Changes to the UK’S Special Tax Regime for Foreign Income and Gains

income tax and CGT.

income and gains (FIG).

Where a claim is made the

individual cannot benefit from the personal allowance or CGT annual exemption.

After specified periods of UK residence a Remittance Basis Charge – the amount

determined by years of prior residence – will be payable.

Where a claim is made

foreign income, and gains are exempt from UK tax

regardless of whether they are remitted to the UK or not.

No charge payable to benefit from the regime. However, an individual benefitting from the regime cannot also benefit from the personal allowance and CGT annual exemption.

After the 4 years the

individual is subject to worldwide tax on income and gains.

Said they would consider a specific incentive for UK

investment within the 4- year period.

Nothing further said about the incentive for

investment in the UK within the 4-year period.

Did say that the government would review some other key areas of

the previously announced reforms to ensure that

“the new regime is both fair and as competitive as possible”.

three years of residence such

that an individual carrying out employment duties in the UK and overseas can claim the RB on the overseas portion of the income.

Complex rules that are poorly understood in general.

individual would have to also be eligible for the new 4-year FIG regime.

OWR will only be available for the first three tax years. For that period OWR will provide a complete exemption from UK tax for the portion of the employment income that can be attributed to overseas duties.

tax relief. Engagement to happen in August with an announcement in the 30 October 2024 Budget.

domiciled individuals who had been eligible for the RB and would be subject to tax on the worldwide basis from 2025/26.

For tax year 2025/26 only the amount of foreign income

taxable was to be reduced by 50%.

this transitional provision.

Rebasing to the 5 April 2019 value announced for assets held personally by such

individuals.

The rebasing date may not be 5 April 2019. What

date would be appropriate is being considered and will be announced at the 30 October 2024 Budget.

Temporary Repatriation Facility (TRF)

A fixed 12% rate would apply to all sums brought to the UK under this facility in tax years 2025/26 and 2026/27.

It was understood that:

a.      there would be no regard paid to what the amounts traced to;

b.      no credit given for any foreign tax credit; and

c.      the TRF would not apply to pre-6 April 2025 FIG generated within trusts and trust structures.

Commitment to explore ways to encourage people to remit

stockpiled FIG to the UK, so that

the legacy of the RB rules can be ended.

Stated that the reduced rate and length of time that the TRF will be

available for will be set to make use as attractive as possible.

Commitment to consider ways to expand the scope of the TRF, such as

including stockpiled

income and gains within overseas structures within the remit. Details to be confirmed in the 30

October 2024 Budget.

they receive distributions or benefits from the trust. As such, they are not subject to the UK anti-avoidance provisions

in the same way they UK resident and UK domiciled individuals are. These favourable provisions are referred to as the “trust protections”.

2025 the trust protections will not apply.

Anyone who comes within the 4-year FIG regime will not be taxed under the anti- avoidance provisions on foreign income or any gains arising within the trust structure whilst the 4-year

FIG regime applies. Equally they will not be taxed on

income or capital distributions received from the non-UK resident trust in that period.

Conservative government plans.

avoidance provisions. If they can benefit from the trust this means being subject to tax on all trust income on the worldwide basis and on the

net trust gains each tax year.

directly by

individuals?

In addition, a ten-year tail was announced. This means that any individual caught within

the UK IHT net will have to be non-UK resident for ten- years to be free of its clutches.

Conservative government plans.

Stated that there will be further engagement with stakeholders in August.

The IHT position of trusts under the new regime will mirror the position of the settlor. That is, it seems that when the settlor is outside the scope of IHT so is the trust and when the settlor is within the scope to IHT (including the ten-year tail period) the trust will be too.

plans for trusts created after 5

April 2025.

charged on non-UK assets which are held in such

trusts, so that everyone who is in scope of UK

IHT pays their taxes here.

This also means that GROB will not apply, as well as the trust IHT relevant property regime – when the settlor can benefit from the trust.

include all foreign assets held in a

trust within the scope of UK IHT, whenever they were settled, so

that nobody living here for longer

than ten years can avoid paying UK inheritance on

trust property settled.

introduced in a manner that allows for

appropriate adjustment of existing trust arrangements, while ensuring that the

treatment of all long-term residents of the UK is the same for IHT purposes.”

transitional arrangements for affected settlors.

Consultation in August and the detail will be published at the 30

October 2024 Budget.

avoidance legislation

avoidance legislation. However, specific mention made of the

Transfer of Assets Abroad and Settlements

legislation.

intentions:

ambiguity and uncertainty in the legislation.

b.      Make the rules simpler to apply in practice.

c.      Ensure these anti-avoidance provisions are effective.

2026/27 tax year.