MAJOR BUDGET CHANGES IMPACTING UK BUSINESS OWNERS IN 2024
Rising Capital Gains Tax (CGT) and Limits on Reliefs
Budget Impact: The new budget raises CGT rates to 18% for the lower rate and 24% for the higher rate, up from 10% and 20%, respectively. These increased rates apply to disposals from October 30, 2024, onwards, which will also affect Business Asset Disposal Relief (BADR) and Investors’ Relief (IR), set to increase to 14% by April 2025 and 18% by April 2026.
Impact on business owners: These changes could reduce net returns from the sale of assets and impact financial planning for UK business owners. Many may find their post-sale returns shrinking, limiting capital available for reinvestment or future planning.
UAE Advantage: The UAE does not impose capital gains tax, which allows business owners to keep a larger share of their profits and reinvest in their ventures or personal wealth.
Changes in National Insurance Contributions (NICs):
Budget Impact: The budget includes an increase in employer NICs from 13.8% to 15% as of April 2025. The threshold at which employers begin paying NICs will also drop from £9,100 to £5,000, raising the cost of employment. While the Employment Allowance has increased from £5,000 to £10,500.
Impact on Businesses: These changes mean higher employment costs for small and medium-sized businesses, putting further strain on their resources and potentially impacting their hiring plans.
UAE Advantage: The UAE offers no income tax or National Insurance, reducing employment costs and enabling companies to focus resources on growth and expansion.
Removal of Non-Domicile Tax Benefits and New Inheritance Tax (IHT) Rules
Budget Changes: Starting in April 2025, the non-domicile tax regime will be replaced by a residence-based approach, with fewer exemptions for foreign income and gains. The IHT relief for agricultural and business properties will only apply to the first £1 million in assets, with any excess taxed at 50% of the 20% IHT rate.
Impact on Wealth Planning: For UK-based business owners, these changes mean that offshore assets and trusts may no longer shield wealth from IHT. The new 10-year exit rule also means that UK residents with global assets may face tax implications if they’ve been UK residents for 10 out of the last 20 years.
UAE Advantage: The UAE has no inheritance tax, allowing business owners to preserve wealth and pass it to future generations without the complexity or added cost of UK IHT compliance.
WHY THE UAE REMAINS AN ATTRACTIVE CHOICE FOR BUSINESS OWNERS
With these recent budgetary changes, UK investors may find the UAE’s regulatory environment highly advantageous:
Tax Efficiency: The UAE does not impose capital gains, inheritance, or personal income taxes. This creates a unique opportunity for business owners to maximize wealth retention.
Pro-Business Environment: UAE free zones offer streamlined company formation processes, 100% foreign ownership, and only a 5% VAT rate, making the cost of doing business straightforward.
Global Connectivity: The UAE’s strategic location provides easy access to markets across Europe, Asia, and Africa, making it ideal for international business and trade.
No Withholding Tax Policy: The UAE’s policy allows international investors, including multinational corporations and private equity firms, to repatriate profits without tax barriers. Foreign investors benefit from no withholding tax on dividends or interest, a significant advantage over other jurisdictions.
CONCLUSION: CONSIDERING A MOVE TO THE UAE?
The UK’s recent budgetary changes underscore the growing tax pressures on entrepreneurs and business owners. For those evaluating a relocation or expansion, the UAE offers a stable, tax-friendly environment that can support both personal and business growth objectives. By providing a pro-business framework, a favourable tax regime, and a well-connected global hub, the UAE positions itself as an ideal choice for long-term wealth preservation and opportunity.
The UK’s 2024 budget introduces higher tax rates and complex compliance requirements that may impact your business and personal wealth. Creation Business Consultants can help you navigate these changes, offering tailored strategies to maximize tax efficiency and explore the advantages of establishing in the UAE’s low-tax environment.
Reach out to our UAE Tax Consultants team for a complimentary consultation on safeguarding your financial goals amidst these evolving tax regulations.
Contact us via email at [email protected] or call:
