The UK 2024 spring budget 2024 was delivered on 6 March 2024 by Chancellor of the Exchequer Jeremy Hunt. The budget aimed to build long term growth via lower taxes, more investment, and better public services. With upcoming UK elections, this budget sought to focus on tax cuts, and Hunt claimed that the announcements deliver personal tax cuts worth £20 billion (combined with changes at the Autumn Statement).
We discuss in this article various tax changes that were made which may be of interest to Israelis with assets or business interests in the UK, or Israelis planning to move to the UK.
Abolition of domicile tax regime
Following protracted discussions at the Israeli Tax Authority and pressure from the OECD, Israel’s Ministry of Finance recently issued an amendment to the ten-year tax exemptions available to new Israeli residents and some returning residents. The change related solely to the exemption from reporting information, which was cancelled, and not to the tax benefits themselves. There are some similarities between these ten-year tax exemptions and the non-UK domicile status which currently exists in the UK.
Non-UK domicile status tends to be relevant to those with significant foreign wealth (although the individuals must meet all the complicated requirements to classify themselves as non-UK domiciled) or for new arrivals in the UK (again, subject to complicated requirements and intentions). Many Israelis moving to the UK were able to enjoy the benefits of non-domicile status. The non-domicile status has always been a point of contention for the Labour Party, and one of their headline policies has been to restrict or abolish the regime.
Rendering this almost irrelevant, the chancellor confirmed in the budget that he was abolishing the domicile tax system.
From 6 April 2025, newcomers to the UK will enjoy a UK tax exemption on all non-UK profits for their first four years of UK residency. From year five, they will be taxed on all profits in exactly the same way as standard UK taxpayers. The attractiveness of this for those moving to the UK remains to be seen. The changes certainly simplify the existing domicile regime, but is a four-year-period attractive enough? There are transitional rules available to those who recently moved to the UK and are non-UK domiciled.
Property
Israelis with UK residential property will welcome the reduction in the higher tax rate from 28% to 24% for capital gains tax. Gains that fall within the basic rate band will continue to be taxed at 18%. This relates to property sales that exchange on or after 6 April 2024.
Multiple Dwellings Relief is a purchase tax relief (known as Stamp Duty Land Tax) for multiple dwellings. This will be abolished for purchases from 1 June 2024.
VAT registration
For Israelis with UK companies, it’s important to note that, from 1 April 2024, there will be an increase in the VAT registration threshold from £85,000 to £90,000. It is estimated that over 28,000 businesses will benefit from no longer being VAT-registered in the tax year 2024/2025.
Claire Shelemay, BFP FCA, is the founder and CEO of CrownStone Consulting Ltd - a UK tax boutique in Tel Aviv.
Published by Globes, Israel business news - en.globes.co.il - on March 18, 2024.
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