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CB team comments on the Chancellor’s 2024 Spring Budget

Our Private Wealth lawyers share their thoughts on Hunt’s announcement regarding HICBC and non-dom system.

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Published 6 March 2024

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Partner James Austen comments on the Chancellor’s HICBC updates, which include the announcement that HICBC will become a household based system and that its threshold will begin at £60,000:

“At first sight, campaigners seeking the overhaul of the confusing, punitive, and mis-named “High Income Child Benefit Charge” (HICBC) might have been expected to welcome the Chancellor’s widely predicted change in today’s Budget. However, the essence of the minor reforms Jeremy Hunt set out is to undermine individual taxation (which was rightly hailed as an important step in the economic emancipation of women when it was introduced in 1990) in favour of a limited version of household taxation. This may prove to cause as many issues as it solves. Ultimately, the Chancellor has – again – opted to try and save the hated HICBC regime by fiddling at the margins, and choosing not to do what he ought to have done, which was to remove it from the statute book altogether: it is another missed opportunity.

Head of Private Wealth Peter Daniel comments on the Chancellor’s intention to abolish non-dom system and replace it with a residency-based system:

“The headlines will be that the non-dom tax regime has been “scrapped”. In reality, it has been rebranded and simplified. The determining factor being years of tax residence, rather than the amorphous concept of domicile, will bring clarity. While the period during which people will have income tax and CGT benefits will be much reduced, for those first four years the position will be far more straightforward, with no complex remittance rules. The changes will also encourage foreign funds to be brought to the UK, rather than incentivising the opposite, as the current system does. The biggest unknown is how the IHT position will be affected, on which the Government will “consult”. For many foreigners moving to the UK, IHT will be far more important than income tax. The potential risk of exposing their worldwide assets to IHT if they are hit by a bus during a relatively short time living in the UK will be hugely concerning, particularly if their home countries have no similar tax, or one at much lower rates.”

Senior Associate Aidan Grant looks at the future of these reforms:

“We shall see what happens to these reforms following the impending UK General Election. Certainly, with the Labour Party having committed itself to similar changes, one assumes that the Government’s proposals now represent the minimum level of change. A future Labour Government would presumably only have the option of increasing the strength of the reforms.”

For more information, visit our Trusts, Tax and Estate Planning lawyers page.

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Shorter Reads

CB team comments on the Chancellor’s 2024 Spring Budget

Our Private Wealth lawyers share their thoughts on Hunt’s announcement regarding HICBC and non-dom system.

Published 6 March 2024

Associated sectors / services

Authors

Partner James Austen comments on the Chancellor’s HICBC updates, which include the announcement that HICBC will become a household based system and that its threshold will begin at £60,000:

“At first sight, campaigners seeking the overhaul of the confusing, punitive, and mis-named “High Income Child Benefit Charge” (HICBC) might have been expected to welcome the Chancellor’s widely predicted change in today’s Budget. However, the essence of the minor reforms Jeremy Hunt set out is to undermine individual taxation (which was rightly hailed as an important step in the economic emancipation of women when it was introduced in 1990) in favour of a limited version of household taxation. This may prove to cause as many issues as it solves. Ultimately, the Chancellor has – again – opted to try and save the hated HICBC regime by fiddling at the margins, and choosing not to do what he ought to have done, which was to remove it from the statute book altogether: it is another missed opportunity.

Head of Private Wealth Peter Daniel comments on the Chancellor’s intention to abolish non-dom system and replace it with a residency-based system:

“The headlines will be that the non-dom tax regime has been “scrapped”. In reality, it has been rebranded and simplified. The determining factor being years of tax residence, rather than the amorphous concept of domicile, will bring clarity. While the period during which people will have income tax and CGT benefits will be much reduced, for those first four years the position will be far more straightforward, with no complex remittance rules. The changes will also encourage foreign funds to be brought to the UK, rather than incentivising the opposite, as the current system does. The biggest unknown is how the IHT position will be affected, on which the Government will “consult”. For many foreigners moving to the UK, IHT will be far more important than income tax. The potential risk of exposing their worldwide assets to IHT if they are hit by a bus during a relatively short time living in the UK will be hugely concerning, particularly if their home countries have no similar tax, or one at much lower rates.”

Senior Associate Aidan Grant looks at the future of these reforms:

“We shall see what happens to these reforms following the impending UK General Election. Certainly, with the Labour Party having committed itself to similar changes, one assumes that the Government’s proposals now represent the minimum level of change. A future Labour Government would presumably only have the option of increasing the strength of the reforms.”

For more information, visit our Trusts, Tax and Estate Planning lawyers page.

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