Among the many rumours surrounding the upcoming 2025 Budget, proposed changes to the UK’s Inheritance Tax regime have dominated the headlines.

While any discussion at this stage remains speculative, several potential reforms have been reported in the press, including:

• Lifetime gifting cap: the Government is reportedly considering a lifetime cap on the value of gifts that can be made free of IHT. Currently, gifts to individuals of any amount are potentially exempt if the donor survives for 7 years.
• Changes to the 7-year rule: the time frame for potentially exempt transfers could be extended beyond 7 years, with some commentators suggesting a period of 10 or even 14 years.
• Reform of gifting exemptions:  Reviews or potential restrictions could be introduced for existing exemptions, such as the £3,000 annual gift allowance.
• Further changes to reliefs: the Government may continue to restrict or remove other IHT reliefs, especially if they are deemed unfair or costly to the taxpayer.
• Flat-rate IHT: some analysts suggest the Government may consider a simplified flat-rate IHT regime, potentially replacing the current ‘cliff edge’ 40% rate with one applied more broadly.

The rumoured changes are in addition to those already announced, which include:

• New residency-based tax system: since 6 April 2025, the non-dom regime has been abolished and replaced with a residence-based system. This could bring the worldwide assets of long-term UK residents within the scope of IHT after only 10 years of residence.
• Changes to business and agricultural relief: from April 2026, Business Property Relief (BPR) and Agricultural Property Relief (APR) at the rate of 100% will be capped at a combined value of £1 million. Assets with a value above this amount receive relief at 50%.

• Changes to pensions from April 2027: most unused pension funds will form part of an individual’s taxable estate for IHT purposes. While the rules are still to be confirmed, this represents a very significant shift, as private pensions have historically been exempt from IHT.
• Thresholds frozen until 2030: the nil-rate band of £325,000 and the residence nil-rate band of £175,000 have been frozen until at least April 2030. Due to inflation and rising asset values this will bring more estates into the IHT net.

Possible pre-Budget actions

If you have significant pension savings, own a business, or hold agricultural assets, you should consider reviewing your estate planning arrangements.

Key considerations should include:

• Review your Will or Draft one if you do not have one: your Will can be structured to maximise allowances, especially given the new cap on BPR and APR and its “use-it-or-lose-it” nature for spouses and civil partners.
• Consider lifetime gifts: given the rumoured changes to the gifting rules, consider making gifts sooner rather than later to start the 7-year clock under the current regime.
• Reassessing your pension strategy: in conjunction with taking financial advice, you may consider spending pension funds in priority to other monies and examine other strategies to reduce the impact of the April 2027 changes.
• Reviewing the tax exposure of any family trusts: the new cap on reliefs will significantly affect both existing and new trusts.
• Assess Investments:  Investors may wish to review holdings such as AIM shares, which may currently benefit from reduced rates of Business Property Relief (BPR).

For more information about the upcoming Autumn Budget, please contact us: advice.uk@dixcart.com.

When the UK ended its non-domicile tax regime in April 2025, the change was more than just a technical tax reform, it was a signal that the country’s relationship with global wealth had fundamentally shifted. For over a century, the non-dom rules allowed internationally mobile individuals to limit their UK tax exposure; that framework has now gone.

The New Residence-Based Reality

The UK now taxes residents on a worldwide basis. The moment you become UK resident, your global income and gains are subject to UK tax, and after a certain period, your worldwide assets may also be liable for inheritance tax.

This shift does not just affect the ultra-wealthy; it affects anyone with assets abroad, property back home, or business interests overseas. Transitional measures exist, but they are temporary.

Why Your Will Matters More Now

In the non-dom era, estate planning often relied on trusts, offshore structures, or the remittance basis to manage exposure. Today, those tools are more limited. That makes the Will more than a formality but a central tool in making sure your wealth is passed on according to your wishes.

The Three Essential Functions of a Will Today

In the post-non-dom UK, a Will does three things:

1. It defines the narrative of your estate in a way the law cannot: who inherits what, in which jurisdiction, and under what conditions.
2. It gives your executors the framework to navigate cross-border probate and the complexities of conflicting inheritance laws.
3. Perhaps most importantly, it allows you to respond directly to the new tax environment, such as structuring bequests, timing disposals, and integrating reliefs so that value passes as intended, not as dictated by the blunt force of intestacy rules.

The reality is that HMRC now has a much broader claim on the wealth of UK residents. Without a Will, that claim will be exercised with maximum inefficiency and minimum alignment to personal wishes. The state decides how your estate is divided, often in ways that are inefficient and misaligned with your wishes.

We are entering a period where private wealth structuring will need to be far more deliberate. Those with international ties will have to think globally but act locally, drafting Wills that respect multiple legal systems, anticipating not just the tax burden but the human dynamics of succession. In this context, the Will is no longer the final step in managing your affairs; it is the foundation.

