UK
Ireland
Autumn Budget 2026: A quieter Budget for international individuals
Following significant tax changes in the Autumn 2024 Budget, including the abolition of the non-UK domiciled tax regime, it was unsurprising that recent Budgets have contained little that will specifically impact the tax treatment of international individuals.
The story so far
In Rachel Reeves’ October 2024 Budget, the Chancellor effectively abolished the non-UK domicile tax regime, principally by removing the remittance basis and replacing it with a new residence-based foreign income and gains (FIG) regime. Under these new rules, individuals arriving in the UK after a non-UK resident period of at least ten tax years are not taxed on their FIG for their first four years of UK residence after 6 April 2025.
In addition, the inheritance tax (IHT) benefits previously enjoyed by non-UK domiciled individuals have been replaced by a long-term residence rule. Once an individual has been UK resident for at least ten out of the previous twenty tax years, they become a long-term resident and subject to IHT on their worldwide estate. Even after leaving the UK, a long-term resident remains in the scope of worldwide IHT for between three and ten tax years, depending on their prior UK residence period.
A set of transitional provisions was introduced from 6 April 2025. These included:
The ability to remit certain amounts of FIG with a reduced tax rate, provided a designation over the income or gains is made before 6 April 2028
The ability for some taxpayers to rebase some overseas assets held since 2017 for CGT purposes
You can read more on the 2024 Budget changes here
What new measures have been announced in this Budget?
The Chancellor has announced several smaller changes that may impact some internationally mobile individuals.
A new tax credit to address double taxation issues for US LLC investors
The government has confirmed plans for a new foreign tax credit mechanism, addressing the double taxation faced by UK-resident individuals who invest in US limited liability companies and other reverse hybrid entities. The announcements follow a consultation launched earlier this year. The government intends to develop an elective credit for foreign tax paid personally by investors.
Skilled worker visas
From 28 October 2026, where an employer pays the fee for a certificate of sponsorship or an immigration skills charge, the employee will be exempt from income tax. This charge arises where the employer sponsors a worker under the skilled worker route, so the aim is presumably to incentivise more skilled workers to work in the UK.
Changes to exit charges for temporarily migrating trusts
If a trust becomes temporarily UK resident, as a result of a trustee becoming UK resident, and then becomes non-UK resident later in the same or following tax year, IHT exit charges will no longer apply. These changes are intended to ease the administrative burden and uncertainties around internationally mobile individuals acting as trustees. These changes take effect from 28 October 2026.
CGT and protected cell companies
Further changes in respect of protected cell companies have been announced to bring gains realised within non-UK resident protected cell companies into the scope of UK tax where the participators are UK resident individuals. These changes take effect from 28 October 2026.
Sovereign wealth funds
Foreign governments have made significant investment in the UK. Historically, these sovereign wealth funds have mostly been exempt from UK tax, which makes the UK more generous than many other countries. The government will introduce a new statutory tax regime to bring their real estate income and gains into the scope of UK tax, but with a suggestion of providing access to real estate investment trusts (REITs) for investments in UK real estate. These changes take effect from 1 January 2029, with further detail to be announced.
Founders’ relief
The government will introduce a founders’ relief, providing a 10% CGT rate on up to £10 million of lifetime gains for qualifying founders of certain fast-growing innovative companies. The change will be introduced from 6 April 2027. The relief will only be available following five years’ continuous UK residence. An individual moving to the UK may qualify for FIG relief during the first four years, and then after one further year may qualify for founders' relief. We await the draft legislation to confirm the detail.
Consultation on offshore penalties
The Chancellor announced a consultation to be published later in 2026 with a view to reforming the offshore penalties framework, for example, penalties for omitting taxable offshore income from a tax return. Any changes will be incorporated into a future finance bill following responses.
Where do we go from here?
