Understanding the Latest Tax Law Changes: What You Need to Know
It is essential to keep pace with the latest tax law changes, but this can be challenging when they are often complex and hard to grasp. With this in mind, this post will take a look at the latest tax law changes, effective from April 2025, and what they mean for individuals, businesses, and tax professionals. You do not want to find yourself non-compliant, so awareness and tax planning are key. Read on to find out more.
Overhaul of Non-Dom Regime
From 6 April 2025, the UK replaced its long-standing non-domiciled (non-dom) tax status with a residence-based system for inheritance tax (IHT). Individuals who have been UK residents for more than 10 out of the past 20 years are now subject to IHT on their worldwide assets. This change also affects offshore trusts and settlor-interested structures. Individuals affected by this specific change should consult tax specialists to navigate the complexities of the new system.
Increase in Employer National Insurance Contributions
Effective from 6 April 2025, the rate of employer National Insurance Contributions (NICs) increased from 13.8% to 15%. Additionally, the secondary threshold (the point at which employers begin to pay NICs) was reduced from £9,100 to £5,000 per year. These changes are expected to impact approximately 940,000 employers, particularly affecting small and medium-sized enterprises.
Introduction of the Four-Year Foreign Income & Gains Exemption (FIG)
For individuals becoming UK tax residents from 6 April 2025, a new four-year exemption allows them to receive foreign income and gains without UK tax liability. This exemption applies provided they have been non-UK tax residents for at least 10 consecutive years before their arrival. It’s crucial to note that this exemption does not apply to inheritance tax.
Changes to Capital Gains Tax (CGT) for Non-Residents
Finally, individuals who were previously eligible for the remittance basis of taxation can now rebase their foreign assets to their market value as of 6 April 2017, provided certain conditions are met. This change aims to simplify CGT calculations for non-residents disposing of assets in the UK.
These are significant updates that shift the UK tax framework. It is essential that individuals and businesses are aware of these latest changes and how they impact their finances and tax planning. These are all changes that are already in effect, being introduced in April 2025, which is why it is wise to consult with a tax specialist if you are unsure what these changes mean for you and how you should be managing your tax obligations.
Visit the rest of the site for more interesting and useful articles.