What We Do

Our private client consultants offer a service tailored to our clients’ unique needs. Whether you simply need a Will to cover your UK assets or a more detailed one that includes tax planning or trust arrangements, we will tailor it to fit your personal needs and circumstances.

At Dixcart UK, we recognise that every client’s situation is unique, and we are committed to delivering personalised solutions that address your specific objectives and concerns.

For more information about Wills, please contact us: advice.uk@dixcart.com.

Planning the future of your wealth is not just about tax efficiency or legal structures; it is about protecting what matters most and creating a legacy that reflects your values. Thoughtful estate planning gives you the confidence that your assets are not only safeguarded but also positioned to benefit your family in meaningful ways. It allows you to take control of how your wealth is transferred, ensuring it supports the next generation while minimising unnecessary risks or taxes.

Below are some of the main tools used in estate planning, along with the benefits they can offer.

1. Family Investment Companies (FICs)

A Family Investment Company is a private company used to hold and manage family wealth. They allow individuals to transfer assets from their personal estates into a corporate structure while retaining control over those assets, including decisions about the board’s composition

However, it is more than just a holding vehicle. If the Founders lend money to the FIC, the loan can be gradually repaid using the FIC’s post-tax profits, alongside any dividends distributed from its earnings. This arrangement can offer the Founders a continuous stream of income.

Alternatively, if the loan’s capital is no longer required, the Founders may choose to gift its value to other family members. This would remove the loan’s value from their taxable estate for Inheritance Tax purposes, provided they survive for seven years following the date of the gift.

There are a number of potential tax advantages when using FICs, including Inheritance Tax, but these will vary depending on the size of the investments/loans, the assets held by the FIC, and the personal circumstances of the Founders. It is therefore very important to speak with a tax specialist from the outset, who can provide guidance on the tax merits of an FIC, tailored to the specific circumstances and objectives of each prospective Founder.

2. Trust Structures

They provide a structured framework for aligning wealth transfer with long-term family goals and values, enabling trustees to manage and distribute assets in a purposeful and strategic manner. At the same time, trusts can offer resilience against divorce settlements, creditor claims, or imprudent financial decisions, while facilitating a seamless transfer of assets that avoids the delays and public scrutiny of probate. When integrated into a comprehensive strategy, trusts can also enhance tax efficiency, helping to reduce exposure to inheritance and capital gains taxes while preserving the integrity of the family legacy.

Trusts can be established during a person’s lifetime or through a Will, with assets transferred to trustees who manage them for the benefit of the chosen beneficiaries.

3. Lifetime Gifting

Lifetime gifting is a further strategy that combines financial efficiency with relational impact. By transferring assets during one’s lifetime, families can reduce the eventual taxable estate. Gifting also allows for a gradual transfer of wealth, mitigating sudden disruptions to family financial dynamics and fostering financial literacy across generations.

Gifts made sufficiently in advance may fall outside the estate for inheritance tax purposes, amplifying the long-term efficiency of such transfers.

4. Comprehensive Tax Planning

At the foundation of all these strategies lies comprehensive tax planning. Coordinating personal, family, and business finances in a holistic manner is essential for preserving and growing wealth. Effective planning ensures that all available allowances and reliefs are maximised, strategically reduces exposure to income tax, capital gains tax, and inheritance tax, and, for internationally connected families, mitigates the risk of double taxation.

About us

Dixcart UK has extensive experience in designing bespoke estate plans for a wide range of clients, including families, entrepreneurs, and both UK and non-UK domiciled individuals. No two situations are the same, which is why we take the time to understand your personal, business, and family priorities before creating a strategy tailored to your needs.

For more information about the above topic, please contact us: advice.uk@dixcart.com.

Companies House will introduce new legal requirements for identity verification for company directors and people with significant control (PSCs) from Tuesday 18 November 2025. However, anyone can choose to verify their identity now during the voluntary phase.

Identity verification (“IDV”) is the process of confirming that a person is who they claim to be. The aim of the IDV regime is to reduce the risk of fraud by making it harder to register fictitious directors and beneficial owners and to improve the integrity and accuracy of the public record at Companies House.

Who needs to have their identity verified?

• New directors will need to verify their identity before they can incorporate a company or be appointed to an existing company.

Existing directors will need to confirm their identity has been verified when filing their next annual confirmation statement, during a 12-month transition period.

• Existing PSCs must verify their identity in line with an appointed date to be confirmed, also within the same year long period.
• Anyone on behalf of a company (e.g. company secretaries)
• Members of LLPs and other registration types

Individuals listed on multiple entities only need to verify their identity once.

The new IDV requirements will also apply to individual directors of overseas companies that have a UK establishment registered at Companies House. The timing of implementation will be the same as for UK companies but with specific transitional provisions for existing directors of overseas companies.

Implementation Timeline

• 8 April 2025: voluntary IDV for individuals was introduced
• 18 November 2025: IDV will become compulsory. A 12-month transition period will also begin in respect of existing directors, LLP members and PSCs
• Spring 2026: IDV will become compulsory for those filing documents at Companies House. Any third parties who are filing on behalf of a company will need to register as an authorised corporate service provider (“ACSP”)
• By the end of 2026: the 12-month transition period will end, and Companies House will start compliance checks.

