Spring Budget 2024


Jeremy Hunt’s Spring Budget appeared, at first sight, to be another non-event… no WOW factor such as the abolition of IHT or other “vote catching” changes.  However, upon peeling back the layers there were quite a few announcements for Private Client practitioners which, taken as a whole, will have a wide-ranging effect on our clients and future advice. Some, such a 4% reduction in higher rate CGT for residential property disposals, are fairly insignificant, others, such as the reform of non-domicile status for IHT, will be having an impact for years to come. So, here follows an overview of the main announcements to be aware of.

APR for IHT extended to land managed under environmental schemes

As hoped and anticipated, the budget included an extension of the scope of agricultural property relief from inheritance tax (APR) to land managed under an environmental agreement with or on behalf of the UK government, devolved administrations, public bodies, local authorities or approved responsible bodies.

The extended relief will only be available for land that was agricultural land for at least two years immediately before the change of use. Existing ownership periods for APR purposes will not be restarted by the change. Qualifying land will be valued at market value subject to a special assumption that land use is restricted to environmental management. Interestingly, in line with current rules, buildings, including farmhouses, occupied in connection with the management of the environmental land can also qualify for APR.

This measure will have effect for lifetime transfers and transfers on death on or after 6th April 2025.  It will also apply in cases where an agreement is in place on or after 6th March 2024 (including agreements made before that date that remain in place on or after that date).

Section 124C of the Inheritance Tax Act 1984, which currently extends APR to land in a habitat scheme, will be repealed.

The proposal to restrict APR to farm tenancies of at least eight years has not gone ahead.

APR and Woodland Relief restriction to UK

As per Spring Budget 2023, from 6th April 2024 property in the European Economic Area (EEA), the Channel Islands and the Isle of Man will no longer benefit from APR or Woodland Relief.

Abolition of the furnished holiday lettings (FHL) regime

It was announced that with effect from 6th April 2025, FHL will be treated as any other residential lets and consequently eliminate the tax advantage of landlords who let out short-term holiday properties over those who let out residential properties to long-term tenants.   

The draft legislation will include anti-forestalling rules, effective from 6th March 2024, to prevent the use of conditional contracts for the disposal of properties currently within the scope of the FHL regime, which could otherwise benefit from roll-over relief under section 152 of TCGA 1992 or business asset disposal relief under section 169H of TCGA 1992.

It will be interesting to see whether this will have an IHT knock on and mean that trying to get BPR for FHLs will become even more difficult, or whether, as was previously mooted, it will be legislated in the future that FHLs will not qualify for BPR.

Reduction of Higher Rate CGT on Disposals of Residential Property

For gains on disposals on or after 6th April 2024, higher rate CGT for residential property will be reduced from 28% to 24% for individuals, trustees, and personal representatives.  The lower rate will remain at 18%. The 18% and 28% rates of CGT that apply to gains in respect of carried interest will remain unchanged.

It will be interesting to see if this will lead to a delay in sales of second properties or estate/trust properties until the new tax year.  The reality is that only people with higher rate gains of around £100,000 or more will be better off than they were before the annual CGT exemption was halved and now quartered.

Rules on Postponing IHT to be eased

On the rare occasions when a personal representative (PR) finds it impossible to pay the IHT due before the grant and can show that they have made every practical effort to raise the sum, HMRC may allow the PR to postpone payment until after the grant has issued. HMRC refer to this as a grant on credit.

From 1st April 2024, PRs will no longer have to show that they have sought to obtain a commercial loan to pay the IHT before they can apply for a grant on credit. This is helpful as I have found there to be virtually no commercial loan facilities to cover anything for less than £100,000.

Replacing Non-Dom with residence Based Scheme

As expected, it was announced that the remittance basis of taxation for foreign income and gains for non-UK domiciled individuals will be abolished from April 2025 and replaced with a new residence-based regime. There will also be consultation on changing IHT from a domicile-based regime to a residence-based regime with effect from 6th April 2025.

Under the new regime, taxpayers coming to the UK who have not been UK-resident in the previous 10 tax years will not pay income tax or CGT on any foreign income or gains arising in their first four years of residence and will be able to remit these funds to the UK tax free (FIG regime). The FIG regime will also apply to individuals who have been tax resident in the UK for less than four years on 6th April 2025 (after a period of 10 years non-UK tax residence), who will be able to use it for any tax year of UK residence in the remainder of those four years.

Taxpayers will need to make a claim to use the new FIG regime for every year that they want to use it but, unlike the current remittance basis regime, it appears there will be no charge to do so.  If a taxpayer becomes non-UK resident during the four-year period, they will be able to make a claim for any of the qualifying years remaining on their return to the UK.  The statutory residence test will be used to determine tax residence for any one tax year. If an individual chooses to be taxed under the FIG regime, they will lose entitlement to personal allowances and the now much reduced CGT annual exemption. After their first four years of UK tax residence, taxpayers will no longer be able to use the FIG regime and will pay tax on their foreign income and gains on the arising basis.

