- From 6 April 2025, the existing remittance basis system of taxing non-UK domiciled individuals on foreign income and gains will be abolished. Instead, individuals will be exempt from UK taxation of foreign income and gains for the first four tax years of residency. Individuals must have been non-UK resident throughout the previous ten tax years to be eligible for the new regime.
- Transitional arrangements are to include:
- A “Temporary Repatriation Facility” from 6 April 2025 to allow foreign income and gains received pre-6 April 2025 to which the remittance basis applies to be subject to a reduced tax rate on remittance for a limited time period. Designated amounts will be charged at a rate of 12% in the 2025/26 and 2026/27 tax years rising to 15% in the 2027/28 tax year. Current and past remittance basis users will be able to rebase personally held foreign assets to their value on 5 April 2017 on disposal where certain conditions are met.
- The government will retain a form of overseas workdays relief which will be for a four year period and will be subject to an annual financial limit of the lower of £300,000 or 30% of net employment income. From 6 April 2025, eligibility for overseas workday relief will be primarily based on whether employees are eligible for the four-year FIG regime.
- The current domicile-based inheritance tax system is to be replaced with a new residence-based system from 6 April 2025. Individuals who have been UK resident for 10 out of the last 20 years prior to the tax year in which the chargeable event (including death) arises will be subject to inheritance tax on worldwide assets. The time the individual remains in scope after leaving the UK will be shortened in certain cases, including where they have only been resident in the UK for between 10 and 19 years.
- Changes will also be made to the taxation of trusts settled by non-UK domiciled individuals. These are to include:
- Removal of the existing regime for taxing income and gains received by trusts (the protected trust regime) for individuals who have settled assets on trusts from which they can benefit who are not eligible for the new four-year regime for foreign income and gains, and
- The inheritance tax position of trusts following the long-term residence position of the settlor, as opposed to being fixed based on the settlor’s domicile position when assets were settled on trust.
- The government has published a call for evidence to review offshore anti-avoidance legislation, including the transfer of assets abroad and settlements legislation, to “modernise the rules and ensure they are fit for purpose”.
- Timing: The new residence-based taxation regimes will apply from 6 April 2025. It is not anticipated that any transfer of assets abroad or settlements legislation changes will be implemented before the 2026/27 tax year and the call for evidence related to this closes on 19 February 2025.
Resources (click to open)
- Technical Note: Reforming the taxation of non-UK domiciled individuals (HMRC, October 2024)
- Open call for evidence: Offshore Anti-Avoidance legislation (HMRC consultation, closes 19 February 2025)
- Private client aspects of Autumn Budget 2024 | TaxScape | Deloitte (October 2024)
- Autumn Budget 2024: Reform of the UK’s “non-dom” regime, inheritance tax and trusts | TaxScape | Deloitte (November 2024)
- Non-UK domiciled individuals (HMRC policy paper, 29 July 2024)
