Our tax experts' reflections on the Budget
Foreign income and gains
Even if the Chancellor does extend the foreign income and gains regime, it may be too late to make much difference. Following the non-dom reforms in April 2025, I suspect many wealthy individuals have already decided to leave or rule out moving to the UK. Without an extension, the UK is likely to remain less competitive for this group.
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Infrastructure investment
Private capital wants to invest in Britain’s infrastructure. What’s missing is the pipeline of investment opportunities. Since the Private Finance Initiative was abolished in 2018, investors simply haven’t had a steady supply of projects to back, despite the nation's creaking infrastructure desperately needing it. The popular offshore transmission owner (OFTO) regime shows investment can flow when the model is well designed.
The government needs to achieve two things from this Budget: unlock investment and position itself as pro-growth. Introducing a new model to bring private money into long-term infrastructure is one of the few ways to do both.
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Land tax
Britain’s property taxes are holding back growth. A single, fairer tax on land would serve businesses and households far better. Stamp Duty Land Tax prices out first-time buyers, puts people off moving, and in turn, stops house builders from building. Council Tax in England is still based on 1991 valuations, leaving lower-value homes and poorer regions paying a disproportionate share. And Business Rates continue to put high street businesses at a disadvantage against online competitors.
A full overhaul isn’t realistic without proper consultation, but even a roadmap to full transition alongside interim targeted changes to these troublesome regimes will demonstrate the government is on the side of businesses. Easing this pressure would give property owners more confidence to move and support retailers, hospitality businesses, housebuilders and the economy at large. Without this support, more high street businesses that are already struggling may close.
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Foreign income relief
The government has a genuine opportunity to drive economic growth in the UK by announcing certain changes to the way Britain's tax system works in today's Budget.
As it stands, new arrivals lose their foreign income relief after four years, which can give people reason to reconsider soon after settling here. Stamp duty can deter workers from moving to where the jobs are. And National Insurance is regressive, falling only on working people, while those living off their wealth aren’t affected.
Extending the FIG regime to ten years, removing stamp duty for owner-occupiers and merging National Insurance into income tax would all help. Though we don’t expect to see these measures in this Budget. The decision not to introduce a new visa route for wealthy investors suggests limited appetite for growth-focused tax reform, which is a missed opportunity.
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VAT
This is an incremental change for online marketplaces as the collection of VAT on goods shipped to the UK has been in place since 2021 for overseas traders. It is highly likely that this will be implemented in the imminent Budget with an effective date in 2027.
The key complication is for traders operating across multiple platforms as the UK has a VAT registration limit currently of £90,000 and a solution is required to identify whether VAT is due or not. One major challenge will be tracking sales across platforms. Under the lead proposal, a business could sell £80,000 on each of three platforms, £240,000 in total, and no platform would have to collect the VAT. Unless that is addressed, we risk creating an unlevel playing field.
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