These measures are part of a wider effort to tackle fraud, prevent the misuse of companies, and improve the accuracy of the companies register, providing investors, regulators and the wider business community with greater confidence about who controls UK companies.

Companies House estimates that between 6 and 7 million individuals will need to complete the identity verification process by November 2026. Since the soft launch in April 2025, over 300,000 individuals have already completed the process voluntarily.

To avoid delays, possible penalties, or rejection of company filings, we recommend beginning the process as soon as possible.

Speak to an Expert

We take the hassle out of the identity verification by managing the process for you with care and reliability. If you would like to speak with a member of the team, please get in touch: hello@dixcartuk.com.

Last month, Bloomberg reported that despite the abolition of the UK non-dom regime and the looming prospect of wealth taxes, London remains a magnet for family offices.

Over the past decade, family offices have become increasingly international. Many now operate across multiple jurisdictions, both to diversify risks and to tap into opportunities in emerging markets. Yet, despite this global outlook, London has retained its gravitational pull. While some wealthy residents have indeed departed, data shows that very few family offices have actually uprooted their operations. According to Bloomberg, out of 259 single-family offices managing a combined $344 billion, only one has relocated alongside its principal. Even among the 19% of non-dom owners who are preparing to leave the UK, their offices remain firmly based in the capital.

It is not hard to understand why family offices have continued to stay fixed in London – their effectiveness relies on having the right advisers to ensure the family office runs as efficiently as possible, and the UK’s long-standing status as a global financial center, with a robust ecosystem of professional services, plays a huge role in that decision.

So why does London hold on so tightly to this community, even amid political uncertainty?

Several factors stand out:

• Depth of Expertise – Family offices thrive when they can draw on top-tier advisers across law, tax, investment, and governance. London’s professional services sector has built decades of global credibility and continues to offer unparalleled expertise.
• Global Financial Hub – The UK’s long-standing reputation as a stable, well-regulated financial centre makes London an attractive base for intergenerational wealth planning and cross-border structuring.
• Connectivity – With direct links to Europe, the Middle East, Asia, and North America, London provides unrivalled access to global markets and networks of capital.
• Cultural and Lifestyle Appeal – Beyond finance, London’s educational institutions, property market, and cultural life remain strong draws for international families.

Taken together, these advantages create a powerful ‘ecosystem effect’.

It is encouraging to see that London’s family office sector continues to thrive and evolve despite a backdrop of policy changes and uncertainty. For families thinking about their long-term strategies, the message is clear: location matters, and the right infrastructure can often outweigh political changes.

At Dixcart we have over fifty years’ family wealth planning experience and assist clients in running and managing Family Offices. For more insights, see our article on Effective Family Wealth Planning.

If you would like tailored advice on succession planning or a comprehensive approach to managing family wealth, please speak to your usual Dixcart professional or contact a member of our professional team at our UK office: advice.uk@dixcart.com.

From January 2026, UK taxpayers who use crypto-assets will face new reporting obligations under regulations aligned with the OECD’s Crypto-Asset Reporting Framework (CARF). Announced by HMRC on 24 June 2025, these rules require crypto service providers to collect and report detailed personal and transactional data for users who are UK residents or residents of other CARF-compliant jurisdictions.

What’s Changing?

Although crypto-assets have always been subject to UK tax laws, including capital gains tax and potentially income tax, this new regulation shifts some of the reporting burden to crypto-asset platforms such as exchanges, wallet providers, and brokers. For the first time, these service providers must proactively report their users’ information directly to HMRC however tax payers will be responsible for providing certain  information to the service providers to allow to report back to HMRC.

From 1 January 2026, the following data must be collected and submitted by crypto-asset service providers:

• Full name
• Address
• Date of birth
• Tax residence(s)
• National Insurance number or unique taxpayer reference
• Summary of crypto transactions (e.g., sales, transfers, exchanges)

Failure by the tax payer to provide accurate and complete information to the service provider or failing to report altogether, could result in penalties of up to £300 per user, applicable to both users and service providers.

Increased Compliance

HMRC will use this data to cross-check taxpayers’ self-assessment returns, ensuring that income and gains from crypto-assets are reported correctly. In cases where no tax return is submitted, HMRC may use the data to estimate and assess the tax due.

This marks a significant shift in enforcement strategy. Historically, crypto tax compliance relied heavily on voluntary disclosure. Now, with transactional information coming directly from crypto platforms, HMRC is better equipped to identify underreporting or non-compliance.

Reporting Crypto on Your Tax Return

While the reporting framework is new, the tax treatment of crypto-assets is not. Profits or gains from the sale, swap, or transfer of crypto-assets have long been subject to Capital Gains Tax. Additionally, Income Tax and National Insurance may apply where crypto-assets are received as:

• Employment income
• Mining rewards
• Staking or lending proceeds

To accommodate this, the 2024/25 self-assessment tax return includes new disclosure sections specifically for crypto-asset income and gains. All UK taxpayers involved with crypto should ensure that these sections are completed accurately.

