Editor’s message

As I write this, a storm rages outside for much of the UK. I can’t help but find it fitting whilst I reflect on the year – it has been a turbulent one, with a seemingly relentless stream of ups and downs. It has also felt fast, with the usual sense of disbelief setting in at the speed of December’s arrival. But with this comes an overwhelming sense of gratitude for the annual opportunity to set up residence by my fireplace, cloaked in a thick blanket with my hand clasping a remote, glass or mug. It really is time to recharge.

It comes as no surprise that this year has felt big. With two budgets announced in one year, we’ve grappled with frequent and drastic changes, particularly with the non-domicile regime. A huge amount of discussion has taken place with a great deal of planning yet in the pipeline.

Regular travel has stitched my year together, kicking off with South Africa, followed by trips to Sardinia, Dusseldorf, Kenya, Switzerland and Oslo. Whilst these destinations and experiences have all been distinct, I’ve thoroughly enjoyed them all, savouring the chance to catch up with peers, make new connections and engage in thought-provoking conversation. I feel fortunate for these varied opportunities and what I learn each time.

Having more recently returned from talking strategy with fellow colleagues and partners, there was a packed agenda. Spanning two days in the quintessentially British town of Windsor, we hashed out big items such as our core values and three-year plan, as well as ten-year targets. It was a timely reminder of the honour that comes with being part of the GE family and the humbling opportunity to contribute to our direction. I’m excited by what lies ahead.

There’s a lot to unpack, digest and action, but for now the time has come to enjoy the beauty of Christmas. I shall quite literally be filling my cup by catching up with family and friends over delicious food and fine wine. Having experimented with making a tiramisu last weekend, I’m particularly keen to perfect this classic.

Whatever you’re thankful for and however you’ll be spending the holidays, I truly wish you and your families the very best and look forward to what 2025 has in store.

Happy holidays and happy reading!

Contents

• The Statutory Residence Test – what is it and why is it now more important than ever for non-doms?
• UK property and SDLT changes – more expensive in all of the UK!
• New budget brings sweeping changes to IHT
• VAT and AirBnBs
• A whistle-stop tour of the UK’s new non-dom tax regime
• Why the Greek non-dom tax regime is a game-changer for global investors by Tzigkos Bantras

The Statutory Residence Test – what is it and why is it now more important than ever for non-doms?

The Statutory Residence Test (SRT) is a set of rules to establish whether someone is considered a UK resident for a particular tax year or not. The SRT is divided into three parts: the automatic overseas tests, the automatic UK tests, and the sufficient ties test. Each part must be assessed in a specific order, and the outcome of one test determines whether further testing is required.

The first step is the automatic overseas tests, this establishes if an individual is non-resident. A person is automatically non-resident if they spend fewer than 16 days in the UK (or fewer than 46 days for someone who hasn’t been a UK resident in the past three years) or if they work full-time overseas and spend fewer than 91 days in the UK, with fewer than 31 days involving work in the UK. If none of these conditions apply, you would move to the automatic UK tests. These tests consider factors such as spending 183 days or more in the UK during the tax year, having a main home in the UK, or working full-time in the UK for a minimum period.

If an individual does not meet the criteria under any automatic tests, the sufficient ties test is applied. This test looks at the ties you have to the UK, namely: family, accommodation, work, UK days in prior years, and whether the UK is your most visited country. The number of ties one has to the UK will govern the number of days one can spend in the UK before they are considered to be UK tax resident.

Following the Budget, it is more important to know your residence status, with the UK moving to a residence-based system for income and Capital Gains Tax and now also for IHT. It is imperative to assess your residence on a yearly basis – get in touch if you require assistance with residency.

Take the SRT here.

UK property and SDLT changes – more expensive in all of the UK!

In a move that could reshape the property investment landscape, the Budget proposed an increase in the stamp duty surcharge for second homes, from 3% to 5%, effective 31 October 2024. This measure is aimed at curbing the purchase of second homes and buy-to-let properties, thereby freeing up more housing for first-time buyers and those seeking primary residences. While this change may deter some investors due to the increased cost, it could also lead to a more balanced housing market by reducing competition for homes that are meant for owner-occupiers.

North of the border, the Scottish Budget announcement on 4 December 2024 has brought in a raft of changes for Scottish Tax, such as raising tax thresholds and restoring winter heating payments to every pensioner household. Similar to the SDLT increase in England and Wales, an increase to the Land and Buildings Transaction Tax (LBTT) from 6% to 8% has been announced effective immediately.

This hike in rates will be sure to make an effect on investments in the North of England where Scottish Investors may look south of the border for new investments. We will have to wait and see the full effect of this change.

Read more about this topic here. 

The New Budget brings sweeping changes to IHT

As you have likely seen, changes to IHT in Rachel Reeves’ Budget are hot in the news – with the likes of Jeremy Clarkson, who purchased his farm for tax avoidance reasons, championing the common farmer. So what has changed?

From 6 April 2026, 100% relief for Business Property Relief (BPR) and Agricultural Property Relief (APR) will be capped at £1 million of combined value that is included in an individual’s estate. Any excess combined value over this £1 million threshold will only benefit from 50% relief. Critics of the changes imply that many smaller working farms will be hit in the ambition of taxing the super wealthy that use these reliefs to avoid IHT – how this will affect the farming industry remains to be seen and it will certainly be a large point for Labour’s next election.