It is reassuring that the government has avoided further major changes targeting international taxpayers in this Budget. Given the significant reforms to their tax treatment in recent years, a period of relative stability is welcome. Entrepreneurs moving to the UK may be encouraged by the announcement of the CGT relief for founders of certain businesses, although the detail is awaited.
That said, some will be disappointed that the government has not taken more decisive steps to curb capital flight, or, indeed, encourage internationally mobile individuals to come to the UK. There remain calls for a modern investor visa to complement the FIG regime and enhance the UK’s attractiveness to inward investment. Such an incentive had been mooted in the weeks leading up to the Budget, but has not yet materialised.
Please do get in touch with your usual S&W team or one of the contacts listed if you would like to discuss these changes in more detail.
Detailed analysis
Changes relating to offshore structures
Changes were announced, from 28 October 2026, to ease the administrative burden where offshore trusts become temporarily UK resident due to a trustee move.
Further measures to bring gains realised within protected cell companies into the scope of UK taxation have also been announced, effective from 28 October 2026.
Alongside the Budget, the government proposed a new tax credit mechanism to address double taxation on some non-UK entities, such as US LLCs.
Summary
If a trust becomes temporarily UK resident as a result of a trustee becoming UK resident, and then becomes non-UK resident later in the same or following year, exit charges will not apply. These changes are intended to ease the administrative burden on trustees. This will take effect from 28 October 2026.
Small changes were made with respect to protected cell companies holding UK property in 2025, with further changes announced in Budget 2026. The changes bring gains realised within protected cell companies into the scope of UK tax where the participators, holding an interest of more than 25%, are UK resident individuals. These changes take effect from 28 October 2026.
Separately, the government has responded to a consultation on the UK taxation of UK-resident members of “LLCs and other reverse hybrid entities”. Rather than proceeding with its initial proposal to treat eligible entities as transparent for UK tax purposes, the government intends to develop an elective credit for foreign tax paid personally by investors.
Our comment
Some relief from exit charges will be a welcome change for those looking to come to the UK in a situation where an inadvertent onshoring of a trust could occur. While the relief is narrowly targeted and is unlikely to apply to many trustees, it does give trustees time to plan jurisdictional changes, and its aim is to make it easier for internationally-mobile individuals to move to the UK.
The government’s targeting of offshore structures continues, ensuring gains realised within non-UK resident close protected cell companies are subject to UK tax. This is a further step in disincentivising use of such structures and clamping down on offshore tax avoidance.
While the exact details of the relief for investors in reverse hybrid entities have not yet been decided, and claims cannot be made until early 2028, the potential relief will be very welcome for many individuals. In particular, it will seek to address the discrepancy between the tax treatment of LLCs in the US, where they are often treated as transparent, and the UK, where they are generally opaque, leading in many cases to double taxation. The issue has been exacerbated in recent years following the abolition of the remittance basis.
Certificate of sponsorship and immigration skills charge
Payments made by an employer towards a certificate of sponsorship, or an immigration skills charge for workers, made on or after 28 October 2026 will be exempt from income tax. A corresponding national insurance contribution (NIC) exemption will also be available.
Summary
Employers are currently required to pay fees for a certificate of sponsorship and the immigration skills charge when sponsoring a worker under a skilled worker visa.
The government has announced that it will introduce legislation in the Finance Bill 2026/27 to exempt any payments made on or after 28 October 2026 from income tax. A corresponding NIC exemption will also be available.
Our comment
The new legislation is a welcome clarification in relation to the treatment of these employer costs.
Historically, in the absence of any specific legislation or HMRC guidance, it was common practice to treat these costs as not taxable as they related to costs employers had to necessarily incur as part of the visa process. They were legally not allowed to pass these on to the relevant employees.
During a meeting between HMRC, various industry bodies and professional advisers in March 2026, HMRC clarified its view in relation to the treatment of these costs. HMRC indicated that it considered these costs to be a benefit in kind and, as such, taxable. This was a departure from the commonly adopted treatment and created uncertainty.
