Non-Doms, Non-Residents & Overseas Wealth

The UK is in the process of changing the basis of taxation for individuals who come to live here, from the non-dom tax regime of the remittance basis to a residence basis.

Non dom tax and a new regime

The concept of domicile has been part of the UK’s tax system for centuries and certain elements of this approach will remain even if the UK moves to a residence basis. If you are coming from overseas to live in the UK but do not regard the UK as your permanent home it is likely that you will be a resident foreign domiciliary, or a “non-dom”.

Subject to qualifying criteria, non-doms have benefitted from a special tax regime that exempts overseas income and capital gains from UK tax provided it is kept outside of the UK. There are also favourable rules relating to Inheritance Tax in relation to non-UK assets. These rules are complex but, as a general principle, as your connections to the UK increase, either through personal circumstances or by virtue of the duration of your residence, your liability to UK tax also increases.

It was announced in the March 2024 Budget that these rules would be abolished with effect from 6 April 2025. These changes were then put on hold by the General Election in July 2024 but now a new government has been formed with a manifesto commitment to reform the non-dom basis of taxation, it is expected that the residence basis will be revived with effect from 6 April 2025 and the application of the Statutory Residence Test will become an area of increasing focus.

With the prospect of change on the horizon and the uncertainty that brings, the need to seek specialist advice is paramount. It is likely that there will still be planning opportunities for non-doms, particularly those considering coming to the UK as planning prior to your arrival in the UK may result in significant tax advantages going forward. Whilst possibly more limited in scope, there are also opportunities for those already resident in the UK.

Our experience and specialist advice focusses on helping non-doms navigate the complex UK tax rules, thereby reducing your exposure to tax in the UK. Please get in touch for more information about non dom tax and related issues.