Changes to Non-UK Domiciled tax rules

It was announced as part of the Spring Budget measures earlier this year that there are to be significant changes to the rules for non-UK domiciled individuals. From April 2025, the government will abolish the preferential remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler residence-based regime.

The government will implement the 4-year foreign income and gains (FIG) regime announced by the previous government at the Spring Budget. This will provide 100% relief on FIG for new arrivals to the UK in their first four years of tax residence, provided they have not been UK tax resident in any of the 10 consecutive years prior to their arrival.

The policy announced by the previous government, which provided a 50% reduction in foreign income subject to tax for individuals who lose access to the remittance basis in the first year of the new regime, will not be introduced. The government is currently considering transitional arrangements for affected non-UK domiciled individuals in respect of CGT and a new Temporary Repatriation Facility (TRF) for individuals who have been taxed on the remittance basis.

The government has also confirmed they are reviewing some other key areas of the previously announced reforms to ensure the new regime is both fair and competitive.

Finally, the government has confirmed that it intends to move from a domicile-based system to a residence-based system for Inheritance Tax from 6 April 2025. Further details will be published in due course.