Jurisdiction(s):
United Kingdom

UK consults on abolishing non-dom regime and taxing carried interest as income; VAT on private school fees from January 2025; possible CGT and corporation tax rises

Published on: 30 July 2024

Published by a Law360 reporter

Legal News

Article summary

Reeves told the House of Commons that the incoming Labour administration must raise certain taxes and pare back expenditure to close a £22bn “black hole” in the public finances attributed to its predecessor. She said the Budget would require tough choices to satisfy fiscal rules spanning spending, welfare and taxation. Initial steps worth £5.5bn will arrive in October 2024 to begin bridging the shortfall, alongside departmental savings of at least £3.2bn, leaving a further £2.3bn to be met through extra tax receipts. A second package totalling £8bn is planned for next year. While she spoke, the Treasury opened industry consultations on scrapping preferential tax treatment for high-net-worth, non-domicile taxpayers, and separately on bringing “carried interest” paid to fund managers within the scope of income tax rather than capital gains. The proposals would align carried interest with income tax rates rather than capital gains. Under the carried interest proposal, fund managers could see liabilities rise from 28% capital gains to as much as 45% income tax, a move expected to generate £565m in revenue. Together, these actions begin to address the shortfall, with the remainder to be covered by new tax revenue and further measures set for next year...

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