United Kingdom

Individual - Significant developments

Last reviewed - 18 December 2022

Trust register - 5th Anti-Money Laundering Directive (5MLD)

On 23 January 2020, the United Kingdom (UK) government launched a technical consultation and provided draft regulations in respect of the Trust Registration Service (TRS). The final regulations were laid in Parliament on 15 September 2020 and came into force on 6 October 2020. 

The 5MLD removes the previous link between the TRS and taxation. All UK express trusts and some non-UK trusts (with specific UK nexus) will be required to register under the TRS unless they are specifically defined as ‘out of scope’.

The registration requirements are as follows:

  • Trusts in existence at 6 October 2020 must have registered by 1 September 2022.
  • Trusts created after 6 October 2020 must register within 90 days or by 1 September 2022 (whichever is later).

Termination payments

From 6 April 2021, certain changes were made to the taxation of termination payments. The changes included aligning the treatment of post-employment notice pay (PENP) for individuals who are non-resident in the year of termination of their UK employment with the treatment of UK residents. From 6 April 2021, earnings that are due to PENP are subject to tax and national insurance contributions (NICs) to the extent that the individual would have worked in the United Kingdom during the notice period.

Off-payroll working in the private sector

From 6 April 2021, the off-payroll working rules that already applied in the public sector were extended to the private sector, although small private sector businesses are excluded from the reforms. 

The changes relate to the taxation of off-payroll workers (i.e. contractors) who fall under the 'IR35' rules. These rules apply to any contractor who works for an end-user business via an intermediary such as their own personal service company (PSC). 

Under the reforms, all businesses subject to the rules are required to undertake an employment status assessment in respect of any of their contractors operating through a PSC, whether they work directly with the business or via an agency. Where the result of that assessment shows that the arrangement is in substance one of employment, then pay-as-you-earn (PAYE) and NIC withholding will need to be operated. The responsibility for this rests with whichever entity is paying the PSC, be that the business itself or an agency.

Main residence relief and capital gains tax (CGT) reporting changes

The Finance Act 2020 contained various changes to the CGT principal private residence (PPR) relief from 6 April 2020. PPR is broadly a relief that, if all the conditions are met, means the gain that arises on the disposal of your main residence is not subject to CGT.

The most important of these is the reduction to 9 months (from 18 months) of the final period of ownership (whilst not in occupation of the property) being able to qualify for PPR, provided, broadly, that the property at some point was the individual's main residence.

Further changes include the requirement that from 6 April 2020 certain disposals of UK residential property by UK residents must be reported and any CGT must be paid within 30 days. This deadline has been increased to 60 days for disposals completed after 27 October 2021. Broadly, these rules apply to disposals that result in a CGT charge. This is to bring UK residents into line with non-UK residents who have had to report all UK property disposals from 6 April 2019, regardless of whether a gain arises.

Higher rate threshold

The 40% higher rate threshold is 50,270 pound sterling (GBP) in 2022/23.

Personal allowance

The personal allowance is GBP 12,570 in 2022/23.

Savings rate

Since 6 April 2015, the starting rate for savings income is 0% (previously 10%), and the maximum amount of savings income that can qualify for this rate is GBP 5,000.  You’re not eligible for the starting rate for savings if your other income is GBP 17,570 or more.

Tax avoidance and evasion

His Majesty's Revenue and Customs (HMRC) is focusing on tackling tax evasion, avoidance, and non-compliance. HMRC is continuing the process of creating specialist personal tax units to enquire into individual's domicile status and target serious non-compliance by trusts, pension schemes, and non-UK domiciled individuals ('non-doms'), as well as a more general extension of the customer relationship model for individuals with wealth between GBP 10 million and GBP 20 million.