It is of note that the government has restricted the change to payments made on or after 28 October 2026. This indicates that HMRC’s previously stated position from the March 2026 meeting will still stand in relation to payments made before 28 October 2026, although an update on this position was expected from HMRC before the Budget. It also appears that the change will not apply to the immigration health surcharge.
Founders’ relief
The government has published a consultation to finalise the details of a new founders’ relief. It will provide a 10% CGT rate on up to £10 million of lifetime gains from 6 April 2027.
The relief is intended to reward founders of innovative UK businesses, but the qualifying conditions as drafted are significantly more restrictive than those applying to business asset disposal relief (BADR) and may limit its practical availability.
Summary
The relief is intended to encourage entrepreneurs to establish, grow and retain innovative businesses in the UK by providing a reduced 10% CGT rate on qualifying share disposals. It will be available for disposals made on or after 6 April 2027 and will be subject to a £10 million lifetime limit per individual. The limit will be reduced by amounts claimed under BADR and investors' relief from that date.
To qualify, an individual must have:
Held at least 25% of the company's ordinary share capital when the trade commenced
Owned shares or securities in the company for at least five years before disposal, and
Been UK tax resident for at least five continuous tax years prior to the disposal
Importantly, the relief will apply to all shares disposed of by a qualifying individual and is not restricted to shares acquired when the company was founded.
The company must:
Be within the scope of UK corporation tax and maintain a substantial UK presence
Carry on a qualifying trading activity, and
Have achieved a minimum level of scale, including turnover of at least £10 million and at least 15 qualifying full-time employees before disposal
The company must also meet at least two of three additional tests designed to demonstrate sustained growth and innovation. These focus on turnover growth, employee growth and qualifying R&D expenditure.
Claims will be made through the self-assessment tax return for the year of disposal, and supporting information will be needed to demonstrate the qualifying conditions have been met.
The consultation closes on 30 November 2026 to allow sufficient time for legislation to be finalised before the relief takes effect from 6 April 2027.
Our comment
The government's objective is clear. While the UK has a strong record of creating innovative start-ups, it has historically struggled to scale those businesses into large, internationally competitive companies. By linking this tax relief to growth, employment and innovation, the government seeks to incentivise entrepreneurs whose businesses deliver broader economic benefits to the UK.
It is disappointing, therefore, that the consultation proposes what would become one of the most heavily conditioned tax reliefs in the UK tax system. Qualification depends not only on the founder’s shareholding and residency position, but also on a range of company-level metrics that may span a ten-year period. In practice, founders are likely to require detailed professional advice both before and after a transaction to determine whether the conditions are satisfied.
Some aspects of the design appear particularly restrictive. The requirement that the company continues the same trade for which it was originally established may prevent relief being available where a business has successfully evolved or pivoted in response to market opportunities. While the provision is clearly aimed at preventing abuse, it may not reflect the commercial reality that many highly successful businesses develop significantly from their original business model.
The proposed innovation test may also create uncertainty. Eligibility can depend on whether historic R&D expenditure qualified for relief, an area that has become increasingly subject to HMRC scrutiny. The consultation acknowledges that a subsequent challenge to an R&D claim could lead to founders’ relief being withdrawn, potentially leaving individuals with additional tax liabilities and interest.
There are also practical concerns around compliance. Founders may need access to information that is held by the company, sometimes many years after the relevant period. The consultation therefore proposes granting individuals a statutory right to request information from companies. While this may assist claimants, it will create additional administrative obligations for growing businesses.
In its current form, the breadth and complexity of the proposed conditions impose an added burden on businesses, and the resulting uncertainty may limit the behavioural impact that the relief is intended to achieve.
Founders’ relief achieving its policy objectives will rely on striking the right balance between targeting support and maintaining simplicity. It has the potential to become a valuable addition to the UK's entrepreneurial tax landscape, but not as drafted.