On another note, from April 2025, an individual’s exposure to IHT will no longer depend on their domicile status. Instead, there will be a new concept of “long term resident” for IHT purposes. For IHT purposes, an individual will be long-term resident in the UK if they have been resident for at least 10 out of the last 20 tax years immediately preceding the year of charge. Once an individual has been non-resident for 10 consecutive years, they will cease to be taxable on non-UK assets.

Likewise, the default position for assets held in trust from April 2025 will depend on whether a settlor is LTR for IHT purposes when a charge arises. This means that trusts with a living settlor who is long-term resident will fall into the relevant property regime and be subject to ten-yearly charges and exit charges. Owing to the ‘Gifts with Reservation’ rules, it would usually be the case that where a settlor or his spouse can continue to benefit from settled property, its value also remains in the personal estate of the settlor on their death, effectively creating a double IHT charge on assets falling within the relevant property regime. However, the government has confirmed that excluded property comprised in a trust as at 30 October 2024, will not be caught by this rule and hence the double IHT charge does not apply for these settlors even once the long-term residence rules come into play.

There is clearly a lot to absorb and consider.

VAT and Airbnbs

VAT and Airbnbs for non-established persons

There is an increasing trend in the UK for individuals to move abroad and rent homes under Airbnb. This can provide a reasonable income stream for a house not being lived in. Airbnb is treated as being similar to a hotel and therefore any income for VAT purposes is taxable at the standard rate of VAT.

While the UK has a relatively high VAT registration threshold of £90,000 per year, this threshold does not apply to non-established businesses or individuals. Non-established businesses or individuals must register for VAT as soon as they expect to receive any income from Airbnb rentals, even if it’s below the £90,000 threshold.

EU VAT reforms for online platforms

The EU has agreed on VAT reforms for online platforms offering short-term rentals and ride-sharing services, such as Airbnb and Uber. Points to note are that platforms will be directly responsible for VAT registration and collection, rather than relying on users and a transition period will make the rules voluntary in July 2028 and mandatory by January 2030.

The reforms aim to close tax gaps as online services have largely evaded VAT, and are intended to impose 25% VAT on these services.

This movement by the EU comes in a long string of moves making holiday letting less desirable across the continent.

A whistle-stop tour of the UK’s new non-dom tax regime

The UK government has announced a major overhaul of the tax system for non-domiciled individuals, set to take effect from 6 April 2025. This reform marks the end of the remittance basis of taxation, replacing it with a new residence-based regime.

Under the new system, newcomers to the UK who have not been tax resident in the country for at least 10 years prior to arrival can opt for a four-year grace period. During this time, they will not be liable for UK tax on their foreign income and gains (FIG), even if brought into or used in the UK. However, after the initial four-year period, individuals will transition to the standard UK tax system.

From 6 April 2025, all former remittance basis users who are not eligible for the four-year FIG regime will pay tax at the same rate as other UK resident individuals on any newly arising FIG like any other taxpayer, unless they make use of the new Temporary Repatriation Facility (TRF). The TRF will allow those who previously claimed the remittance basis to bring in pre-April 2025 foreign income and gains at a reduced tax rate for a limited time.

Additionally, the government plans to reform the Inheritance Tax (IHT) system, moving to a residence-based approach. Under the proposed rules, non-UK assets will fall within the scope of UK IHT if a person has been UK resident for 10 years prior to their death or when an IHT charge arises

These sweeping changes represent a significant shift in the UK’s approach to taxing international residents and are estimated to raise £2.35 billion per annum across the first four years of operation.

Read more here or watch my video of the key updates.

Why the Greek non-dom tax regime is a game-changer for global investors

The Greek “non-domicile” tax status has been in effect since 2020, based on Article 5 of Law 4172/2013, and has been recognised by the EU market as one of the most competitive tax tools for foreign investors.

Let’s dive in to why the program offers limitless opportunities for foreign investors who want to explore new tax opportunities in the ever-evolving Greek investment landscape.

Eligibility criteria for the non-dom tax Regime

Investment Requirements for the applicant:

• To be non-Greek tax resident for seven out of the last eight years before the application.
• To invest at least €500,000 in Greece directly as an individual (investment in real estate or business) or indirectly, through a majority-owned company. The process of the investment must be finalised within three years from filing the relevant application.

How you benefit as a Non-Dom Tax Resident in Greece?

• Flat Tax on Global Income as you pay a fixed annual tax of €100,000 on all income earned outside Greece, regardless of its total amount.
• Family Inclusion as you qualify to extend the benefits to family members by paying an additional € 20,000 per year for each member.
• Exemption from Foreign Income Reporting as you are not obliged to declare any income earned abroad to Greek tax authorities.
• Inheritance and Donation Tax Exemptions as you are exempt from paying inheritance and donation taxes on assets located outside Greece.
• Double Tax Treaty Advantages as you benefit from full implementation of double tax treaties between Greece and other countries, ensuring you avoid double taxation on your income.
• Flexibility and Longevity as you enjoy the regime for up to 15 years with the option to terminate any time without exit penalties.
• Golden Visa Holders as you are a foreign investor who holds a Golden Visa you are still eligible to apply for the Greek Non-Dom tax regime.

Our experienced financial consultants help efficiently foreign investors navigate the complexities of the Non-Dom Tax Regime. Our goal is to ensure compliance and secure your wealth every step of the way. For further information contact Sakis F. Tzigkos at s.tzigkos@t-b.gr.