DISCLAIMER: This post was last modified on 11 March 2024. Some information in this article may not be updated.

After 225 years of being in effect, the United Kingdom is abolishing its non-domiciled tax regime, which allows the UK’s wealthy to save taxes from their foreign income. People who reside in the UK but have permanent residence abroad are given non-dom status, and they benefit from this rule.   

This status has allowed the rich not to pay foreign income and capital gains taxes for up to 15 years since they settled in Britain. The condition is that they should not transfer these earnings into the jurisdiction. 

Under the new rule, non-doms will only be exempted from paying foreign income taxes during their first four years of residence in the UK. After this, they will be expected to pay the same as UK residents. Inheritance taxes will also be moved to a residence-based regime.   

The changes are set to take effect in April 2025.  For the tax year 2025-2026, there will be a temporary 50% cut in personal foreign income for non-doms who will lose access to the remittance-basis system.   

According to the UK Finance Minister Jeremy Hunt, this system “is both fairer and remains competitive with other countries.” Hunt introduced these changes during the recent budget announcement.   

“Those with the broadest shoulders should pay their fair share,” Hunt said.   

Through these changes, the UK aims to raise about $3.4 billion in taxes annually on top of the current taxes that non-doms pay.   

In 2022, the UK recorded about 68,800 non-doms. With the scrapping of the special non-dom rule, concerns were raised that Britain’s richest would be exiting the jurisdiction.   

According to Bolder Group’s Commercial Director for Europe Tim van Santen, “These are significant changes to the tax regime for non-doms, and although there is a suggestion that the regime has been simplified, the rules will still produce a variety of scenarios with several layers of complexity. The transitional provisions provide time for some individuals to arrange their affairs before the new rules take effect.” 

Countries in the nearby EU region have been attracting the wealthy through tax regimes. For example, Spain, whose neighbouring country Portugal has also scrapped its version of the non-dom regime in 2023, has the Beckham Law.   

Van Santen adds: “While there is much still to be established, we recommend that all current non-doms, regardless of how long they have lived in the UK, should consider their position without delay.” 

Bolder Solutions 

Recent regulatory changes in the UK may push HNWIs, entrepreneurs and investors to reevaluate their financial plans. At Bolder Group, we stay ahead of these developments. Our international team of professionals is ready to assist clients in navigating these new rules.   

We can help you explore new markets and businesses aligned with your long-term financial goals, ensuring a smooth transition. From business development and market entry to ongoing corporate and compliance solutions, our experts will support you every step of the way.    

Contact Bolder Group to discuss how we can help you adapt and thrive amid the changes.   

Disclaimer. Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

Bolder Group refers to the global network of independent subsidiaries of Bolder Group Holding BV. Bolder Group Holding BV provides no client services. Such services are provided solely by the independent companies within the Bolder Group which are each legally distinct and separate entities and have no authority (actual, apparent, implied or otherwise) to obligate or bind Bolder Group Holding BV in any manner whatsoever. The operations of the Bolder Group are conducted independently and have no affiliation with third-party financial, tax or legal advisory firms or corporations.