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 current domicile-based tax regime to one centred on an individual’s residence status.

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 after the move to the residence basis.

At present, where certain criteria are met, non-doms benefit from a special tax regime that exempts overseas income and capital gains from UK tax provided it is kept outside of the UK. There is also a favourable Inheritance Tax regime applying to non-UK assets.

The rules are complex but, in principle, as your connections to the UK increase, either through personal circumstances or by virtue of the duration of your residence, your exposure to UK tax also increases.

It was confirmed in the October 2024 Budget that these existing rules would be abolished with effect from 6 April 2025. From that date the residence status of the individual will be the relevant factor, and the application of the Statutory Residence Test will be an area of increasing focus.

With change on the horizon and the uncertainty that brings, the need to seek specialist advice is paramount. There remain planning opportunities for non-doms, particularly those considering coming to the UK as planning prior to your arrival can result in significant tax advantages going forward. Whilst more limited in scope, there are also potential opportunities for those already resident in the UK.