Spring Budget 2024: Changes to the non-dom regime

The Chancellor’s Spring Budget on 6 March 2024 announced measures to abolish the current ‘non-dom’ regime as we know it and replace this with a new “modern, simpler and fairer” residence-based regime from 6 April 2025.

The concept of domicile, which has long been a contentious and ‘grey’ area for a number of years will no longer be determinative of the scope of liability to tax from April 2025, although it will continue to be relevant for earlier periods (and for other legal purposes). There will be an impact on non-resident trusts and additional reforms to the Inheritance Tax regime, which are yet to be fully scoped and are subject to consultation.

Although the full detail of the new provisions is not yet available, the key changes proposed are expected to affect:

  • “FIG (foreign income and gains) regime” for New Arrivers
  • Existing UK resident non-doms
  • Overseas Workday Relief (OWR)
  • Inheritance Tax (IHT)
  • Non-resident Trusts

What you need to know

Please click here to read our summary of the key changes.

What next?

While a simplification of the existing non-dom regime is welcome, as always, the devil is in the detail. For existing UK resident non-doms and those with trusts in particular, a comprehensive review of their tax positions to assess the impact of the changes will be essential. Now is a good time for those who do not have trusts to consider whether this might be an option.

For some, moving abroad may become more attractive (particularly to jurisdictions with more favourable non-dom or remittance basis regimes) and care will also be required around the residence rules. Despite the continued uncertainty around the general election and the possibility that some or all of these changes may be removed, replaced or adapted, there is nevertheless a window of opportunity between now and April 2025 to plan ahead and to ensure that measures are in place to avoid any surprises.

How can we help?

If you have any queries in the meantime or would like to discuss the potential impact of these changes on your personal tax position, please contact us.

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