Non-domicile changes


Filed Under: Private Client

Written by: Nimesh Shah

The non-domicile community breathed a collective sigh of relief when the Conservatives were elected into Government with a majority in May.

Whilst most expected some changes to the non-domicile regime, few predicted the dramatic changes that were announced in the Summer Budget. Three key changes were proposed, effective from April 2017:


  1. A non-domiciled individual who has been resident in the UK for more than 15 out of the previous 20 tax years will be "deemed" to be domiciled in the UK for all UK tax purposes – income tax, capital gains tax and inheritance tax ("IHT").
  2. Individuals who were born in the UK (to UK domiciled parents) and who subsequently acquire a ‘domicile of choice’ in another country will not be able to claim the non-domicile status if they return and become resident in the UK.
  3. UK residential property owned either directly or indirectly (for example through offshore trusts/company structures) by non-domiciled individuals (includes non-UK residents) will be subject to UK IHT.

The proposal that is likely to have the most impact is that a non-domiciled individual will not be able to benefit from the favourable taxing regime beyond 15 years. However, there may be some relaxation to the existing tax rules, as the technical note issued by the Treasury at the time of the Summer Budget confirmed that the use of offshore trust/company structures will continue to be effective, and such offshore structures established before the 15 year point will retain their benefits.

The real ‘sting in the tail’ with the proposed changes concerns yet more changes to the taxation of UK residential property. From April 2017, UK residential property, irrespective of the ownership structure or the domicile and residence of the beneficial owner, will be subject to UK IHT. Historically, non-domiciled individuals (in particular non-UK resident overseas investors) would structure their ownership of UK residential property through offshore companies to protect against UK IHT, but this is unlikely to be the case after April 2017.

Whilst April 2017 may seem some time away, there is now a limited window of opportunity for non-domiciled individuals and trustees of offshore trusts to plan and restructure to optimise their tax positions in advance of the changes taking effect.

For more information, please contact your usual Blick Rothenberg contact or Nimesh Shah, partner, on +44 (0)20 7544 8746 or at