The non-dom regime is set to end on 5th April 2025 – what does this mean? Residency and domicile are two separate, and quite different, legal concepts, with quite different effects. Domicile ceases to be relevant for UK tax purposes after 5th April 2025, but some transitional relief is available. Aspects of UK tax for which domicile was relevant are now governed by new rules with a connection to residency.
Published 4th November 2024
The “non-dom” regime will end on 5th April 2025 and, together with it, the concept of domicile and the complex remittance basis rules
Residency and domicile are two separate, and quite different, legal concepts, with quite different effects. From 6th April 2025, domicile ceases to be relevant for UK tax purposes, but some transitional relief is available. Aspects of UK tax for which domicile was relevant are now governed by new rules with a connection to residency.
The replacement for the non-domicile regime will be a residence-based test, which allows individuals relocating to the UK to be taxed only on their UK source income and gains for the first four tax years, with no UK tax on any foreign income and gains arising in those years, even if brought to the UK. To be within this four-year foreign income and gains (FIG) regime, individuals must be within their first four tax years of UK residence, following a period of 10 tax years consecutive non-UK residence.
Key points
Until the changes take place on 5th April 2025 the regime which has been largely unchanged since 2017 will prevail. The following applies until 5th April 2025 only.
- Your country of domicile is often described as the country you consider to be your “mother country”. But if you were born in the UK you will normally be challenged if you claim that you are domiciled elsewhere. Everyone has a domicile, but it can change. For example a second generation of a migrant family may consider that their country of birth (and not the parents’ country of birth) is their domicile. If a person remains in the UK for more than fifteen years, it will be presumed that the UK is the new domicile.
- UK residents who are not domiciled in the UK will normally pay UK tax on all their income arising outside the UK unless they use the remittance basis. There is a charge for using the remittance basis starting at £30,000 for those who have been UK resident for seven out of the last nine years (before that there is no charge). This applies to those satisfying certain additional tests as to how long they have been UK resident. The charge increases when you have been resident in the UK more than twelve years out of the last twenty years and the remittance basis is not available after you have been resident in the UK for more than fifteen out of the last twenty years. Special rules apply if the unremitted income and gains amount to £2,000 or less.
Transitional arrangements
Individuals who have accumulated income and gains overseas and who have been taxed on the remittance basis may now take advantage of the Temporary Repatriation Facility (TRF). This will allow them to designate amounts derived from Foreign Income and Gains and held overseas and to pay a reduced rate of tax. This arrangement will run for three years from 5th April 2025.
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The non-dom regime is set to end on 5th April 2025 – what does this mean? Residency and domicile are two separate, and quite different, legal concepts, with quite different effects. Domicile ceases to be relevant for UK tax purposes after 5th April 2025, but some transitional relief is available. Aspects of UK tax for which domicile was relevant are now governed by new rules with a connection to residency.
Autumn Budget 2024: key points at a glance: The UK Budget is that occasion each year (and sometimes twice in a year) when the UK government outlines the extra money it needs and how it is going to spend it. Changes to the tax rules are what interest us here. The Budget of 30th October 2024 included a lot of tax changes – some quite big in effect, and we are not going to recount them all here. This article outlines the changes most likely to affect the owners of UK investment property, and within each subject, only deals with aspects directly impacting landlords.
Autumn Budget 2024: key points at a glance: The UK Budget is that occasion each year (and sometimes twice in a year) when the UK government outlines the extra money it needs and how it is going to spend it. Changes to the tax rules are what interest us here. The Budget of 30th October 2024 included a lot of tax changes – some quite big in effect, and we are not going to recount them all here. This article outlines the changes most likely to affect the owners of UK investment property, and within each subject, only deals with aspects directly impacting landlords.
Autumn Budget 2024: key points at a glance: The UK Budget is that occasion each year (and sometimes twice in a year) when the UK government outlines the extra money it needs and how it is going to spend it. Changes to the tax rules are what interest us here. The Budget of 30th October 2024 included a lot of tax changes – some quite big in effect, and we are not going to recount them all here. This article outlines the changes most likely to affect the owners of UK investment property, and within each subject, only deals with aspects directly impacting landlords.
The information contained in this article is believed to be correct at the time of publication. The content of this article is intended to be a brief summary of the principal points of the legislation or proposed legislation only, and it is provided for general guidance only. It may not take into account subsequent changes in the law and of necessity it omits much detail. Taxation is a complicated subject and is subject to change. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article. If the subject matter is of interest you should contact us to see if there is a relevant update, and to take professional advice which takes into account your circumstances.