Will the Budget leave you better off?


Some property sellers and middle earners with children have reason to cheer, while holiday homeowners and ‘non-doms’ count the cost.

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Second-home owners looking to sell a property, middle earners with children, investors with a spare £5,000 and, potentially, people moving overseas for at least a decade are among the few who gained from this week’s Budget.

Pensioners, owners of furnished holiday lets, “non-doms” and the wealthy will all see their finances take a hit from the changes chancellor Jeremy Hunt made — and did not make — to the UK’s tax and investment regime.

While all workers will benefit from the 2p cut to national insurance contributions, many will be poorer overall because of the continued freezing of the personal tax thresholds.

Experts said the outcome was partly driven by Hunt being overtly political, hoping to be able to deliver more giveaways in a pre-election Autumn Statement when economic conditions may be rosier.

These are the personal finance sectors that have been most affected by the Budget.


The chancellor’s property tax changes will have significant implications for some real estate investors but are not expected to make a big difference for first-time buyers or the wider market.

The reduction of capital gains tax on the sale of second homes and investment properties for higher-rate taxpayers from 28 per cent to 24 per cent is a large carrot to encourage sales.

But he also announced two sticks, of increased taxes on some real estate investors.

Tax relief for furnished holiday lets, which will be abolished in 2025, currently benefits some 127,000 holiday rental businesses, giving perks such as allowances for spending on furniture and appliances, and tax relief for mortgage payments. Hunt said he was abolishing the regime because it was “creating a distortion” by encouraging owners to convert long-term rentals in tourist areas into holiday homes to receive favourable tax treatment.

He will also scrap the relief from stamp duty for those buying multiple homes at once, because he said the tax break had not boosted investment by landlords and was being misused. This will make it more expensive for holiday-let landlords to shift their assets into a company.

Taken together, experts think the suite of measures should encourage some holiday let owners to sell up, and squeeze second-home owners who benefit from tax relief by letting their property on the side.

“Hunt’s trying to light a fire under a section of the property market. He’s herding people in one direction and that’s out of the market” – Chris Etherington, tax partner at RSM

“Hunt’s trying to light a fire under a section of the property market,” said Chris Etherington, tax partner at RSM. “He’s herding people in one direction and that’s out of the market.”

The government has already said it will double the amount of extra council tax local authorities can charge on holiday lets, implement a register and require new properties to get planning permission. Labour has pledged to further increase the maximum council tax.

The Treasury said the changes would lead to more tax revenue overall and free up homes for first-time buyers.

But analysts doubt there will be major benefits for first-time buyers or renters in tourist areas. The Budget offered nothing to help people facing record rental increases and aspiring first-time buyers struggling with high interest rates and house prices.

The number of new buyers climbing on to the housing ladder hit a 10-year low last year.

“We . . . want to level up opportunity across the generations — including building more houses for young people,” Hunt said.

Anthony Codling, analyst at RBC, said: “If you subscribe to the view that the UK housing market is broken, the budget did not try to fix it. The [Conservative] party, so long considered the party of home ownership, ghosted homebuyers, aspiring homeowners, homeowners and the housing market at large.”

Case study: landlord near retirement

Lesley Yarranton, 65, is keen to keep working, but is worried that when she starts drawing her state pension next year, she will have to pay tax on it.

“For most of my life I would have expected to receive it at 60, and now, when I’m getting it six years late, I’m going to have to start instantly handing it back to the government,” says Yarranton, who works as a part-time teacher and is a writer and researcher for Radix, a think-tank.

“This government said they were going to make work pay, but in my case that’s not really going to happen . . . they certainly could have put a carrot in there so there’s some kind of incentive for people my age to carry on working.”

She criticised the lack of assistance in the Budget for first-time homebuyers, like her two sons who live in Birmingham and London, but is pleased by the chancellor’s announcement that he would abolish tax breaks for furnished holiday lets, which she says can “ruin communities” such as hers in Moreton-in-Marsh, Gloucestershire.

