Navigating personal and business tax complexities for non-domiciled individuals
Non-Domiciled Individuals
The abolition of the non-dom tax regime
In the Autumn Budget 2024, UK Chancellor Rachel Reeves confirmed that the UK non-dom regime will be abolished from 6 April 2025 and with it the remittance basis of taxation.
All UK residents will be taxed in the UK on their worldwide income and gains in the year they arise. Furthermore, individuals qualifying as ‘long-term residents’ will be subject to Inheritance Tax (IHT) on their worldwide assets.
Many affected individuals will now face a dilemma, in terms of both their existing structures and ongoing exposure to UK tax.
It is one of the most significant reforms to the non-dom tax regime in our generation and, as with any substantial tax change, there is a lot of complexity within the rules.
In this video series and associated articles, we highlight what this could mean for you and how you can prepare for the changes.
Inheritance Tax (IHT)
For IHT purposes, the concept of domicile will be replaced with a residence-based test from 6 April 2025. If an individual is considered a ‘long-term resident’ they will be subject to IHT on their worldwide assets.
An individual will be considered a long-term resident if they have been UK resident in 10 of the 20 tax years immediately preceding the tax year in which the relevant event occurs.
Temporary Repatriation (TRF) and Rebasing
The TRF will allow individuals to designate untaxed foreign income and gains and be taxed at a 12% rate (2025/26 and 2026/27) or 15% (2027/28). They can then remit those funds in the year of designation or a later year.
Individuals who are not deemed domiciled on 5 April 2025 are able to rebase their assets to their value as of 5 April 2017.
Trusts
The Trust protections for deemed settlors introduced in 2017 will be abolished from 6 April 2025, with income and gains arising in those structures potentially assessed directly on the taxpayer, if they choose to remain UK-resident.
Global Mobility
Rehana Earle talks to Jay Bailey and Kugan Panchalingam about the changes announced in the budget.
Many employees who have come to the UK for work will be substantially affected by the abolition of the non-dom regime, with their employment income as well as their personal income and gains affected.
There are going to be some winners and some losers, but there’s certainly a lot to think about.
An American perspective
Many US citizens and US ‘Green Card’ holders who live and work in the UK will be impacted by the abolition of the UK’s non-dom tax regime.
An American perspective on trust changes
It will be more important than ever to ensure that all US trusts with a UK connection, are reviewed on a case-by-case basis to identify whether any UK tax concerns are present.
Non-domicile individuals relocating to other countries
An on-demand webinar series
From April 2025 the current non-dom regime will be abolished, and we are aware that many people are considering their options
We understand the complexities and considerations involved in relocating to a new country. Our webinar series is tailored specifically for non-domiciled individuals looking to make a move
Our webinars delve into the key tax and financial aspects that non-domiciled individuals need to be aware of when considering a relocation and the local considerations each country presents
Hosted by our international experts, and in some cases local partners
How we can help
Our specialist team of Private Client specialists can assist individuals, families, trustees and businesses with preparing for the changes.
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Insights
November 14, 2024
Autumn Budget – Summary of the rules: All change for non-doms
Effective from 6 April 2025, the UK non-dom regime will be abolished and with it the remittance basis of taxation.
November 5, 2024
Rachel Reeves offering non-doms first class plane tickets to get out of the UK
Rachel Reeves may be digging her fiscal black hole even deeper by handing an easy exit to non-doms planning to leave in the next tax year.
November 1, 2024
Little in UK Budget to soften impact of non-dom abolishment for Japanese businesses
The lack of significant changes in Tuesday’s Budget to the proposed plan to scrap the non-dom regime is no surprise, but disappointing.
September 27, 2024
Once in a lifetime opportunity for Government to create a world class non-dom regime
Government must step back and delay new regime.
July 29, 2024
Labour’s first non-dom move
The new Labour Government have made their first official announcement on the non-dom reforms.
March 7, 2024
Impact of the abolition of the non-dom regime
The big news from Jeremy Hunt’s Spring Budget 2024 was the abolition of the non-dom tax regime.