The government’s recent changes to non-domiciled (non-dom) tax status have significantly impacted high-net-worth individuals and professionals working in the UK. While the traditional non-dom regime is being phased out, there are still strategic approaches to manage tax liabilities and optimise financial planning. You have options.
But before delving into alternatives, it’s crucial to grasp the key changes:
- Abolition of Remittance Basis: The ability to defer UK tax on foreign income and gains unless remitted to the UK is being significantly curtailed.
- Stricter Residency Rules: The rules determining residency for tax purposes are becoming more stringent, potentially subjecting more individuals to full UK tax on their worldwide income and gains.
So, what can you do?
The first thing to consider, if your professional commitments allow, is to look at reviewing your UK residency days. At it’s simplest, spending 183 days or more in the UK in a tax year automatically makes you a UK tax resident, although the 91-day rule may also apply: If your only or main home is in the UK for 91 days or more, and you spend at least 30 days in that home, you may be considered a UK resident.
You can look at ways to minimise your time:
Travel Strategy: Plan your travel to spend a significant portion of the year outside the UK.
Remote Work: Leverage remote work opportunities to work from abroad, or become a digital nomad.
Property Ownership: Consider renting out your UK property or selling it if feasible.
You could also consider dual residency: Look to countries with favourable tax regimes and strong economic ties to the UK.
And you can look at wider tax strategies that generate tax efficiencies:
Offshore Investments:
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- Utilise Offshore Structures: Explore offshore structures like trusts and companies to hold assets and generate income outside the UK tax net.
- Seek Expert Advice: Consult with financial advisors specializing in cross-border wealth management.
UK Tax-Efficient Investments:
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- ISAs and Pensions: Maximize contributions to these tax-advantaged vehicles to shelter income and capital gains.
- Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS): Consider these schemes for potential tax reliefs and capital gains tax advantages.
Family Trusts and Estate Planning
- Family Trusts: Use trusts to protect assets from potential future tax changes and other liabilities.
- Succession Planning: Implement effective succession planning to minimize inheritance tax and ensure smooth asset transfer to future generations.
- Inheritance Tax Planning:
- Lifetime Gifts: Consider making lifetime gifts to reduce the value of your estate subject to inheritance tax.
- Business Relief: If you own a business, explore business property relief to potentially reduce inheritance tax.
And, of course, come and meet us. We can assess your strategies, whether that’s moving to Dubai or making your money strategies more efficient without upping sticks and shifting the family.
So get in touch and let’s see what works for you.