She and her husband own a small second home, which they rent out to two nurses rather than let to holidaymakers, due to the shortage of affordable housing for public sector workers in the area.

“When you live in a rural community, neighbours are quite important and, as properties become vacant, they get sold to Airbnb [hosts],” she said. “There are outlying villages which have been turned into ghost villages and have ended up without a shop, a pub or a post office.”

Jeremy Hunt’s plan to spend £3.4bn on NHS digitalisation came as a relief — her mother has a rare disease and so a digital NHS passport could be life-saving.

“For most people, a digital patient passport is a great idea, but in her case it’s a matter of life and death,” she said. “If she was unconscious and they couldn’t access her records and they gave her anaesthetic, it could kill her.”


Tax advisers largely welcomed the abolition of the complicated 200-year-old “non-dom” tax regime with a residence-based system despite the fact there will be clear losers from the changes.

“On the surface the new proposals seem to create a regime that still offers incentives — which are key to attract individuals to the UK — but will be perceived to be fairer in terms of the time period for which they are offered,” said Simon Bashorun, co-head of private client advice, Investec Wealth & Investment (UK).

Some of the losers are existing non-doms who will not qualify for the new tax breaks, and non-doms or former non-doms — who have since been deemed UK-domiciled — who have placed foreign assets and income in trusts.

Currently, a non-dom who has not been UK resident for more than 15 years can place assets into a trust free of inheritance tax. Any foreign income and gains generated by the trust will largely remain free of UK tax provided the settlor does not become domiciled here. Broadly, the foreign trust gains and income are only subject to UK tax when trust funds are distributed to UK residents.

However, from April 6 2025 the new regime will apply UK tax to any income and gains in trusts whenever settled if the settlor has been UK resident for more than four years.

Nimesh Shah, chief executive of Blick Rothenberg, said he expected many existing non-doms who have several years of their 15-year time limit left would be “annoyed” by the changes.

The government has attempted to appeal to these people by putting in place transitional arrangements “to try and stop them from rushing for the airport”, as Huw Griffiths, director at Andersen put it.

These include the ability to bring income and gains held abroad to the UK during the 2025-26 and 2026-27 tax years under a flat tax rate of 12 per cent. It also includes the rebasing of assets to April 2019.

Any income and gains held within a trust created before April 2025 will not be taxed if they are not distributed. Meanwhile, trusts set up by non-doms before April 2025 will still be protected from inheritance tax indefinitely.

“Do not be at all surprised if we see even more non-doms leaving the UK and fewer wealthy individuals choosing the UK as a destination of choice” – James Ward, Kingsley Napley

The chancellor said the transitional measures will bring in at least £1bn extra in tax. However, some tax experts are sceptical — particularly as they argue that the four years the UK regime lasts is less than those in Italy, Ireland, Greece, Malta and Switzerland.

James Ward, head of private clients at Kingsley Napley, said: “Do not be at all surprised if we see even more non-doms leaving the UK and fewer wealthy individuals choosing the UK as a destination of choice.”

The reform will also create some winners. These include “ordinary, professional” people arriving in the UK who will be able to benefit from the simpler regime without paying for costly advisers, according to Dan Neidle, a tax lawyer and founder of the Tax Policy Associates think-tank. “It’s made it more attractive to normal people and less attractive to the mega-wealthy,” he added.

The reforms are also likely to benefit British people who under the current regime would normally be considered UK-domiciled.

Emma Chamberlain, a barrister who specialises in non-dom work and trusts, said: “Some clients who have been away for more than 10 years are saying this morning they might come back now as it is a much simpler regime and they don’t have to worry about what being foreign-dom means.

“They can just have an exemption from income tax and [capital gains tax] for the first four years and then [inheritance tax] exemption for 10 years. They like that certainty, which is often more important than actual tax paid.”

Read the full article on the FT here

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