In relation to trusts, it was announced that, from 6th April 2025, the protection from tax on income and gains arising within settlor-interested trust structures will no longer be available for non-domiciled and deemed domiciled individuals who do not qualify for the FIG regime. Beneficiaries and settlors who are within the FIG regime will be able to receive benefits from 6th April 2025 free from any UK tax charges whether or not the benefits are received in the UK. However, such benefits will not be matched to trust income and gains and will be subject to a modified onwards gift rule.

Furthermore, also from 6th April 2025, there is an intention to move IHT to a residence-based regime; there will be a consultation on the best way to do so. It is envisaged that the new rules will involve charging IHT on worldwide assets owned outright when an individual has been resident in the UK for 10 years (the “residence criteria”), with a provision to keep a person in scope for 10 years after leaving the UK (the “tail” provision).  UK-situs assets will remain chargeable to IHT on the same basis as at present, regardless of residence.

The IHT position for property held in trust will depend on whether a settlor meets the residence criteria or is within the tail provision at the time the assets are settled and/or when charges such as 10-year anniversary charges or exit charge arise. The government's confirmation that the IHT treatment of non-UK assets settled into a trust by a non-UK domiciled settlor prior to 6th April 2025 will not change (and therefore that such trusts will remain outside the scope of the UK IHT regime). Hence is likely to lead to a flurry of new trusts being set up before that date.

There will be generous transitional measures for existing non-doms who took advantage of the remittance regime and who will not eligible for the new FIG regime including a rebasing election for CGT to 2019, and a 2 year transitional income tax rate of 12% for a couple of tax years.

Income Tax savings Band

The 0% band for the starting rate for savings income will be kept at its current value of £5,000 for the tax year 2024-25 and not increase in line with the consumer prices index from the tax year 2024-25, as announced at the Spring 2023 Budget.


There will be a consultation on a new UK Individual Savings Account (ISA). Responses should be submitted by email to [email protected] by 6th June 2024 and HM Treasury are also planning to hold round-table discussions. The proposed ISA will have an allowance of £5,000, in addition to existing ISA allowances.

The stated objective of introducing a UK ISA is to support investment in the UK, increase capital available to UK business and support UK equity markets. Legislation will be passed after the consultation has ended.

SDLT MDR to be abolished

For transactions on or after 1st June 2024, SDLT multiple dwellings relief (MDR) will be abolished (subject to transitional provisions) as a review into the relief concluded that MDR no longer achieves its original objective of supporting investment in residential property and the private rented sector in a cost-effective way.

Currently, MDR is available for (linked) land transactions involving the acquisition of more than one dwelling if certain conditions are satisfied. The relief operates by fixing the SDLT rates by reference to the average chargeable consideration for the purchases of the dwellings (rather than the aggregate chargeable consideration).

SDLT first-time buyers' relief rules amended for leases to bare trustees and nominees

The SDLT first-time buyers' relief rules that apply on the grants of leases to bare trustees and nominees will be amended that, if a new lease is granted to a bare trustee or a nominee, the beneficiary is treated as the buyer for FTBR purposes so the relief will apply. This amendment applies to land transactions with an effective date on or after 6th March 2024.

Consultation on raising tax standards

The Government is looking to improve the regulatory framework of the tax advice market. The consultation proposes three options for better regulation of the tax advice market (in particular, to put an end to "substandard and unscrupulous tax advice"), namely:

  • Mandatory membership of a recognised professional body which would monitor and enforce the standards of their members. It looks like practitioners in regulated professions, like legal services, will be excluded from the requirement.
  • A hybrid model with joint HMRC and industry enforcement. Tax practitioners could choose to be supervised by either HMRC or a recognised professional body.
  • Regulation by a government body. This option would avoid many of the disadvantages of the two previous ones but adding a new body to an already complex regulatory landscape could be confusing and expensive.

The consultation will close on 29th May 2024.

This will be very welcome but be interesting to see how far the regulations will go – for example should anyone writing wills or selling lifetime gifts of properties be regulated as this will/should usually include tax advice but could potentially be “dressed up” to avoid regulation.

Tax Day on 18th April 2024

We have not seen the last of it …. As part of the Spring Budget 2024 the government announced that the next tax administration and maintenance day (commonly known as "Tax Day") will take place on 18th April 2024 and will involve it making a further set of “tax administration and maintenance” announcements.

So, what next?

(Author: Claudia Roberts, partner, Glanvilles Damant Legal Services)