Preparing for the upcoming changes to non-domiciled taxation

Our experienced team of international tax advisers is here to guide you through significant upcoming changes affecting non-domiciled individuals (non-doms) in the UK.

With changes set to take effect from 6 April 2025, it’s crucial to understand how these will impact your tax obligations and to plan accordingly.

Abolition of remittance basis: The remittance basis will be replaced by a new 4-year Foreign Income and Gains (FIG) regime for new UK arrivals and certain transitional arrangements for current non-domiciled residents.
Under the new 4-year FIG regime, where individuals arrive in the UK after 10 consecutive tax years of non-residence, they can annually claim for 4 tax years to forgo their Income Tax Personal Allowance and Capital Gains Tax Annual Exempt Amount and have their foreign income and gains be exempt from UK tax (regardless of whether remitted to the UK).
Transitional arrangements: Non-doms that have previously claimed the remittance basis may be able to utilise transitional arrangements.

Non-doms will only pay UK Income Tax on 50% of their foreign income for the 2025/26 tax year.
Non-doms will benefit from a 12% rate for remitting pre-April 2025 foreign income and gains in the 2025/25 and 2026/27 tax years.
Capital Gains Tax can be reduced by rebasing the base cost of assets to their value on 5 April 2019.

Be aware, that under a Labour Government, this transition period may be abolished or reformed further.
Overseas workday relief (OWR) changes: From 6 April 2025, the rules for claiming OWR will change, removing the domicile requirement and instead focusing solely on UK residency.

Earnings from foreign employment duties during the first three years of UK residence will be exempt from UK tax, regardless of remittance.
Previously OWR could potentially be claimed again after three consecutive years of non-residence, but this will become 10 consecutive years of non-residence.
Inheritance Tax & trusts adjustments: Non-doms have until April 2025 to create trusts that are excluded from UK Inheritance Tax. Future changes may shift the tax system from a domicile-based to a residency-based system after 10 years in the UK. It is worth noting that a Labour government may make changes that would bring the foreign assets of excluded property trusts within the scope of UK IHT or that could potentially bring forward this April 2025 deadline.

For a deeper dive into these changes, read our latest guidance.

Why act now?

Whilst some of the dates proposed may seem a way off, early action allows for greater preparation including:

Pre-emptive planning: With potential changes from future governments, planning now can safeguard against unfavourable modifications to the tax rules.
Strategic repatriation: Utilise the Temporary Repatriation Facility for favourable tax rates on foreign income and gains.
Trusts and inheritance tax: Establish trusts before potential changes in April 2025 to potentially maximise tax advantages under current laws.

Our team is ready to assist with personalised tax planning strategies to navigate these changes effectively.

Whether it’s adjusting your residency status, managing trusts, or planning for tax obligations, Grunberg & Co offers expert advice tailored to your unique situation.

As a member of Reanda International – a leading network of accountants across the world – we are ideally poised to help individuals with complex international tax arrangements.