Time to start planning? What the latest changes mean for UK non-doms

On 6 March 2024, Jeremy Hunt announced the UK government’s decision to abolish the non-domiciled (non-dom) tax status, a significant change which aims to reform the tax regime affecting individuals who reside in the UK but are not considered permanently settled for tax purposes.

Here’s the key points you need to know?

• The current tax regime allows individuals with non-dom status to pay tax on their UK income while potentially avoiding tax on foreign income not brought into the UK. This status also offers some relief from UK Inheritance Tax. The government’s announcement marks the end of these provisions.
• For those already claiming non-dom status, transitional arrangements will be put in place. This includes a two-year period intended to encourage the repatriation of wealth earned overseas into the UK.
• Going forward, tax advantages for new arrivals to the UK will be limited to four years. After this period, their income will be taxed in the same manner as other UK residents.
• Non-UK assets settled into trust by a non-dom settlor before the changes take effect will retain protection from Inheritance Tax. This provides an incentive for new arrivals to settle trusts shortly after arriving in the UK.
• The changes are scheduled to come into effect from April 2025, with more details expected to be released in the future.

Implications:

This move represents a significant shift in the UK’s approach to taxation of non-dom individuals, aiming to create a more equitable tax system. It highlights the government’s intent to ensure that those residing in the UK contribute fairly to the tax system, regardless of their domicile status. The transitional arrangements and the limited tax advantages for new arrivals indicate a balanced approach to implementing these changes, providing a window for adjustment and planning for affected individuals.

As a trust and corporate services provider, we have been assisting individuals and their families in establishing tax effective structures for nearly 40 years. If you are a UK non-dom or someone considering moving to the UK, and would like to have a free, no obligation discussion around your personal circumstances and structuring opportunities, contact us at info@sentientinternational.com or telephone +44 1624 616544.