The biggest surprise in the Spring Budget was perhaps the raucous reaction given by the House to a fairly muted set of tax proposals.
While the non-dom reform and NICs cuts stand out as significant changes they had been so well trailed in the press they were of no surprise. Perhaps it was the whiff of an election in the air that was the cause of excitement, so much so that the Deputy Speaker had to frequently intervene instructing all sides of the chamber to "shout more quietly".
Whatever the cause, MPs were in good voice as the Chancellor announced his measures. In addition to the non-dom change and NICs cut the Chancellor also announced measures including an extension of the energy profits levy and a reduction in the capital gains tax rate on residential property disposals on which we've commented in more detail below. There were also the usual 'crowd pleasers' of saving 2p duty on a pint of beer and a freeze in fuel duty. Did this signal the firing of the election starting gun? By the sound of the MPs reaction to the Budget, it certainly sounds like we're off to the races.
1. Non-dom regime reforms
One of the most high-profile announcements was the abolition of the UK's current tax regime that applies to non-domiciled individuals ("Non-Doms") which, if the Conservatives win the next general election, would come into effect from 6 April 2025.
That is not to say that similar changes would not happen if Labour wins the next general election. As many people will be aware, there has been speculation for some time that a Labour government would abolish or replace the Non-Dom rules.
The current rules
Very broadly, the Non-Dom regime is aimed at UK resident individuals whose 'permanent residence' (which is a complicated term) is overseas. Non-Doms are currently able to reside in the UK and pay tax on their income and gains only if it is either UK source or is "remitted" to the UK – they do not pay tax on their unremitted foreign income and gains. There are also inheritance tax benefits to Non-Doms, as they do not generally pay inheritance tax on worldwide assets.
This status can be claimed for up to 14 years in 20 (though charges can apply after 7 years). This is generally viewed, by international standards, as quite a generous regime.
The changes
The Chancellor announced plans to abolish the Non-Dom regime in full and replace it with a different, residence-based regime.
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