For the non-doms
Finally, one of the most significant and complex changes announced at the Spring Budget was the abolition of the non-domiciled regime from April 6 2025.
The proposed policy is a move away from the long-standing convention of attracting overseas individuals to the UK by allowing them access to the remittance basis of taxation, which will enables them to shelter their non-UK income and capital gains from UK tax, provided those funds were not brought into the UK.
Instead, the chancellor intends the UK to move to a residence-based approach, whereby overseas individuals can come to the UK and not pay tax on their non-UK income and capital gains for the first four tax years of residence.
In that time they can also bring their overseas income and capital gains without paying UK tax. However, if they remain resident in the UK after those four tax years, they will be subject to UK tax on their worldwide income and capital gains.
It is well known that there were political reasons for changing the non-dom regime; however, the proposed changes will also simplify the rules for those coming to and from the UK.
It remains to be seen whether four years is enough of a grace period to attract high-net-worth individuals, particularly for those who want to come to the UK for their children’s schooling.
The other big unknown is how many of the existing non-doms will look to leave the UK before the new rules kick in.
Associated rule changes relating to inheritance tax and trusts have also been suggested, which have the potential for considerable tax implications for those involved.
In the coming months, the movements of wealthy individuals in the UK and the precise wording of the new rules, when published, will be examined closely.
Sam Dewes is private client partner at HW Fisher