The first Finance Act of the Labour government has gained Royal Assent and passed
into law.
The Finance Act 2025 makes major changes to the tax rules for non-doms, removes
the VAT exemption for private school fees, increases some rates of Capital Gains
Tax (CGT) and Stamp Duty Land Tax, and extends the energy profits levy on the
oil and gas sector.
The abolition of the remittance basis of taxation for non-UK domiciled
individuals sees it replaced with a residence-based regime with effect from 6
April 2025. This means all longer-term UK residents will be taxed by the UK on
their worldwide income and gains as they arise.
The Act removes the VAT exemption on the supply of private school fees,
vocational training and board and lodgings when supplied by a private school or
similar institute.
The Act increases the main rates of CGT from 10% and 20% to 18% and 24%
respectively for disposals made on or after 30 October 2024.
John Barnett, Chair of the Technical Policy and Oversight Committee at the
Chartered Institute of Taxation (CIOT), said:
'Moving from domicile to residence as the basis for taxing people who are
internationally mobile makes sense.
'As well as being a major simplification, it is a fairer and more transparent
basis for determining UK tax.
'Residence is determined by criteria far more objective and certain than the
subjective concept of domicile. Replacing the outdated remittance basis is
also sensible and the Temporary Repatriation Facility offers a helpful
transition.'
Internet link: GOV.UK CIOT