There is an HMRC cryptoasset disclosure service for voluntary disclosures where an individual may not have been previously compliant, however we recommend any crypto investors affected by CARF seek professional advice before taken the decision to use the CDS.

Economic Impact

The Government expects the CARF-aligned rules to yield an additional £315 million in tax revenue by April 2030. HMRC has already identified 50 UK-based crypto-asset service providers and estimates their annual compliance costs under the new rules at around £800,000.

The implementation cost to HMRC itself is forecasted at £69 million, largely covering IT infrastructure and support.

A tax information and impact note published with the regulations states that the rules are designed to deter individuals from failing to declare crypto-asset holdings and to encourage accurate and timely reporting.

Key Takeaways for Crypto Holders

• From 1 January 2026, crypto service providers and crypto exchanges will begin collecting data on users’ activities and reporting transaction details to HMRC for UK residents.
• Users will be required to provide service providers with the information requested.
• HMRC will use this data to enforce tax compliance and verify the accuracy of tax returns. Failure to disclose information, or service providers who submit inaccurate or incomplete records will be subject to fines of up to £300 per user.
• The 2024/25 self-assessment tax return  requires full disclosure of crypto gains or income, under the capital gain pages.

UK taxpayers involved with crypto-assets should begin reviewing their records now to ensure full compliance. With greater transparency and increased enforcement on the horizon, proactive reporting is no longer optional, it is essential.

Next Steps

If you have any questions and/or would like advice on the above topic, please contact us at: hello@dixcartuk.com or your usual Dixcart contact.

We are frequently asked by our clients about the often-difficult topic of exit and succession planning. 

This gives rise to several practical issues, especially where a trade sale is not likely, or the existing management team are perhaps not in a position to be able to raise sufficient funds to affect a traditional “Management Buy Out”.

One Solution that is often overlooked is an Employee Ownership Trust (EOT).

An EOT can be used to acquire between 51% and 100% of a trading company’s shares which are then held on trust for the benefit of all the company’s employees, on the same terms.

Unlike traditional employee share schemes, which give rise to direct employee ownership, the EOT allows for indirect employee ownership overseen by selected employee Trustees.

EOT’s have been shown to promote better business performance, greater commitment, and productivity from employees with increased staff loyalty, lower staff turnover and absenteeism. They also allow staff members to benefit from being involved in the management and future direction of the business.

Benefits to the Shareholder

• The sale by the existing business owner of over 51% of his/her shares in the company to a qualifying EOT, would be Capital Gains Tax (CGT) and Inheritance Tax (IHT) free.  This can prove to be a valuable relief given that the Business Asset Disposal relief limit for the reduced 10% rate of CGT is only £1 million;
• A market is created for the shares that might not otherwise exist;
• Unlike in a liquidation situation (which is often the only choice for small business owners to realise the value of the business), the company can continue to operate, and the shareholders and employees can still be part of that business;
• Typically, the sale of shares in a company to an EOT is funded by a mixture of existing cash, from within the company, and external loan instruments;
• It avoids the need for often complex and expensive negotiations when selling to a third party.

Benefits to the Company and Employees

• A trading company owned by an EOT is able to pay cash bonuses of up to £3,600 per annum to all employees (on a ‘same terms’ basis);
• These bonuses will be tax-free but will be subject to National Insurance Contributions (NIC’s);
• The company gets corporation tax relief on these tax-free bonuses;
• There are benefits in terms of increased staff motivation and job retention, as set out above.

Summary and Additional Information

An EOT can provide a tax-beneficial way for shareholders to realise value and to involve employees in the company that they work for, although the structuring and funding of an EOT requires careful consideration.

If you would like to find out more about how an EOT may benefit you and your business, please contact us: hello@dixcartuk.com.

FICs are companies limited by shares (an “Ltd” or “Limited”) and often established by parents and/or grandparents (“Founders”) to benefit themselves and their family, as shareholders. The popularity of FICs has increased over recent years, and they are viewed as a corporate alternative to the more common discretionary trust.

An FIC owns assets such as property, which generate income and capital gains, which can be distributed to the family shareholders over time.

Assets generally come from the Founders themselves, either through a loan or a direct transfer into the FIC. Each shareholder owns a different class of shares (often referred to as “alphabet shares”), gifted to them by the Founders.

Generally, the Founders’ shares will have the usual rights to vote and receive dividends but not capital, whereas the gifted shares will only have the rights to receive dividends and capital, but not to vote.

This ensures that the Founders have the sole right to make decisions regarding the FIC, at both shareholder and board level, including decisions relating to dividend payments.

What are the Benefits of Establishing an FIC?

