The UK government has published a policy paper on non-domiciled taxation, outlining key points that significantly change the taxation model for high-net-worth families and individuals from April 2025.
The new regime will implement many of the reforms to the taxation of non-doms announced by the previous government earlier this year, but also introduces updates that will have long lasting consequences.
Here is our summary of these changes and updates.
New FIG regime replaces domicile
Once the changes come into place in April 2025, Domicile will be replaced by a new four-year regime, known as the “FIG regime,” which exempts non-UK income and capital gains from tax during the first four years of residence. This exemption applies only if the individual has not been a UK resident in the previous ten years. Non-doms outside the FIG regime will not receive any income tax relief in the first year of the new rules.
End of protected trust status
Those not eligible for the FIG regime will now be liable for income tax and capital gains tax held in the trusts they have established.
Changes to Inheritance tax
UK residents for ten years will now be exposed to Inheritance tax on their world-wide assets, and they’ll remain affected for ten years after departure. The government plans to engage with stakeholders to consider potential tweaks to this.
Capital gains tax
The government will allow asset rebasing for capital gains tax purposes to a date yet to be determined. The date for will be confirmed in the Budget in October.
End of excluded property trusts
The government will remove excluded property status from trusts established by UK resident settlors. This could lead to tax under the relevant property regime and under the gift with reservation of benefit rules. The impact on existing structures will be considered with details to be published in the Budget.
Temporary repatriation facility (TRF)
There will be a facility allowing non-UK income and capital gains, to be brought to the UK at a reduced tax rate for a limited period.
Consider your future with IQ-EQ
The government has indicted that they will give further clarity on these changes in the Budget on 30 October. Reach out to us today to discuss your personal situation in more detail. IQ-EQ’s team has vast experience in providing personalised solutions that are unique for each family or individual circumstances. Contact us today to learn more.
About the author
Mirek is IQ-EQ’s Chief Commercial Officer for the UK, Ireland and Crown Dependencies. He has more than 15 years’ experience in financial services, with a particular focus on working with institutional investors to implement and oversee the governance structures for their international investments. As well as being an expert in client service delivery, Mirek is an experienced leader, well versed in organic growth, new client acquisition and jurisdictional expansion.
