Author: Glenn

It was confirmed as part of the Autumn Budget measures that changes announced by the previous government at the Spring Budget earlier this year will proceed almost entirely as initially announced. From April 2025, the government will abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler residence-based regime.

The government will also introduce a 4-year foreign income and gains (FIG) regime. New arrivals to the UK who opt into the regime will benefit from 100% relief on FIG in their first four years of tax residence, provided they have not been UK tax resident in any of the 10 consecutive years prior to their arrival.

As a transitional measure for Capital Gains Tax purposes, current and past remittance basis users will be able to rebase personally held foreign assets they held on 5 April 2017 to that date where certain conditions are met.

Overseas Workday Relief will be extended to a 4 year period to align with the new 4-year FIG regime. This will remove the need for users of this relief to keep their employment income offshore. The amount of Overseas Workday Relief that can be claimed annually will be limited to the lower of £300,000 or 30% of the employee’s net employment income from 6 April 2025.

A new Temporary Repatriation Facility (TRF) for individuals who have been taxed on the remittance basis will also be introduced from April 2025 for 3 years. This will allow individuals to designate and remit at a reduced rate foreign income and gains that arose prior to the changes. This includes unattributed foreign income and gains held within trust structures. The TRF rate will be 12% for the first 2 years and 15% in the final tax year of operation.

At Autumn Budget 2024, the government confirmed that it will go ahead with a simplification measure first announced in January 2024. This new measure will mandate the reporting of Income Tax and Class 1A National Insurance Contributions (NICs) for most benefits in kind (BiKs) in real time from April 2026. This measure is known as mandatory payrolling of BiKs.

Following the announcement in January 2024, the government consulted with a number of stakeholder groups including the Institute of Chartered Accountants in England and Wales (ICAEW) and the Chartered Institute of Tax (CIOT).

Based on the feedback received from stakeholders, a number of changes have been made to the rules for the mandatory payrolling of BiKs.

The main changes are: 

• the delivery of the work to mandate the real time reporting of and payment of tax on BiKs will be phased in from April 2026 – this will mean that all BiKs, with the exception of employment related loans and accommodation, will be mandated to be reported via payroll from April 2026;
• voluntary payrolling will be introduced for employment related loans and accommodation from April 2026. The P11D and P11D(b) process will still be available for those that do not want to payroll these BiKs. The government intends to mandate these BiKs and will set out a timeline in due course;
• an end of year process will be introduced to amend the taxable values of any BiKs that cannot be determined during the tax year. However, it is expected that the taxable values of most BiKs will be reported as accurately as possible during the tax year; and
• HMRC will continue to monitor the penalty position, from April 2026 to April 2027, whilst taxpayers get used to the new process of reporting BiKs. HMRC accepts that there will inevitably be a period of adjustment in the first year.

The tax treatment of double cab pick-up vehicles (DCPUs) has been clarified as part of the recent Budget announcements. This follows a chequered history of the tax treatment of DCPUs after a 2020 Court of Appeal judgment and after the previous government reversed its plans to overhaul the tax treatment of these vehicles.

DCPUs with a payload of one tonne or more will be treated as cars rather than goods vehicles for the purposes of capital allowances, benefits in kind, and some deductions from business profits. These changes will take effect from 1‌‌‌ April‌‌‌ 2025 for Corporation Tax, and 6‌‌‌ April‌‌‌ 2025 for Income Tax. This means that going forward the vast majority of DCPUs equally capable of transporting passengers or goods will be categorised as cars. This shift could lead to higher tax liabilities for many businesses, including increased Benefit in Kind and National Insurance costs. Additionally, the change in vehicle classification could also impact the tax obligations of employees.

For expenditure incurred before 1 April 2025 for Corporation Tax and 6 April 2025 for Income Tax the existing capital allowances treatment will apply to those who purchase double cab pick-ups before April 2025. Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6‌‌‌ April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5‌‌‌ April‌‌‌ 2029.

The definition of DCPUs with a payload of less than one tonne has not changed and these vehicles will continue to be classed as cars as has historically been the case.

It was announced as part of the Budget measures that the government will reform these reliefs from 6 April 2026. The existing 100% rates of relief will be maintained for the first £1 million of combined agricultural and business property. The rate of relief will be 50% for the value of any qualifying assets over £1 million.

The government will also reduce the rate of business property relief available from 100% to 50% in all circumstances for shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM. The existing rate of relief will continue at 50% where it is currently this rate and will also not be affected by the new allowance.

This new allowance will apply to the combined value of property in an estate qualifying for 100% business property relief and 100% agricultural property relief.

HM Treasury has provided the following example, the allowance will cover £1 million of property qualifying for business property relief, or a combined £400,000 of agricultural property relief and £600,000 business property relief qualifying for 100% relief.

If the total value of the qualifying property to which 100% relief applies is more than £1 million, the allowance will be applied proportionately across the qualifying property. For example, if there was agricultural property of £3 million and business property of £2 million, the allowance for the agricultural property and the business property will be £600,000 and £400,000, respectively.

As part of the recent Budget measures, it has been confirmed that the Help to Save scheme is to be extended by a further 2 years, until April 2027. The last date an account can be opened under the current scheme will be 5 April 2027. Around 517,000 Help to Save accounts have been opened since its launch in 2018.

The Help to Save scheme is intended to help those on low incomes to boost their savings. Eligible users of the scheme can save between £1 and £50 every calendar month and receive a 50% government bonus. The 50% bonus is payable at the end of the second and fourth years and is based on how much account holders have saved. The bonus is paid directly into the account holder’s chosen bank account.

This means that account holders on low incomes can receive a maximum bonus of up to £1,200 on savings of £2,400 for 4 years from the date the account is opened.

The eligibility rules for the scheme will also be widened from April 2025 with the scheme opening to all working Universal Credit claimants earning at least £1 a month. The government has also launched a consultation on the most effective way to deliver the new wider scheme. The consultation is open for comment until 22 January 2025.