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The UK government has announced that it will modernize the tax system by ending the current rules for non-UK domiciled individuals, or non-doms, from April 2025. The government is introducing a new residence-based regime, which will come into force from April 2025.
The current non-dom regime is a favourable tax regime which allows non-doms who are UK resident to opt to use the remittance basis of taxation. This means that whilst they pay tax on their UK income and gains in the same way as UK domiciles, they pay tax on their foreign income or gains (FIG) only when they are remitted, or brought to, the UK.
From April 2025, for new arrivals, who have a period of 10 years consecutive non-residence, there will be full tax relief for a 4-year period of subsequent UK tax residence on FIG arising during a 4-year period, during which time this money can be brought to the UK without an additional tax charge.
Existing tax residents, who have been tax resident for fewer than 4 tax years and are eligible for the scheme, will also benefit from the relief until the end of their 4th year of tax residence.
So, under the new system, anyone who has been a UK tax resident for more than four years will pay UK tax on any foreign income and gains, as is the case for other UK residents.
The reform is expected to generate £2.7 billion in additional annual revenue by 2028-29, in addition to the current £8.5 billion that non-doms pay in taxes each year.
The experts of Investment Migration Insider believe that the reform will lead to a mass outflow of wealthy residents from the country.
Please read also: Portugal will maintain a special tax regime for certain categories of foreigners
Source: The UK Government
Photo by Roberto Catarinicchia on Unsplash