FICs allow individuals to transfer assets from their personal estates into a corporate structure, where they—acting as the sole voting shareholders (Founders)—retain control over those assets, including decisions about the board’s composition. This setup enables them to generate a controlled and ongoing source of income for themselves and their family over time.

If the Founders lend money to the FIC, the loan can be gradually repaid using the FIC’s post-tax profits, alongside any dividends distributed from its earnings. This arrangement can offer the Founders a continuous stream of income.

Alternatively, if the loan’s capital is no longer required, the Founders may choose to gift its value to other family members. This would remove the loan’s value from their taxable estate for Inheritance Tax purposes, provided they survive for seven years following the date of the gift.

There are a number of potential tax advantages when using FICs, including Inheritance Tax, but these will vary depending on the size of the investments/loans, the assets held by the FIC, and the personal circumstances of the Founders. It is therefore very important to speak with a tax specialist from the outset, who can provide guidance on the tax merits of an FIC, tailored to the specific circumstances and objectives of each prospective Founder. .

Limited companies also offer the great advantage of flexibility. This is ideal for FICs where family structures, objectives and other considerations, are changing regularly. Examples of such flexibility, include shares being transferred, new shares being issued with different rights, and changes to the composition of the board of directors.  All of which can be decided by the Founders.

How are FICs Set Up and Managed?

FICs need bespoke articles of association and a shareholders’ agreement, before any assets are put into the FIC and before any “alphabet shares” are transferred to family members.

These documents will detail how the FIC will be run, how dividends will be declared, when meetings are to be held, the rights of the shareholders, including voting rights, and rights on the issue, and transfer of shares.

The operation of the FIC extending from its day to day activities to amending its constitution, will remain at the absolute discretion and control of the Founders.

Additional Information

To find out how an FIC might be of benefit to you, and for assistance in establishing an FIC appropriate to meet your needs, please contact Paul Webb at: hello@dixcartuk.com.

Spring Statement 2025

Chancellor of the Exchequer, Rachel Reeves, remained true to her word by refraining from announcing any tax changes in the 2025 Spring Statement.

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The Spring Statement confirmed that there will be no additional tax increases beyond those previously disclosed. However, new measures aimed at tackling tax avoidance and evasion are set to generate an additional £1 billion in savings.

While the speech itself did not introduce further details, HMRC has since released press statements outlining a series of consultations on various tax-related matters. These initiatives aim to enhance compliance, improve administrative efficiency, and ensure fair tax practices. The key areas under review include:

• Tighter Regulations on Tax Advisers: Proposals are being considered to bolster HMRC’s authority in dealing with professional tax advisers who facilitate non-compliance. The suggested changes would enable swifter and stronger action against those aiding in tax evasion or avoidance.
• Expanding Advance Clearances in R&D Tax Reliefs: HMRC is considering widening the use of advance clearances for R&D tax reliefs. This move seeks to minimise error and fraud while providing greater certainty to businesses and improving the overall customer experience.
• Enhancing Data Quality for Tax Administration: A consultation is being launched to refine the quality of data acquired through HMRC’s bulk data-gathering powers. The goal is to streamline tax administration, ensuring that taxpayers can pay the correct amount more efficiently.
• Strengthening Behavioural Penalties: HMRC is exploring options to simplify and reinforce penalties for inaccuracies and failures to notify. These changes aim to create a fairer and more effective system that encourages compliance.

More details of the specific measures can be found in our Statement Summary.

To find out how we can help your business, or if you have any questions regarding the 2025 Spring Statement, please contact us.

Client Situation

A client who is a social media influencer has incurred significant costs for both back and cosmetic surgeries. She argues that the cosmetic surgery is necessary for her industry and the back surgery is needed to enable her to sit for extended periods during video shoots. How should these expenses be treated for tax purposes?

General Principles

First, it is crucial to determine the purpose of the expenditure. The key question is: what is the taxpayer’s motive for the surgeries? If the expenditure is incurred solely for business reasons, then it may qualify as an allowable expense under the “wholly and exclusively” test. However, if the expenditure serves dual purposes (both personal and business), it is unlikely to be deductible.

Back Surgery

According to HMRC, medical expenses aimed at ensuring or restoring good health generally have a dual purpose—both personal and business—making them non-deductible. However, there are exceptions. For example, in the Parsons case, a stuntman successfully claimed the cost of a private knee operation and other treatments as business expenses, as they were deemed necessary to return to work quickly.

Cosmetic Surgery

Cosmetic surgery costs are more complicated. HMRC guidance states that if the purpose of cosmetic surgery includes a personal desire to improve appearance, it is unlikely to be deductible. The case of Daniels, where a dancer successfully claimed expenses for various beauty treatments, suggests that if there is compelling evidence that the expenditure is solely for business purposes, it might be allowable.

Summary

Determining the tax treatment of surgery costs is not always straightforward. Business owners should assess whether the expenses are incurred wholly and exclusively for the business (if there is a dual purpose, the expense is not deductible) and should carefully document the reasons for the expenditure so evidence can be provided to HMRC if challenged.

