UK Treasury Non-Domicile Tax Status

Published on: Nov 4, 2024

On Oct. 30, UK Treasury announced changes to taxation of non-doms.

  • UK Treasury, UK HMRC announced amendments to taxation of non-UK domiciled individuals, accompanied by related documents including a technical note.
  • On the same day, UK Treasury issued details of autumn budget 2024, see #231484.
  • Follows UK Treasury Mar. 2024 plan to amend tax of non-domiciles, see #203268.
  • New Measures
  • From Apr. 6, 2025, current rules for the taxation of non-UK domiciled individuals ends.
  • The concept of domicile as a relevant connecting factor in the UK tax system will be replaced by a system based on tax residence which is internationally competitive.
  • The government will implement a 4-year foreign income and gains (FIG) regime.
  • Replace domicile-based system for inheritance tax (IHT) with residence-based system.
  • Introduce a new temporary repatriation facility (TRF) to allow individuals previously taxed on the remittance basis to designate amounts derived from pre-Apr. 6, 2025 FIG, and pay reduced tax rate for a period of 3 tax years, starting from 2025 to 2026.
  • This facility will be extended to distributions from qualifying overseas trust structures.
  • Reform overseas workday relief by removing the need to keep the income offshore, extend the period that employees can benefit from the relief from 3 to 4 years.
  • Government seeks to better understand where there is ambiguity, undue complexity and inconsistency in the application of the personal tax offshore anti-avoidance rules across settlements, transfer of assets abroad and capital gains tax (CGT).
  • Supporting Documents
  • The technical note details main tax changes effective Apr. 6, 2025, for non-domiciles already in the UK and individuals moving to the UK after non-residency.
  • Tax information and impact note for this measure provides further information on the impacts of the reforms and draft legislation has been published alongside this.
  • A call for evidence, which closes on Feb. 19, 2025, to understand and identify areas where the personal tax offshore anti-avoidance rules could be improved or updated.
  • A report which examines the response of taxpayers who have been deemed domiciled in the UK due to the 2017 deemed domicile reforms to non-dom tax regime.
  • Effectiveness
  • Call for evidence closes on Feb. 19, 2025 and main changes apply from Apr. 6, 2025.
Regulators
UK HMRC; UK Treasury
Entity Types
B/D; CNSM; IA
Reference
PR, Nt, Rp, CfE, 10/30/2024; TCGA 1992 (UK); ITA 2007 (UK); IT(TOI)A 2005 (UK);
Functions
Compliance; Financial; Reporting; Settlement; Tax; Treasury
Countries
United Kingdom
Category
State
N/A
Products
Equity; Fund Mgt; Securities; Wealth Mgt
Rule Type
Final
Regions
EMEA
Rule Date
Oct 30, 2024
Effective Date
Feb 19, 2025
Rule ID
231789
Linked to
Reg. Last Update
Oct 30, 2024
Report Section
UK