UK revokes Non-Domicile status
From next year, the United Kingdom will lose one of its major tax advantages for wealthy foreigners. As of April 6, 2025, the Non-Domicile (Non-Dom) regime, which allows, under certain conditions, permanent residence in the UK and no tax on income earned outside the country, will no longer apply.
So what happens now? What tax rules will apply in Britain after the Non-Domicile regime is abolished? What to do if you are not satisfied with such rules? Intelligent Solution Group specialists have prepared explanations.
Peculiarities of Non-Domicile status
A person with Non-Domicile status is a UK resident whose permanent place of residence (domicile) for tax purposes is outside the UK. Such a person is entitled to be taxed on a remittance basis for 15 years. Income and capital gains from UK sources are taxed, and worldwide income is only taxed if transferred to or used in the UK.
For example. A person receives rental income from property abroad or dividends from foreign companies. These incomes are not taxable in the UK until they are deposited in a UK bank account, assets in the country are bought with them and so on. So, earned a million abroad, took 100 thousand of it to Britain - paid tax on 100 thousand.
There is no charge for using remortgaging for seven years of tax residency. Then applying for this method of taxation costs £30,000 a year, and after 12 years of tax residency this fee increases to £60,000. Once a taxpayer has been UK tax resident for 15 out of 20 tax years, they are considered domiciled for UK tax purposes and can no longer claim tax relief.
Reasons for tax changes in Britain
According to HM Revenue & Customs, around 74,000 people will have non-dom status between 2022 and 2023. However, it has been criticized from time to time in government circles and in the media. Finally, the catalyst for the revocation was the scandal in 2022 surrounding Akshata Narayan Murthy, wife of former Prime Minister Rishi Sunak, who also enjoyed the Resident Non-Domiciled tax regime. After Labor came to power in the summer of 2024, the issue of the abolition of Non-Domicile status was finally resolved.
New Foreign Income and Gains (FIG) tax regime
The new tax rules for wealthy foreigners will be simpler but less favorable. The FIG regime entitles foreigners to pay no tax on worldwide income (subject to application) for the first 4 years of their stay in the UK, whether or not the funds were remitted to Britain. These exemptions apply to:
- individuals who arrived in the country after April 6, 2025;
- current tax residents who have held this status for less than 4 years (valid only until the end of the fourth tax year of residence).
After the four-year period, tax credits can no longer be claimed and the individual will be subject to UK tax on their worldwide income under the general rules applicable to citizens and residents.
Alternatives to the UK Non-Domicile
After April 6, 2025, foreigners residing in the United Kingdom and benefiting from the non-domicile regime should consider new tax optimization strategies. Get in touch - we will develop an individual tax optimization plan for you.
In particular, we suggest considering relocation to those jurisdictions where the Non-Domicile tax regime in any variations is still in force. For a free consultation, please contact the Intelligent Solution Group manager in a convenient way for you.