Thinking of Leaving UK due to Labour Tax Increases in Budget 2024
Published / Last Updated on 19/12/2024
We have had a number of calls from both clients and new enquiries about emigrating and leaving the UK due to some freezing of allowances by the then Conservative government and now the massive tax increases to ‘Middle’ Britain, pensioners and those with reasonable pensions, property and other assets. Not just multi-millionaires but hard working people who have done the right thing, saved hard in pensions and paid for their homes only to be hit with:
- Capital Gains Tax (CGT) rates increasing to 18% and 24% for non-property assets.
- CGT allowances down to just £3,000 pa.
- Dividend allowance now only £500 pa.
- Many allowances frozen until 2028-2030 depending upon which one.
- Pensions and Inheritance Tax (IHT) - from April 2027, unused pension funds will be included in a deceased’s estate for inheritance tax purposes.
- Huge 15% employer national insurance costs on yearly earnings above £5,000 pa with some owners looking to move the business overseas.
With UK moving into recession given the last 2 months of GDP falls and now even WASPI pensioners getting no compensation, many people are ‘fed up’ and ready to leave the UK.
Careful Planning is Required
It is not just a case of 183 days being out of UK and and you are free of UK income tax, capital gains tax and inheritance taxes. You need to understand much has changed over the last 20 years with regard to when you are considered resident and also new rules on UK Resident and Long Term Resident meaning you still may be subject to UK inheritance tax on your Worldwide Assets (not just UK assets) for up to 10 years after you have left the UK (starts April 2025)..
HMRC’s Statutory Residence Test and Non-Residence Tests
- You must ensure you don’t break the tests and end up being classified as UK Tax Resident. 16-day, 30-day, 90-day and 120-day rules as well as sufficient ties test
- Again, securing an NT code (no UK income tax) for UK pensions income when drawing income – getting a DTI Form (Double Tax Individuals – rubber stamped by your new country’s authorities)
UK State Pension Increases when live Abroad – does not increase in payment when living in certain countries
Autumn Budget 2024 Domicile Rules Replaced by Resident and Long Term Resident - April 2025
Autumn Budget 2024 Pensions Included in Estate for IHT – April 2027
- https://www.financialadvice.net/autumn_budget_2024_pensions_included_in_estate_for_iht/video/2050/32
This is not a simple ‘tick box’ exercise to get an NT code and off you go. This is high level income tax and IHT planning with considerations for drawing down pensions - even consider taking all remaining tax-free cash now before you move and even making gifts to children if you wish to whilst you can before you go as some countries have a beneficiary/recipient tax rather than the person making the gift (in life or death) being taxed.
In addition, the debate about whether to keep or sell your UK home. Tax free when you sell your main residence (when living in UK) but it may be taxable if you sell later when you are overseas. In addition, by keeping a UK property you may get caught for residency under a ‘significant ties’ test. We suggest many people will likely want to secure non-UK resident status sooner rather than later, retain that status for up to 10 years (to lose the new Long Term Resident status) and then only pay UK IHT on UK assets only but hopefully having run these down below IHT nil rate band levels.
Leaving the UK is no longer simple. Contact us for professional tax, investment, pension and leaving the UK advice.
