Future modifications of non -domestic rules
Major changes to existing non-domestic rules (non-dom)!
At the start of the new fiscal year (April 6, 2025), there are major changes to existing non-domestic rules (non-DOM), which could have a significant impact on non-British nationals who lived in the United Kingdom for a number of years, as well as British residents wishing to move permanently abroad. These modifications are designed to eliminate long-standing non-Dom tax benefits which have allowed individuals to exclude income, gains and foreign assets from the scope of the British tax.
What are the current non -domestic rules?
Non-nomes are people who live in the United Kingdom but have a permanent home (domicile) in another country. For years, this meant that individuals could pay less / no tax in the United Kingdom on foreign income and capital gains, unless they bring these funds (given) to the United Kingdom. He also exempt from assets abroad detained from the UK inheritance tax (IHT). This system attracted rich individuals from abroad to settle in the United Kingdom.
For British citizens, it has often been difficult to obtain the status of “non-dom”, because the HMRC will generally consider that, no matter how long an individual has remained abroad, their real “house” is still in the United Kingdom and therefore remains in the United Kingdom.
Upcoming changes in non -domestic rules
The new rules will take care of people taxed according to their residence status, rather than their home. From April 2025, non-doms will no longer be able to indefinitely claim the basis of sending funds. After a certain period, non-Domains will be imposed on their income and their global gains, as are the other British tax residents.
One of the most important changes is that people who have experienced in the United Kingdom for a large time will no longer obtain advantageous tax treatment for revenues and offshore assets. The HMRC will tax individuals depending on the duration of a person resident in the United Kingdom, rather than their status as a domicile.
The four -year -old foreign income and winnings scheme
The new system has a “foreign income and gains” regime (FIG) for people who return to the United Kingdom after having lived abroad. If someone has been a non-UK tax resident for at least 10 years, he can use this diet for four years on his return. During this period, they will not pay tax on foreign income or earnings unless they integrate these assets in the United Kingdom. After these four years, their world income and gains will be imposed like that of any other British resident.
The installation of temporary repatriation (TRF)
Another new concept and a new opportunity for non-doms is TRF. This allows individuals to bring income and foreign assets to the United Kingdom to a reduced tax rate. For income or gains that have not been brought to the United Kingdom by April 2025, individuals can move funds to the United Kingdom at a 12% tax rate during the 2025/2026 and 2026/27 taxation years, going to 15% in 2027/2028. This offers a window so that non-gypsies bring back foreign income and gains in the United Kingdom with a reduced tax rate, but it is only available for assets held before the new rules take effect.
Changes in the inheritance tax rules
In addition to variations in income and capital gains tax, the HMRC also modifies the rules of succession tax (IHT). As of April 6, 2025, British residents will be responsible for the IHT on global assets if they have been a British resident for 10 years over the last 20 years. This is a significant change, as this means that British long -term residents will be taxed on their global assets when they die, including those that have been held abroad.
If someone leaves the United Kingdom after being resident for a long time, HMRC can still tax their succession for several years. The duration of the Tax on the inheritance of the United Kingdom applies after the departure of someone depends on the duration of the United Kingdom. In short, people who have been residents of the United Kingdom for 10 years or more will have current tax obligations for years, even after their departure.
Conclusion
The assets located in the United Kingdom will always be subject to the IHT, regardless of an individual’s residence status. However, these changes mark a significant change in the way the United Kingdom taxes income, gains and foreign assets. Non-subsidiary will no longer have the same tax advantages, and their world revenues and their wealth will be subject to British tax once they meet certain criteria for residence bases. Although these changes can be difficult for those who previously relied on the non -domestic system
A positive planning point is that for people with the intention of retiring or moving permanently abroad, there is now a clear understanding, established in legislation, only after a maximum of ten years of residence abroad, because the individual of the United Kingdom can be considered as not domiciled by the United Kingdom.
Following steps
With the major changes in existing non-domestic rules (non-dom), it is important to collect correct tax advice to avoid an expensive error. Please contact etc tax for more advice.