As is always the case, tax advice cannot be taken soon enough, so please contact your usual Dixcart contact to discuss each specific case: hello@dixcartuk.com.

Introduction

The talk around the taxation of non-domiciled individuals in the UK has been a hot topic for a few years in the press and more recently in the political arena. In March, the previous government announced a new proposal, effectively scrapping the exiting remittance basis regime and replacing it with a residence-based system. Following a lot of debate, a general election, and a new government, the new rules have now been finalised.

As with most UK tax laws, they are not simple, and this article is not intended to set out every element of the new rules in detail, but rather help answer some common questions that are on the non-dom community’s lips. For more information on the new regime, and other announcements in the Budget of 30 October 2024, please visit our Autumn 2024 Budget Summary here.

Below is a hypothetical example of an individual whose situation closely mirrors that of many non-doms currently living in the UK.

Mrs Non-Dom

Mrs Non-Dom (known as ND by her friends and family) has lived in the UK for 12 years, having been born overseas to non-UK parents, making her a non-UK domiciled (non-dom) under the current rules. She has enjoyed living in the UK enjoying the great food and even better weather. She is a member of the promoter family of an overseas listed entity and owns 10% of the shares worth the equivalent of $100 million. Each year she receives a dividend of $1 million and has bank accounts with $5 million in them, paying $250,000 interest per year. 

Before moving to the UK, she took some great advice and created a healthy pot of clean capital to live off. She has claimed the remittance basis in her UK tax returns and has lived off her clean capital.

A few years after arriving in the UK, she settled a non-UK Trust with some of her non-UK assets and is a discretionary beneficiary of the Trust along with her spouse and children. She also owns 100% of the shares in a non-UK company which has some passive investments.

Current position

As a remittance basis user, she has only been paying tax on her UK source income and gains as well as the UK’s remittance basis charge.  ND has correctly segregated her clean capital from new income and gains, and these have not been remitted into the UK.

Her Trust is an excluded property Trust meaning the assets held within the Trust are protected from inheritance tax at the time she becomes deemed domiciled after living in the UK for 15 years.

The income and gains generated in her investment company are not taxable for her in the UK as she claims the remittance basis.

Position post 5 April 2025

As she has already been tax resident in the UK for more than 4 years, she will not be eligible for any benefits under the new FIG regime. As a result, her overseas dividend and interest will be taxable in the UK from 6 April 2025.

As a settlor interested Trust, the tax position of the Trust will now follow her UK tax position.  While she remains a UK tax resident, the income and gains in the Trust will be taxable.  The underlying assets will also now fall into her UK estate for inheritance tax purposes as she has been resident in the UK for more than 10 years.

The income and gains generated by the investment company will also now be taxed directly. The value of the company itself will also fall into her UK inheritance tax estate, as will all of her overseas assets as she has been UK tax resident for more than 10 years.

What steps can she take?

Income and gains

She will be able to benefit from the proposed Transitional Provisions which will firstly allow her to designate pre-6 April 2025 income and gains and pay 12% UK tax on them (with no foreign tax credit) up to 5 April 2027, and then 15% for the following tax year. It will also mean any assets sold at a gain post 6 April 2025 can be rebased to April 2017.

This may mean she will want to bring some income forward (where possible) to before the new tax rules take effect so they can then be used in the UK at a lower tax rate under these transitional provisions.

She should also consider the position of any assets she is considering selling. Each position will be subjective, and the financial and commercial aspects of the decision should not be ignored, but some may be better sold before 6 April 2025 (and then designated under the transition provisions at the 12%/15% rates) or some may be better sold under the new rules and, whilst then taxable at the prevailing capital gains tax rates (now 24% for most assets), may benefit from the rebasing. Each scenario should be assessed separately as each asset may fall into a different category.

Whilst new income and gains will be taxable on a worldwide basis from 6 April 2025, she should consider any foreign taxes she also suffers (and as a remittance basis user has perhaps not considered previously) to ensure she is able to claim any foreign tax credits.  Please note that credit for foreign taxes paid is not possible under the Transitional Provisions.

The UK has an extensive Double Tax Treaty network, and she should consider whether she can avail any benefits under these.

Inheritance tax

Alongside the UK’s extensive Double Tax Treaty network, it has 10 Estate Tax Treaties, and she should consider whether she can avail any benefits under these, for Inheritance tax purposes.

The more traditional inheritance tax planning opportunities of lifetime gifts and gifts out of excess income should not be ignored.

Under the new rules, now she has been UK tax resident for more than 10 years, if she were to leave after 6 April 2025, she would be subject to UK inheritance tax for a further 3 years.  This would be the case if she left after 13 years too but after that, this “tail” will follow her for an extra year, per year of residence. So, for example, if she leaves after 16 years, the tail will be 6 years and will continue increasing by a year up to a maximum of 10 years.

