Residency & Domicile
Helping you to navigate the changing UK tax landscape
Are you a non-dom currently residing in the UK? We have put together some updated guidance on how to best protect your position in light of impending regulation changes.
Non-doms in the UK
Previously, the UK’s non-domiciled (non-dom) tax rules were designed to provide certain tax advantages to individuals who are resident in the UK but are not domiciled there. Over recent months, news of major changes to the UK non-dom rules have sparked numerous discussions and concerns over what the future looks like for non-doms in the UK, and the potential tax consequences they face.
Where are you domiciled?
Domicile is a complex legal concept that generally refers to the country that a person treats as their permanent home or has a substantial connection with. It’s different from nationality or residence. The two key types of domicile status to note for tax purposes are:
- Domicile of Origin: Acquired at birth, usually from the father.
- Domicile of Choice: Acquired by a person who moves to a new country with the intention of living there permanently or indefinitely.
Need help understanding the tax implications of where you are domiciled? We can help. Knowing your domicile status is key to understanding your tax status, both here in the UK and in your country of origin. It is essential to have a clear understanding and plans in place to manage the tax consequences if you are wanting to change your domicile of origin to a domicile of choice.
Residency status
What about an individual’s residency status?
An individuals domicile status is a separate factor entirely to a person’s residency status. An individual is considered a UK resident if they meet certain criteria outlined in the Statutory Residence Test (SRT), which considers factors such as the number of days spent in the UK, ties to the UK (like family, accommodation, work), and the purpose and frequency of visits.
Current tax rules
Taxing non-doms in the UK
Currently, non-doms can choose how their foreign income and gains are taxed in the UK. The two main options for the taxation of non-doms are through the ‘Arising Basis’ or, the ‘Remittance Basis’. The Arising Basis works by taxing all worldwide income and gains as they arise, whereas the Remittance Basis sees only UK income and gains, and foreign income and gains remitted (brought) to the UK, being taxed. The term remittance here refers to bringing foreign income or gains into the UK, which then becomes taxable, and includes transferring money into a UK bank account, using foreign income to pay for goods or services in the UK, or gifting or loaning money to a family member who then uses it in the UK.
The law in the UK stipulates that once an individual has been resident for 15 out of the last 20 years, they become deemed domiciled and lose access to the remittance basis, being taxed on their worldwide income and gains.
What’s Changing?
What’s changing?
The 2024 Spring Budget saw ex-chancellor Jermery Hunt, set out the Conservative’s future plans for non-doms by announcing the scrapping of the remittance basis. This policy change has been a long running pledge of Labour, and with a new Labour government at the helm, the future for UK non-doms is uncertain.
So, what is next for non-doms? We can expect the Labour government to fundamentally change taxation for non-domiciled, UK resident individuals, but how these changes will come into fruition and what the new rules will look like, is for now, unclear.
Non-doms should carefully take time to fully understand the tax implications any changes will have on their positions. With this in mind, non-doms are strongly advised to consider the following points:
- Whether any assets they may have in the UK are standing at a gain
- The current tax structures they currently have in place
- The impact on double taxation and how assets may be taxed
Leaving the UK? Let’s map out your exit plan
The looming changes to non-dom tax has sparked a rise in departures from the UK
Destinations such as Italy, Portugal, Switzerland and the UAE are becoming key contenders for non-doms relocating away from the UK on the back off the impending rule changes.
Italy offers an enticing option with the introduction of the Investors Visa in 2020. This scheme allows foreign nationals to pay a €100,000 (an estimated £84,290) lump sum in tax per year and a further €25,000 (an estimated £21,072) per family member for a period of 15 years.
Other jurisdictions such as the UAE, are also being highly considered for a new residence. The UAE boasts attractive incentives to wealthy investors who are looking to relocate by having no income tax levied on individuals and offering several residence visa options.
Read moreGetting the right advice
Are you planning to move abroad, or perhaps you’re considering settling in the UK? Navigating the rules surrounding residency can be complex, and you might feel uncertain about how to become—and, more importantly, remain—non-resident for tax purposes. Therefore, seeking expert advice is crucial to ensure each step of your move is handled smoothly and efficiently.
Our qualified advisers thoroughly review your circumstances and provide guidance on the necessary steps to become either resident or non-resident for UK tax purposes. Additionally, we offer ongoing support, monitoring the number of days you spend in the UK to ensure your residency status remains accurate and compliant.
Got some questions? Reach out to our experts today for residency and domicile tax advice tailored to your needs.
We can help with planning your move from the UK
Residency & Domicile Tax Advice
Are you considering moving abroad? If so, there are several key aspects that need to be thoroughly reviewed and carefully mapped out. Fortunately, our experienced advisors are here to help you plan every detail of your big move and provide essential tax advice along the way.
So, how exactly can we assist you? Our expert advisors are ready to offer guidance on the following areas:
With the future of non-dom’s in the UK up in the air, it is important to seek professional advice. Engaging a consultant allows you to gain a clearer insight into all of your assets and assess your options on exiting the UK as tax efficiently as possible. Don’t wait, it is vital to act now to safeguard your financial future.
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