What the new tax regime means for non-doms

The Autumn Budget contained significant changes to non-dom offshore tax structures.

If you are tax planning in Cheshire and have a permanent home outside of the UK, here is our introductory guide to the new regime, which takes effect from 5 April 2025.

At present, non-doms are classified as resident in the UK but domiciled elsewhere, and with no intention of remaining in Britain. However, from spring, domicile, while remaining a common-law concept, will cease to apply when determining liability to UK tax.

Instead, new residence-based criteria will be introduced that will be taken into account when considering liability for inheritance tax (IHT), income tax and capital gains tax (CGT).

This Statutory Residency Test (SRT) will assess UK residence since 2013/14, while the existing system will continue to apply for previous years. If someone divided their time between the UK and another territory, this period will count as UK residence.

Domiciles will still have a role in relation to older offshore structures and therefore their interest to the UK taxman.

The end of domicile as a determinant of tax status reflects its increasingly anachronistic value in an era of rapid international mobility. Furthermore, it had become highly subjective, making it difficult and expensive for tax authorities to investigate. It is hoped the new SRT will offer greater clarity on tax residence and certainty on which individuals are exposed to UK taxes.

In further changes, 2025 will see the introduction of a 4-year foreign income and gains tax regime for non-UK tax residents over the previous decade.

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