So after months of speculation and waiting we've now had confirmation of the new UK tax regime for new arrivals which replaces the on non-dom system from 6 April 2025.
Effectively non-dom status will be removed and replaced with a residence based system. This means that for the first 4 years of UK residence all foreign income and gains will be tax free. Regardless of remittance. This means that unlike the old remittance basis you can have foreign income and gains and bring this into the UK in the first 4 years of residence and pay no tax at all in the UK.
After 4 years of residence, however, you are taxable on worldwide income and gains. However, this does make the UK oddly attractive for a short period of up to 4 years if you have non-UK income.
The IHT rules have also been tightened up following the removal of domicile as a concept in UK tax law. Domicile historically was the vital concept for IHT purposes and UK domiciled or deemed domiciled (resident for 15 of the past 20 years) individuals are subject to tax on worldwide assets. Non-doms are currently only subject to IHT on UK assets.
From 6 April 2025 the test will be changed to a "long term residence" test with individuals who have been resident in the UK for at least 10 of the past 20 years will be subject to IHT on their worldwide assets. As such, if you leave the UK it may take 10 years to escape the IHT net. For individuals who have been in the UK for less than 20 years there is some relief and the time to exit will be less (3 years for 10-13 years in the UK, 4 years for 14 years , 5 years for 15 years etc).
On top of this, IHT for long term residents will be extended to catch offshore trusts, meaning that clients who previously had 'protected status' are no longer protected and income and gains will be attributed and offshore trusts for long term resident settlors will now fall into the UK relevant property rules (10 year, entry and exit charges). This will be a substantial change for any non-doms settled in the UK with offshore trusts as they will now be subject to UK IHT rules.
Feel free to ask any questions.
Effectively non-dom status will be removed and replaced with a residence based system. This means that for the first 4 years of UK residence all foreign income and gains will be tax free. Regardless of remittance. This means that unlike the old remittance basis you can have foreign income and gains and bring this into the UK in the first 4 years of residence and pay no tax at all in the UK.
After 4 years of residence, however, you are taxable on worldwide income and gains. However, this does make the UK oddly attractive for a short period of up to 4 years if you have non-UK income.
The IHT rules have also been tightened up following the removal of domicile as a concept in UK tax law. Domicile historically was the vital concept for IHT purposes and UK domiciled or deemed domiciled (resident for 15 of the past 20 years) individuals are subject to tax on worldwide assets. Non-doms are currently only subject to IHT on UK assets.
From 6 April 2025 the test will be changed to a "long term residence" test with individuals who have been resident in the UK for at least 10 of the past 20 years will be subject to IHT on their worldwide assets. As such, if you leave the UK it may take 10 years to escape the IHT net. For individuals who have been in the UK for less than 20 years there is some relief and the time to exit will be less (3 years for 10-13 years in the UK, 4 years for 14 years , 5 years for 15 years etc).
On top of this, IHT for long term residents will be extended to catch offshore trusts, meaning that clients who previously had 'protected status' are no longer protected and income and gains will be attributed and offshore trusts for long term resident settlors will now fall into the UK relevant property rules (10 year, entry and exit charges). This will be a substantial change for any non-doms settled in the UK with offshore trusts as they will now be subject to UK IHT rules.
Feel free to ask any questions.