Leaving the UK

The new rules will result in Mrs Non-Dom being exposed to higher UK taxes than she has been previously. She may therefore decide to relocate to a more tax-friendly jurisdiction. As with any relocation, the tax consequences in both jurisdictions must be considered. 

The UK Statutory Residence Test will dictate how many days she can continue to remain in the UK. She should take advice and develop a plan for her days in the UK for the coming years, to be sure she does become non-UK tax resident.  There is more detail information in our note here.

She may discover that where she has chosen to move to is no more efficient from a tax perspective.  Dixcart is able to offer the immigration and tax support in a number of tax efficient jurisdictions and would be happy to assist. More information can be found here.

Conclusion

The new FIG regime is a significant shift in the tax laws and more importantly in many UK tax resident individual’s lives. Dixcart UK, and the wider Dixcart Group, can assist with providing advice on the new rules and developing a plan for the future, sadly perhaps not in the UK.

As is always the case, tax advice cannot be taken soon enough, so please do reach out to your usual Dixcart contact, or through our contact page to start these discussions: hello@dixcartuk.com.

Autumn Budget 2024

On Wednesday 30^th October, Chancellor Rachel Reeves delivered the UK’s Autumn Budget, marking an historical occasion as the first budget to be delivered by a female Chancellor. The Budget outlined Labour’s plans to address the UK’s economy.

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The Budget set out £40 billion in tax raises, the largest in a generation, with the majority of those rises being borne by employers through the increasing of the rate of employer’s national insurance from 13.8% and the reduction of the thresholds at which contributions apply. This means that the cost of employing an employee on average wages increases by approximately £1,000.

As expected, non-doms were also targeted with the previously announced measures largely being introduced as part of the abolition of domicile as a concept in the UK’s tax system.

Capital Gains Tax increases and reforms to Inheritance Tax (IHT), including reforms to Business and Agricultural Property Reliefs, were announced, as were increases to the ‘national living wage’. Inherited Pensions will also move into the scope of IHT meaning that most unused pension funds and death benefits will be included in the value of a person’s estate for IHT purposes.

There were no changes to the main rates of income tax, VAT or employee’s national insurance, and Ms Reeves announced that from 2028 to 2029 the income tax thresholds will be updated in line with inflation. Interesting, just ahead of the next scheduled election.

There was little in the way of incentives for businesses apart from a previous commitment to maintain full expensing and the £1 million annual investment allowance, and a commitment to not raise the corporation tax rate above the current 25%.

More details of the specific measures can be found in our Budget Summary.

To find out how we can help your business, or if you have any questions regarding the 2024 Autumn Budget, please contact us.

With Chancellor Rachel Reeves’s first Budget scheduled for Wednesday 30th October 2024, we have set out below, our thoughts on some of the rumoured tax rises required to address the nation’s £20 billion deficit.

While Reeves has pledged not to raise income tax, national insurance or VAT, other tax increases and spending cuts may still be on the horizon, especially in light of a £22 billion shortfall, public sector pay rises, and other recent financial commitments. Though details will not be confirmed until the Budget is officially released, Labour’s manifesto has hinted at potential changes in key areas. We have summarised the most relevant updates for you below:

Furnished Holiday Lets (FHL)

The Government has already confirmed that the rule changes for FHL, proposed in the Spring Budget, will come into effect from April 2025.

Key changes include the removal of pension relief, further restrictions on Business Asset Disposal Relief (BADR), and the reduction of full interest relief claims. These adjustments could significantly impact your profits, so it is important to be prepared.

Please see our article regarding Furnished Holiday Lets for more information.

Capital Gains Tax (CGT)

There have been discussions about aligning Capital Gains Tax rates with Income Tax rates, which could result in significant changes. With recent reductions in the CGT allowance, further adjustments may be on the table.

If you are planning any major sales or considering the closure of your business, it may be beneficial to act quickly, as any changes could take effect after the Budget. In many cases, contracts exchanged before the announcement may still follow the current rules.

Please see our article concerning Capital Gains Tax for more information.

Gift Holdover Relief

This relief allows for the deferral of Capital Gains Tax when business assets are gifted. If the Government seeks immediate revenue, this relief could be a target. If you are considering gifting business assets or shares to family members, it might be worth completing this before the Budget to ensure you benefit from the current rules.

Inheritance Tax (IHT)

There have been a lot of rumours regarding the reform of Inheritance Tax and while some of the speculation involves complex changes to the system, several areas of Inheritance Tax could easily be targeted including:

• The removal of Agricultural Property Relief (APR) and Business Property Relief (BPR): APR can help reduce IHT on agricultural assets, which has been a key tool for farmers to allow the passing down of land and buildings. BPR provides relief from IHT on certain assets such as shares in unquoted companies.
• Reform or Removal of Potentially Exempt Transfers (PETs): PETs allow gifts (over the normal exempt limits) to be made without triggering immediate IHT and can exempt these gifts entirely if the donor survives seven years. There is speculation that the Government may remove this exemption and so thought should be paid to making any intended significant gifts before the 30th October.

