The UK Chancellor yesterday revealed the Autumn Budget, which outlines changes to taxation and outlines the nation’s finances. A number of announcements made in yesterday’s Budget may have an impact on the experience of those relocating to the UK. Here are some of our key takeaways from the budget, and what they might mean for the relocation industry.
VAT on private school fees
As we reported in July, the government are removing the VAT exemption status from private schools. This change will take effect from January 2025, meaning that private school fees for many parents will see an increase from the new year. State schools will not be affected.
Stamp Duty increase
The additional rate of Stamp Duty Land Tax (SDLT) paid on the purchase of additional properties has risen from 3% to 5%. This means that landlords, or anyone who purchases additional residential property, will have to pay more tax on their purchase. This could deter landlords from investing further in the rental market, which would have a negative effect on stock levels of rental properties. Fewer rental properties available means it may be more difficult for relocators to secure a home in the UK.
Housing investment
The government will invest £5bn on housing in 2025-26, with the aim of increasing the supply of affordable housing. This has the intention of increasing the supply of homes in the UK – which would theoretically make it easier for those relocating to find a home. However, there is no guarantee how many new homes will enter the rental market, where the majority of relocators initially source homes, instead of the sales market. With the increase in Stamp Duty making rental investments less attractive for landlords, it may not have a significant impact on rental stock levels.
Abolition of non-dom status
A ‘non-dom’ individual is a UK resident who classes their permanent home outside the UK for tax purposes. This allows them to not pay tax to the UK government on money they make abroad – unless they pay it into a UK bank account. You can be classed as ‘non-dom’ if you move to the UK but you (or your father) were born elsewhere, or if you leave the UK and live indefinitely in another country. For those with large amounts of financial assets, it presents an opportunity to save money by paying tax in a country with lower taxes. However, the concept of this status will be abolished from April (with a transition period) meaning that anyone relocating to the UK will no longer have this as an option if they want to avoid paying tax in the UK.
Business taxes
The main focus of tax increases announced in the budget is for business. The national insurance contributions paid by employers will increase from 13.8% to 15% from April 2025, and the threshold for when payments are due has been reduced from £9,100 to £5,000. Meanwhile, the national living wage will increase by 6.7% to £12.21. These changes make it more expensive for businesses to employ people in the UK. It may mean that multi-national companies re-evaluate their global mobility strategy and favour hiring in destinations with lower tax.
