Non-doms

The last government set out proposals for ending the tax advantages that are very beneficial to those who are not domiciled in the UK but have been living here for many years, with effect from 2025/26.

https://jsca.co.uk/uk-budget-2024-blog-15-uk-residency-and-domicile/

Abolishing such tax breaks was originally a Labour Party idea, so it is no surprise that the new government is going ahead with the proposals. It seems to be intending to follow most of what the last government set out (e.g. abolition of the remittance basis of tax, but with a four-year exemption from tax on foreign income and gains for those becoming resident in the UK after at least ten years of non-residence). However, there are two important differences.

1. Those not eligible for the four-year exemption (because they have been here too long) will be fully taxable on their foreign income and gains from 2025/26 onwards. Previously, half of their foreign income was due to be exempt from income tax in 2025/26, as a transitional rule.
2. There will be a tightening up of the anti-avoidance rules on offshore trusts.

The government has confirmed that the Inheritance Tax regime will be based on someone’s residence status rather than domicile status in the future. They intend this to take effect from 2025/26 also, but we will have to wait until the Budget at the end of October 2024 for the final details of all these changes.

Photo by Luis Mayoral on Unsplash