Our new private client team can assist on these matters as well as any other IHT or Will related advice.

Pensions

It is possible that the Government may remove or amend pension tax relief for individuals who make higher and/or additional pension contributions and instead introduce a flat rate regardless of the saver’s income. If you are a higher rate taxpayer making personal pension contributions it may be wise to seek financial advice and consider making your contributions before the 30th October.

The standard lifetime allowance was abolished in April 2024, and while it is unlikely this will be reversed, it is always worth being aware of any potential changes.

For expert advice and support in relation to this matter, please enquire or contact us at hello@dixcartuk.com.

The Government have announced the removal of tax reliefs for Furnished Holiday Lets (FHL), set to take effect from the 6th April 2025. This change marks a departure from the tax regime that has been in place since 1982, which was designed to offer favourable tax treatment to owners of FHL properties.

Background of Furnished Holiday Lettings Tax Regime

The FHL tax regime was introduced over four decades ago, and provided significant tax benefits, including:

• No restrictions on the deduction of interest and finance costs,
• Eligibility for plant and machinery capital allowances,
• Access to business asset reliefs for Capital Gains Tax (CGT).

These benefits made FHLs an attractive option for property owners, especially with the rise of platforms like Airbnb, which facilitated short-term holiday rentals.

What is Considered a Furnished Holiday Let?

According to HMRC, a furnished holiday let is defined as a furnished commercial property in the UK that meets specific criteria:

• Available for letting for at least 210 days per year,
• Commercially let as holiday accommodation for at least 105 days per year,
• Not occupied by guests for more than 31 days at a time.

Implications of the New Rules from April 6th, 2025

Starting from April 2025, these changes will have several implications for FHL owners:

• Business Asset Disposal Relief (BADR): Currently available on qualifying FHL properties, BADR allows gains to be taxed at a reduced CGT rate of 10%. Under the new rules, FHL owners will be subject to standard residential CGT rates—18% for gains within the basic rate band, and 24% thereafter.
• Capital Allowances: These will no longer be available for fixtures and furnishings. Instead, relief may only be claimed for the replacement of domestic items, in line with rules for long-term lets.
• Mortgage Interest: Mortgage interest will no longer be deductible from profits. Instead, it will be claimed as a tax reducer at 20% of the interest costs, eliminating the potential for higher rate tax relief on these expenses.
• Pension Contributions: FHL income will no longer count as relevant earnings for pension contributions, limiting the tax relief available.

Transitional Relief Measures

Despite the removal of many benefits, the Government has introduced the following to ease the transition:

• 100% annual investment allowances can still be claimed in the current year.
• Losses from FHL businesses can be carried forward beyond April 2025.
• Existing pools of allowances, as of April 2025, can continue to be claimed after the changes take effect.

These upcoming changes represent a significant shift for FHL owners. Proper planning and timely actions can help mitigate the impact and take advantage of any remaining benefits before they are phased out.

For more information from us, or if you wish to discuss tax reliefs, enquire or contact us at hello@dixcartuk.com.

With the Budget now set for Wednesday 30th October 2024, it is apparent that there may well be a change to Business Asset Disposal Relief and/or Capital Gains rates. This may affect business owners looking to sell or close their companies, and one strategy may be to bring forward a Members’ Voluntary Liquidation (MVL) for those clients who maybe considering using this in the near future.

What is a Members’ Voluntary Liquidation (MVL)?

A MVL is a process used to wind up a solvent company, typically when the directors and shareholders decide the business has reached the end of its useful life, or the owners wish to retire or pursue other interests.

MVL’s are beneficial for shareholders as they allow for a structured and tax-efficient way of distributing the company’s assets. For instance, shareholders might benefit from tax reliefs like Business Asset Disposal Relief (BADR), which can significantly reduce the amount of Capital Gains Tax payable.

Optimising Business Asset Disposal Relief During a Members’ Voluntary Liquidation

When business owners decide to close their company through a MVL, maximising tax efficiency is often a priority. Business Asset Disposal Relief (BADR) provides a significant opportunity to reduce Capital Gains Tax (CGT) liabilities during this process, offering a lower tax rate of 10% on qualifying business disposals.

What is Business Asset Disposal Relief (BADR)?

BADR is a tax benefit available to business owners, allowing them to pay a reduced CGT rate when disposing of qualifying business assets up to a value of £1m. To benefit from this relief, it is essential to meet specific conditions:

1. Ownership Duration: You must have owned the shares or assets for at least two years before the liquidation date.
2. Trading Status: The company should be a trading company or the holding company of a trading group.
3. Significant Shareholding and Role: You need to hold at least 5% of the company’s shares and voting rights and be an officer or employee of the company for a minimum of two years leading up to the liquidation.

Next Steps

If you are considering closing your business, given the complexities involved in qualifying for BADR and navigating the MVL process, it is essential to seek professional guidance.

For expert advice and support in relation to this matter or any other aspect of company or personal taxation, please enquire or contact us at hello@dixcartuk.com.