For employers of globally-mobile employees there is always a great deal of interest in the U.K.’s fiscal events as they can have a direct impact on the cost of assignments.
The increase in the pension annual allowance and the abolition of the pension lifetime allowance will be welcomed by high earners, who will be able to contribute more into their pension, tax-efficiently.
The specific impact of the Budget’s measures will depend on each taxpayer’s particular set of circumstances. However, in most instances, we expect that an employee’s U.K. tax burden for 2023/2024 should remain relatively stable; although for higher-income earners, and those with capital gains, there could be an increase in their tax burdens due to lowering of the threshold at which additional rate of income tax (at a rate of 45 percent) becomes payable and to the reduction in the capital gains tax annual exempt amount as announced in the Autumn Statement in November 2022.
Prior to the Budget, there was speculation that changes may be announced regarding the U.K.’s non-domicile rules and the remittance basis regime, but ultimately there were no further developments in this area.2
It is essential to get in front of the changes described in this newsletter and to communicate quickly and clearly with key stakeholders, so that they can properly plan, budget, and make any necessary adjustments.