The Government is set to abolish non-dom status over a multiple-year transition period. The aim is to bring non-doms’ tax contributions into the UK system, thus increasing the Treasury’s total tax revenue.
The domicile system will be replaced with a residence-based regime, which will bring foreign earnings into the UK Inheritance Tax (IHT) system.
From 6 April 2025, the concept of domicile will be replaced by long-term residency. Looking back over a 20-year period, if someone is resident for income tax purposes in the UK for 10 out of those 20 years, then they will be treated as being a long-term resident for IHT and taxed accordingly on the value of their worldwide assets.
The Government will also introduce a Temporary Repatriation Facility (TRF). This will enable non-doms with historic (prior to April 2025) untaxed foreign income and gains (FIG) to pay reduced tax as a one-off payment (on some or all the amount), meaning it can be brought into the UK without further income or capital gains liabilities.
While the initial transition period was announced as being April 2025 to April 2027, the Chancellor announced minor changes that are intended to make the process more favourable to non-doms.
