UK Overhauls Non-Dom Tax Rules: Remittance Basis Gone, New FIG Regime In
The UK government has announced significant changes to its non-dom (non-domiciled) tax regime, set to take effect from 6 April 2025. These changes aim to simplify the tax system and address perceived inequalities. Long-term residents and trusts will be notably affected.
Previously, non-doms could opt for the remittance basis, paying UK tax only on income and gains brought into the country. However, this will no longer be an option after 6 April 2025. Instead, a new four-year foreign income and gains (FIG) regime will be introduced for non-doms who have been non-UK residents for at least ten tax years before becoming UK tax residents.
Long-term residents, defined as UK tax residents for ten or more of the last twenty years, will continue to be subject to inheritance taxes (IHT) on their worldwide assets, even after they cease to be UK tax residents. Trusts with living, UK resident settlors may also have their income and gains attributed to them and taxed appropriately.
The UK non-dom regime and related structures will be replaced, opening opportunities for alternative tax programs in other countries. These include Switzerland's lump sum taxation, Italy's flat tax regime, and residency options in Cyprus, Portugal, and Greece through their respective Golden Visa programs. Additionally, Caribbean citizenship by investment programs, Malta's permanent residency, and Spain's Beckham Law offer tax benefits.
The changes to the UK non-dom rules, first announced in March 2024, will significantly impact long-term residents and trusts. While the final details are yet to be specified, the new four-year FIG regime and the end of the remittance basis will introduce substantial changes. Those affected should consider alternative residency and tax programs offered by other countries.
