Autumn Budget 2025: Impact for internationally mobile individuals

The main change announced for internationally mobile individuals was the capping at 6 percent for Inheritance Tax (IHT) ten-yearly and exit charges for former excluded property trusts. These grandfathering provisions will apply with retrospective effect from 6 April 2025 and mean that IHT charges on trusts settled by non-UK domiciles which held non-UK assets on 30 October 2024 will be capped at £5 million every 10 years. This announcement will benefit those qualifying trusts where the value derived from excluded property exceeds approximately £83.33 million.

These rules were much hoped for this time last year when the end of the Trust Protections were announced, and it may well feel like a case of ‘too little, too late’ for a number of wealthy individuals who have already left the UK, with the exposure to IHT on their non-UK trusts being a primary driver for their departure. It will be welcome news for those individuals remaining in the UK with previously excluded property trusts, although there may be speculation that the £5 million limit could be changed in the future, particularly as the 10 year charges for UK relevant property trusts will remain uncapped.

The Chancellor did not make any changes to the new four year Foreign Income and Gains (FIG) regime, or the transitional rules regarding the Temporary Repatriation Facility, leaving the rules as in force from 6 April 2025.

There was mention of further development of a “tax offer for high-talent new arrivals”, which is encouraging if this allows individuals to more easily navigate their immigration status to benefit from the new FIG regime. We shall have to wait and see what further detail is released.

For individuals not eligible for the four year FIG regime or moving to worldwide basis, the increased tax rates for dividends from April 2026 and savings income and property income from April 2027 will mean higher tax rates than expected and the OBR acknowledges that “policies in this Budget which increase taxation on wealthy individuals could further increase the incentive for those ineligible for the new regime to migrate”.

The most typical UK touchpoint for internationally mobile individuals is purchasing UK residential property, and these individuals may be impacted by the introduction of the high-value council tax surcharge on residential properties valued at more than £2 million which will come into force from April 2028 and be charged through the council tax system. The maximum annual cost of this surcharge is £7,500 for properties worth more than £5 million. Given pre-Budget fears surrounding the introduction of a ‘mansion tax’, this relatively low charge is unlikely to dissuade UK property purchases.

There were minor tweaks or clarifications to existing tax measures including:

• Confirmation that there will be ambitious reform and substantial simplification of the Transfer of Assets Abroad anti-avoidance rules;
• Introduction of legislation to ensure UK agricultural property held via non-UK entities is treated as UK-situated for IHT purposes;
• Removal of the concept of ‘post departure trade profits’ from being outside the scope of the temporary non-residence (TNR) rules from 6 April 2026; and
• Specific changes to non-resident capital gains tax for individuals who invest in UK land / property via protected cell companies and invest in Collective Investment Schemes.

Please do not hesitate to contact us if you would like to discuss any of the above.

For further information please contact:

• Gavin Shaw
• Hannah Keens