The UK government has recently confirmed major reforms that reshape how people with non-domiciled status are taxed. These changes represent one of the most significant shifts in the system for internationally mobile individuals, prompting many to reassess their financial planning and long-term residency decisions.
A Look Back: How the Old Non-Dom Framework Worked
For years, the Non-Dom rules allowed people who were not considered UK-domiciled to benefit from a unique tax structure. Under that system:
Tax was applied only to UK-sourced income and gains.
Foreign income or profits were not taxed unless brought into the UK (“remitted”).
Many international professionals and entrepreneurs used this structure to manage global income efficiently.
This framework, however, is now being phased out entirely.
What’s Changing Under the New Rules
The government’s overhaul introduces a new approach that affects both current Non-Doms and those planning a future move to the UK.
1. Transitional Arrangements
Current users of the remittance basis won’t be forced into an abrupt shift. Instead, transitional rules will help ease them into the new system, though precise details are still being refined. These rules will matter especially for those with long-held offshore assets.
2. Introduction of the Foreign Income and Gains Scheme (FIGS)
The FIGS scheme acts as a temporary relief mechanism for new arrivals to the UK. Key aspects include:
A four-year window in which newly arrived individuals can receive foreign income and realize foreign gains without UK tax.
After this period, standard UK taxation applies.
This scheme essentially replaces the former remittance basis but with clearer time limits and tighter definitions.
3. Remaining Ambiguities
Some areas still lack full clarity. For instance:
How will people who were born in the UK but lived abroad for many years be treated?
Will there be special rules for long-term residents who never previously claimed Non-Dom status?
How will offshore trusts be taxed under the new regime?
Further guidance from HMRC is expected.
Preparing for the New Landscape: Practical Steps
Given the scale of these reforms, proactive planning is essential. Here are useful strategies and tips:
✔ Review Your Global Asset Structure
Individuals with offshore accounts, companies, or trusts should reassess how income flows between jurisdictions. What made sense under the remittance regime may no longer be optimal.
✔ Consider the Timing of Income and Asset Disposals
If you expect significant foreign gains, the timing relative to the four-year FIGS period can make a big difference.
✔ Evaluate Whether Relocating to, or Staying in, the UK Still Aligns With Your Goals
Some individuals may find the revised rules less advantageous, while others (especially short-term workers) may benefit from the four-year relief.
✔ Seek Specialist Advice Early
International tax advisers can help structure foreign investments, trusts, asset sales, or employment contracts in light of the updated rules.
✔ Explore Double Tax Treaties
Many people overlook how tax treaties can reduce exposure even when UK domestic rules change. This can be especially valuable for those maintaining strong ties with another jurisdiction.
The Bottom Line
The end of the traditional Non-Dom regime marks a significant turning point in UK tax policy. Whether you are currently benefitting from Non-Dom status or considering a future move to the UK, understanding the implications—and planning ahead, is critical. With proper guidance and early action, you can adapt smoothly and protect your long-term financial position.
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