The recent UK Autumn Budget was one of the most substantial fiscal overhauls in recent years. It has introduced several substantial financial adjustments, with particular ramifications for entrepreneurs and business proprietors.
For those operating within the UK, these changes necessitate a reassessment of both business and personal tax strategies. With the UAE offering a stable environment for wealth preservation, it presents itself as a strong alternative that warrants consideration for a strategic relocation.
Key Changes in the 2024 Budget for Entrepreneurs
Increased Capital Gains Tax (CGT):
The updated budget raises CGT rates to 18% and 24% for the lower and higher rate respectively, up from 10% and 20%. This impacts disposals from 30 October 2024 onwards and can directly erode post-sale returns on asset sales. This also includes big changes for Business Asset Disposal Relief (BADR) and Investors' Relief (IR), whose rates will increase to 14% by April 2025, and again to 18% by April 2026. These shifts directly influence entrepreneurs who rely on these rates for financial planning, limiting post-sale proceeds which may affect exit strategies and long-term planning.
Changes in National Insurance Contributions (NICs):
The budget outlines three key changes to National Insurance Contributions.
- The rate of Employer NICs is increasing to 15% by April 2025, up from 13.8%.
- A reduction in the Secondary Threshold (where employers begin paying NICs) from £9,100 to £5,000.
- Employment Allowance increase from £5,000 to £10,500
The Employment Allowance increase is intended to offset some of this impact, but the overall changes suggest a net increase in employment costs. Small and medium-sized businesses will need to navigate this new cost structure effectively.
Inheritance Tax (IHT) and the End of Non-Domicile Benefits:
The new regime, commencing in April 2025, shifts from a non-domicile to a residence-based approach, with limited exemptions for Foreign Income and Gains. Offshore trusts, traditionally used to protect non-UK assets, will no longer shield such assets from UK inheritance tax after an initial four-year grace period.
Additionally, beginning in April 2026, IHT relief for agricultural and business properties will apply only to the first £1 million in assets, with a 50% rate of relief imposed on any excess. This means that 50% of the business’s value after £1 million will be taxed at the IHT rate of 20%.
The new 10-year exit rule further extends IHT’s reach, meaning worldwide assets may be subject to IHT if they’ve been a resident in the UK for 10 of the last 20 years. These changes highlight the need for revised multi-decade succession planning among UK-based entrepreneurs.
The UAE: A Strategic Alternative
For UK entrepreneurs impacted by these changes, the UAE presents an attractive alternative. The tax gap between the UK and UAE has continued to widen, and the UAE offers a competitive framework for both business operations and tax efficiencies.
Optimised Tax Regime: The UAE’s tax structure eliminates personal income, capital gains and inheritance taxes. It offers clear advantages for those prioritising wealth preservation and a less volatile political environment that doesn’t revolve around quarterly budgets like the UK.
Pro-Business Framework: UAE free zones facilitate company formation, ownership flexibility and streamlined regulations. These collectively reduce administrative overhead for businesses. Further, the 5% VAT rate is very conducive to encouraging consumer spending. Even then, 0% exceptions apply to some goods and services.
International Connectivity: UAE cities like Dubai and Abu Dhabi serve as global business hubs. They both provide convenient access to both developed and emerging markets, making them exceptionally well-positioned for international trade and investment.
Next Steps
In response to these fiscal shifts, UK entrepreneurs and business owners may find that a structured evaluation of the UAE’s unique advantages supports both their long-term business and personal goals. Relocating to a jurisdiction that combines tax efficiency with a pro-business environment, as well as promising long-term policy stability, provides an opportunity to maximise wealth creation.
