April 2025 tax changes for non-doms: helping you prepare

Country of domicile

Date of birth if you were born in the UK*

Date you arrived in the UK (if applicable)*

Historic residence position*

If you haven’t been continuously resident in the UK for tax purposes since your above date of arrival, please provide a brief overview of your residence history.

Long term residence plans

1. How long you intend to remain resident in the UK

2. If you were to leave the UK, the countries you would consider moving to

3. Any other details which may dictate your ability/likelihood of moving overseas/to the UK

Remittance basis*

Please provide the most recent tax year in which you made a remittance claim (if applicable)

Remitting money to the UK

Where claims for the remittance basis have previously been made, please confirm:

1. Whether you have maintained overseas segregated accounts

2. Whether you continue to hold income/gains overseas which have previously been sheltered from UK income tax

3. The quantum of your UK monies/clean capital

4. Whether your UK monies/clean capital are sufficient to fund your UK expenditure for the foreseeable future

Family

Please provide the names, ages and domiciles of your spouse/civil partner and/or children.

Restructuring your affairs

Please consider how you feel about:

1. Beginning to pass wealth to the next generation

2. Changing your investment strategy

3. Establishing trusts and/or companies to hold relevant assets

Offshore trusts

1. Are you the beneficiary of any UK or non-UK trusts?

2. Are you the settlor of any UK or non-UK trusts?

Overseas assets

It’s helpful to list all of your assets with: purchase date; purchase price; value at 5 April 2017; current value.

* Provided BKL have filed your most recent tax returns, we should already have this information.

Current legislation

Currently, non-doms can claim the remittance basis within their annual tax returns. The remittance basis shelters overseas income and gains from the scope of UK tax, provided they are not remitted to the UK.

A claim also has the following effects:

• The loss of UK tax-free allowances in any year the remittance basis is claimed
• Once an individual has been resident in the UK for at least seven of the prior nine UK tax years, a £30,000 charge (known as the remittance basis charge) applies in each year a claim for the remittance basis is made
• Once an individual has been resident in the UK for at least 12 of the prior 14 UK tax years, the above-mentioned remittance basis charge increases to £60,000

Once an individual has been resident in the UK for at least 15 of the prior 20 tax years, they are “deemed UK domiciled” for UK tax purposes and are therefore unable to claim the remittance basis.

Proposed new legislation

The remittance basis regime will be abolished from 6 April 2025 and will be replaced by the Foreign Income and Gains (FIG) regime.

Regardless of an individual’s domicile position, the FIG regime will be available to any individuals who are in their first four years of UK residence, after a period of 10 consecutive years of non-UK residence. During these four years, new arrivers will not be subject to UK tax on their foreign income and gains, nor on distributions from non-UK resident trusts. Overseas income/gains arising within this four-year period can be remitted to the UK without further tax charges.

Once the four-year period has ended, individuals will be subject to UK tax on their worldwide income and gains.

Proposed transactional reliefs

Two transitional reliefs are set to be introduced:

• Temporary Repatriation Facility (TRF): those who have previously claimed the remittance basis can bring pre-April 2025 “tainted” funds to the UK and pay a reduced rate of tax for a limited time only. These rates are 12% in the 2025/26 and 2026/27 tax years, then 15% in the 2027/28 tax year.
• Individuals who have claimed the remittance basis in any tax year from 2017/18 to 2024/25 (inclusive) but will not qualify for the FIG regime will receive an opportunity to rebase overseas assets so that CGT is only paid on the increase in value from 5 April 2017 (where the asset was held prior to this date) to the date of the sale.

Current legislation

Currently, non-doms are only subject to IHT on transfers of assets situated in the UK, unless an individual is deemed UK domiciled or election has been made to treat an individual as domiciled in the UK.

For IHT purposes, an individual is “deemed UK domiciled” if they meet any of the below conditions in the year of the event subject to IHT:

• Was domiciled in the UK under general law at any point in the last three years;
• Was born in the UK with a UK domicile of origin and is UK resident; or
• Has been resident in the UK for at least 15 of the 20 prior tax years.

If an individual leaves the UK, deemed UK domiciled status will continue for IHT purposes for three years after their departure.

Proposed new legislation

An individual’s IHT exposure will no longer be dictated by their domicile position. Provided an individual has not been resident in the UK for 10+ of the prior 20 UK tax years, they will only be subject to UK IHT on their UK assets.

Once an individual has been resident in the UK for 10 of the prior 20 UK tax years, they will be considered long term resident (LTR) for inheritance tax purposes, at which time their worldwide estate will be subject to IHT.

A “tail” will apply to keep overseas assets within the scope of UK IHT once an LTR leaves the UK. The tail will range from 3 to 10 UK tax years, depending on how long the individual was resident in the UK prior to their departure.

Proposed transactional reliefs

For individuals who were non-UK domiciled at 30 October 2024 (i.e. the date of Autumn Budget 2024), but are non-UK resident from the 2025/26 UK tax year onwards, the current rules for deemed UK domiciled individuals will apply. If these individuals resume UK residence at any time in the future, the new rules will apply from the date of return.

Current legislation

The tax regime applicable to settlor-interested non-UK trusts, which were settled before the settlor became deemed UK domiciled, is complex. Broadly, since 6 April 2017, the following key concepts are:

• Non-UK domiciled and deemed UK domiciled settlors are protected from an immediate tax charge on income and gains as they arise, other than in respect of UK source income which is taxable
• Non-UK assets are outside the scope of UK IHT

There are important conditions to consider in maintaining these trust protections. Most notably, the trust must not be “tainted” at any time after the settlor becomes domiciled or deemed domiciled in the UK. This includes the addition of any value to the trust, however small, either by the settlor or by any associated trust.

Proposed new legislation

From 6 April 2025, income and gains arising in both new and existing settlor-interested trusts will be taxed on the settlor, unless the settlor qualifies for the new FIG regime.

Pre-6 April 2025 foreign income and gains will remain protected unless the settlor receives a distribution or benefit which can be ‘matched’ to pre-April 2025 income or gains under the existing rules. Qualifying individuals in receipt of such distributions in the period 6 April 2025 to 5 April 2028 may be able to benefit from a low tax rate under the TRF transitional relief.

Settlors and other beneficiaries who qualify for the FIG regime will be able to receive benefits or distributions from 6 April 2025 tax-free, regardless of whether they are received in or brought to the UK.

Current legislation

Currently, an individual can claim relief from UK tax for duties performed overseas if:

• They are non-UK domiciled for the entire tax year;
• They make a claim for the remittance basis in respect of that tax year; and
• They perform duties of employment wholly or partly outside the UK in a tax year which is either:
  • The first tax year immediately after three consecutive tax years of being non-UK resident; or
  • One of the two following tax years

Any earnings qualifying for relief are not taxable in the UK unless they are remitted to the UK, i.e. they must be kept out of the UK indefinitely to remain out of the UK tax net.

Proposed new legislation

Relief will continue to be available for employees who qualify for the new FIG regime, providing relief on earnings related to employment duties performed overseas.

This relief will now be available for four tax years and there will be no restriction on bringing earnings subject to the relief into the UK.

However, there will be a new limit on the amount of relief an individual can claim each year, being the lower of 30% of the qualifying employment income and £300,000.