Major changes to UK’s non-dom rules: What you need to know before April 2025

From 6 April 2025, the UK will abolish the non-domicile (non-dom) status and shift to a residence-based tax system. This means significant changes for individuals who have used the remittance basis to manage their foreign income and gains. Here’s a quick breakdown of the new rules and how you can prepare.

What’s changing?

1. No more remittance basis: Non-doms will no longer be able to pay tax on foreign income and gains only when brought into the UK. Instead, they’ll pay tax on worldwide income, just like UK residents.
2. 100% relief on foreign income: New UK residents who haven't been here in the past 10 years will get 100% relief on foreign income and gains for up to four years.
3. Temporary Repatriation Facility (TRF): For those who have previously been taxed under the remittance basis and have untaxed foreign income, the TRF provides an optional service to remit this income at reduced rates. Individuals can elect to remit designated unremitted income arising before 5 April 2025, and it will be taxed at 12% for 2025/26 and 2026/27, and 15% in 2027/28. Act quickly - this facility is only available for a limited time.
4. Overseas Workday Relief (OWR): OWR remains for internationally mobile employees (IMEs) but is now tied to the four-year period of the FIG regime. New IMEs arriving after 6 April 2025 can access this relief if they’ve not been UK residents in the last 10 years, with a financial limit of the lower of 30% of qualifying income or £300k per tax year.
5. Inheritance Tax (IHT) overhaul: A new residence-based IHT system means long-term UK residents will now be taxed on worldwide assets, including those held outside the UK. If you’ve been in the UK for 10 out of the last 20 years before death or a chargeable event, your global assets will now be subject to UK IHT.
6. Capital Gains Tax (CGT) re-basing: Non-doms who’ve used the remittance basis can re-base their foreign assets for CGT purposes as of 5 April 2017, which could reduce future capital gains tax when assets are sold.

What should you do now?

Everyone’s circumstances are unique, so it’s crucial to review how these changes impact your tax position. Get in touch with us today to discuss your specific situation and ensure you're fully prepared for the transition. We'll help you navigate the new rules and create a tailored tax plan that works best for you. Don’t wait - plan now!