The UK’s reform of its non-domiciled (non-dom) tax regime, coming into effect on April 6, 2025 – unless the election beforehand changes policies radically, which is, let’s face it, unlikely.
So, if you’re ‘internationally mobile’ you need to assume big changes are ahead, and begin some careful planning and potentially a shift in approach.
The cornerstone of the reform is the abolishment of the remittance basis for most non-doms. This previously allowed them to pay UK tax only on their UK-sourced income and gains, while sheltering their overseas income and gains from UK taxation unless brought (remitted) into the UK. The new system hinges on residency:
- Remittance Basis with Restrictions: Individuals who have been non-domiciled for 15 out of the previous 20 tax years can still access a limited remittance basis. However, after exceeding a £200,000 remittance allowance, their overseas income and gains are subject to UK tax, even if not brought into the UK.
- Four-Year Temporary Remittance Basis (FIG Regime): A new option exists for those who have been UK tax resident for at least 10 consecutive years but are still considered non-domiciled. This regime allows them to continue using the remittance basis with some restrictions for their first four years of UK residence.
So, if you’re a nom-dom, the chances are, you’re going to need some professional advice on what’s coming:
- Analyse your situation: We will assess your domicile status, residency history, and financial portfolio to determine the most relevant tax rules and potential strategies.
- Navigate the complexities: From deciphering eligibility for the FIG regime to estimating potential tax liabilities under the new remittance basis, we can provide valuable guidance.
- Develop a personalised plan: Based on your unique circumstances and future plans, we can recommend optimal strategies to minimise your tax burden under the new regime.
As you might imagine, proactive planning is key. And is one of the areas we can help most.
- Review your assets: Analyse your global asset allocation, considering the tax implications of holding assets in different jurisdictions. We can suggest strategies for optimising your asset location based on the new rules. This might involve diversifying your portfolio or relocating certain assets to more tax-efficient locations.
- Potential tax liabilities: If you haven’t been remitting your overseas income, consider the potential tax liabilities under the new remittance basis. We can help you estimate these liabilities and explore potential mitigation strategies, such as utilising the forthcoming Temporary Repatriation Facility (TRF) if eligible.
- Long-term residency plans: Are you planning to remain a UK resident for the long term? If so, understanding the implications of exceeding the 15-year threshold for the limited remittance basis is crucial. We would help you evaluate potential long-term tax liabilities and plan accordingly.
There’s no easy, one-size answer (of course). While some individuals might benefit from the FIG regime, others might choose to establish domicile elsewhere.
Give us a call so that we can start taking steps, including information gathering, professional consultation, and financial planning, so that you can navigate the non-dom tax changes with greater confidence and minimise potential tax liabilities.
