The Death of the Non-Dom Status
Labour's first Autumn Budget has announced the abolition of the UK's long-standing Non-Dom regime.
The Current Landscape
For decades, the Non-Dom regime has offered a safe harbour for international wealth, allowing UK residents with permanent homes abroad to:
Pay UK tax only on UK-sourced income
Keep overseas earnings outside the UK tax net (unless remitted)
Enjoy significant inheritance tax advantages
Maintain international flexibility in wealth management
The Transformation from April 2025
The government announced the following at the Autumn Budget 2024:
The complete abolition of Non-Dom status
Introduction of a new residence-based system
Removal of 50% discount on foreign income
Full UK inheritance tax exposure
CGT rebasing date set at 5 April 2017
The New Horizon: The FIG Regime
To soften the landing, a new Four-Year Income and Gains (FIG) regime will offer:
100% relief on foreign income/gains for new arrivals
Four-year tax holiday for qualifying individuals
Requirement: No UK residence in previous 10 years
More structured approach to temporary residence
Strategic Planning Points
Before changes from April 2025, we suggest a review of assets, including auditing international holdings, consider restructuring opportunities and evaluate your UK exposure.
If you have trusts, this is the time to review existing trust structures, consider new protective arrangements and evaluate settlor-interested trust positions.
With investments, review investment portfolios, consider repatriation timing and plan around the 2017 rebasing date.
In terms of long-term planning and residency status, evaluate your qualification for the FIG regime, consider timing of UK entry or exist, and ultimately review your long-term residence strategy.
While some international wealth managers have called this a "colossal misjudgment," others see it as an opportunity to modernize the UK's approach to international wealth. The key will be in the detail of the new residence-based system and how it compares internationally.
Looking Ahead
While the end of Non-Dom status represents a significant change in UK tax policy, careful planning and proper advice can help navigate these changes effectively. The new FIG regime offers some opportunities, particularly for new arrivals, but requires careful consideration and timing.
