2026, after which new wider reforms to the tax treatment of carried interest will come into effect.

Read more?here.

Offshore Receipts in Respect of Intangible Property repeal

The Offshore Receipts in Respect of Intangible Property (ORIP) rules will be abolished in relation to income arising from 31 December 2024, based on the UK Government’s view that the Pillar 2 Undertaxed Profits Rule will more comprehensively discourage the multinational tax-planning arrangements that ORIP sought to counter. Repeal of ORIP will be legislated in 2024-25.

Taxation of Employee Ownership Trusts (EOT) and Employee Benefit Trusts (EBT)

In summer 2023, the then UK Government launched a consultation seeking views on targeted proposals to ensure that the tax regimes relating to EOTs and EBTs remain focused on the objectives of rewarding employees and encouraging employee engagement.?Following this consultation, the UK Government has now announced a package of reforms.

Read more?here.

The Common Reporting Standard (CRS) and Crypto Asset Reporting Framework (CARF) – Consultation and Draft Regulations

HMRC has released for consultation draft updated CRS regulations which would introduce a mandatory registration requirement with HMRC for UK Financial Institutions. In addition, a new penalty regime is proposed which includes penalties per account holder (applicable per account holder in instances of failure to apply due diligence procedures, inaccurate or incomplete reporting and failure to provide notification to reportable persons), as well as penalties for account holders who fail to provide self-certifications.

In respect of “domestic reporting" (i.e. reporting in respect of UK account holders by UK reporting institutions), HMRC has confirmed that this will be introduced for CARF, but will not be introduced for CRS at this time (although HMRC will continue to engage with stakeholders on potential domestic reporting for CRS).

Contacts

If you have questions or would like to discuss any of the above, please get in touch with your usual Deloitte contact or any of the below.

Guernsey

Jo Huxtable : 01481 703 308

Martin Popplewell : 01481 703 229

Adam Hart : 01481 703 321

Matthew Maltby : 01481 703 267

Jersey

Martin Rowley :?020 7007 7665

Katy Wintle :?01534 824 336

Rupert Lee :?01534 824 264

Miranda Harries :?01534 824 391