End of the Non-Dom Era in the UK

For many years, the concept of domicile has been a cornerstone of the UK tax system. In order to attract wealthy individuals to the UK, the UK Government was happy to grant preferential tax treatment to non-UK domiciled individuals, effectively protecting their overseas assets from UK taxation for an extended period.

However, this privileged status has attracted much debate in recent years, so it was no surprise when the Chancellor announced the abolition of the non-dom regime in the 2024 Spring Budget. We were told that the existing rules would be replaced with a residence-based tax system for income and capital gains tax from April 2025, with new benefits for long-term non-residents lasting for only four years following a move to the UK.

The Government also announced the inheritance tax regime would move to a residence-based test following a period of consultation, leaving many UK resident non-doms having to rethink their plans, whilst new arrivers to the UK will be wondering how they can benefit from the new rules.

UK TAX PRINCIPLES

Domicile

Domicile is a concept in UK general law that is distinct from nationality and residency. It is the country where a person ‘belongs’ and is found by considering the individual’s habit