AUTUMN BUDGET 2024 – A BOON FOR LONG TERM EXPATS?

Andy Wood • November 27, 2024

Introduction

A city skyline overlooking a body of water at sunset.
The UK’s March 2024 Budget introduced sweeping reforms to the taxation of “non-doms,” with confirmation from the new Labour Government in the Autumn Budget that these changes would proceed in largely the same form.
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However, there has been less discussion about how these changes will affect individuals with a UK background, particularly British ex-pats. 


The proposed changes, set to come into effect on 6 April 2025, present opportunities for British ex-pats living around the world. 


While some technical details could still evolve, the draft legislation released on 30 October provides clarity on the framework. This note explores the implications for British ex-pats under the new regime. 


Key Features of the New Regime for British Ex-Pats (Effective 6 April 2025) 

Special Four-Year Tax Regime for Returning Residents 

Qualifying individuals will be exempt from UK tax on their foreign income and gains for their first four years of residence, regardless of whether such income is remitted to the UK. 

Eligibility applies to anyone who becomes UK resident after at least ten tax years of non-UK residence, irrespective of their domicile. 

New Residence-Based Test for Inheritance Tax (IHT) 

Domicile will no longer determine liability for IHT. Instead, individuals will be subject to IHT on worldwide assets after being UK resident for 10 out of the previous 20 tax years. 

If they subsequently leave the UK, their estates will remain subject to IHT for a “tail period” of 3–10 years, depending on their duration of UK residence. 

Favourable Transitional Rules for Current Non-Residents 

Individuals who are non-UK resident during the current tax year and were not UK domiciled on 30 October 2024 can benefit from transitional provisions that shorten the IHT “tail.” 

Planning Points for British Ex-Pats 

Returning to the UK 

Under the current regime, individuals born in the UK with a UK domicile of origin are immediately deemed UK domiciled upon becoming UK resident, making their worldwide income and gains subject to UK tax. 

The new rules change this dynamic: 

  • Those returning to the UK after ten years of absence can take advantage of the special four-year tax regime, exempting non-UK income and gains from tax. 
  • This presents a favourable window for British ex-pats to return temporarily—for example, to care for elderly parents, settle children in UK schools, or manage tax planning in another jurisdiction. 

The UK’s statutory residence test, while complex, offers clear guidance on residence status, enabling individuals to determine their first year of residence and plan their eventual departure if desired. 

Increased Certainty Around IHT 

The current system ties IHT liability to domicile, which can be difficult for globally mobile individuals to establish. Even after decades of living abroad, a UK domicile of origin can persist if the individual has not formed a permanent intention to remain elsewhere. 

The new residence-based IHT test provides clarity: 

  • Individuals who have been non-UK resident for 10 years by 6 April 2025 can benefit from the change immediately, gaining certainty over the IHT treatment of their non-UK assets. 
  • Those non-UK resident for less than 10 years by that date will face transitional uncertainty, as the new rules apply only to those with a non-UK domicile on 30 October 2024. 

Opportunities to Create Trusts and Structures 

The new IHT regime has significant implications for trust creation and other estate planning structures: 

  • Under current rules, transferring assets to a trust by a UK-domiciled individual triggers immediate and ongoing IHT liabilities, creating risks for ex-pats with uncertain domicile status. 
  • From 6 April 2025, certainty around IHT treatment will enable non-UK residents to create trusts and similar structures without the risk of upfront IHT charges, supporting succession planning and asset protection. 

However, ongoing IHT risks remain: 

  • Trusts established outside the scope of IHT may later fall within it if the settlor resumes UK residence and meets the 10/20 residence test. Careful monitoring will be required. 

Need for Expert Advice 

While the proposed regime simplifies certain aspects of the tax rules, expert advice remains essential for individuals returning to the UK. 

The new rules bring potential tax implications for corporate, trust, and other structures, making pre-arrival planning crucial. 

It is also important to note that UK-based assets and assets linked to UK residential property will remain within the scope of IHT, regardless of residence status. 

Conclusion 
The new regime introduces welcome clarity and opportunities for British ex-pats, particularly in terms of temporary UK returns and estate planning. 

However, careful planning is necessary to maximise benefits and mitigate risks under the new rules. 

Final Thoughts 
If you have any queries about this article on the new UK tax regime for ex-pats or tax matters more generally, then please get in touch.


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BREAKING NEWS: UAE Offers Corporate Tax Penalty Relief – But You Must Act Fast to Qualify

By Amie Roberts • May 1, 2025
If you’ve missed your Corporate Tax registration deadline or already paid the AED 10,000 fine, there’s now a golden opportunity to waive or reclaim that penalty — but only if you act quickly. In a recent move to support businesses during the first year of the UAE’s Corporate Tax rollout, the Federal Tax Authority (FTA) has announced a limited-time grace period. The initiative allows eligible businesses to apply for a full penalty waiver if they file their Corporate Tax return early. This is a major relief for thousands of companies who have either: Missed their Corporate Tax registration deadline, or Registered late and were hit with the AED 10,000 fine Why is this happening? According to Gulf News, this initiative is part of a broader effort by the Ministry of Finance and the FTA to ease the transition into the new Corporate Tax system and promote long-term compliance. What You Need to Know: Deadline for the waiver: July 31, 2025 BUT: You must file your return well ahead of your official tax deadline to qualify. Don’t wait – gathering your financial records and preparing your tax return can take time. For most businesses operating on a calendar year basis (Jan–Dec), that means filing within the next couple of months. Who qualifies for the penalty waiver? If you’re asking: “Can I get a refund on my Corporate Tax late registration fine in the UAE?” “Is it possible to waive the AED 10,000 Corporate Tax penalty?” “How do I apply for the UAE Corporate Tax penalty relief?” Then the answer is – yes, you may be eligible. But there’s a catch: you must file your tax return early, ahead of your normal deadline. This is not automatic, and if you miss the window, the fine will not be waived or refunded. Why early filing matters: The FTA has made it clear: early compliance is the only route to relief. This means: Completing your Corporate Tax registration (if not already done) Preparing your financials for your first tax year Submitting your Corporate Tax return well before the deadline This one-time waiver won’t be repeated – so don’t leave it until the last minute. How Mosaic Chambers Group can help: At Mosaic Chambers Group, our FTA-certified tax advisors and legal consultants are ready to guide you through the entire process. Whether you need help: Understanding your eligibility Filing your Corporate Tax return early Claiming your AED 10,000 fine refund Or ensuring future tax compliance We’re here to take the stress out of Corporate Tax. Book a free consultation today and get expert support from our team. Click here to get in touch or below to book your call.

End of the Non-Dom Era: Labour’s Tax Reform Triggers Wealth Flight

April 15, 2025
April 6th, 2025 marks the beginning of a major shift in UK taxation. Labour’s new tax reforms have officially scrapped the long-standing non-domiciled (non-dom) tax status — a move that targets wealthy individuals who live in the UK but, under the new non dom regime, have been able to mitigate UK tax on their overseas income and gains. This change spells the end of a tax break that attracted many high-net-worth individuals (HNWIs) to the UK and is already causing ripples across the country’s elite financial circles. The message is clear: if you live here, you pay here. Let's break down what has changed. What Was the Non-Dom Tax Regime? The non-dom tax regime allowed individuals residing in the UK, who claimed their primary home (domicile) to be outside the UK, to avoid UK income and capital gains taxes by not bringing any foreign earnings or gains back into the UK. This system made the UK an attractive location for individuals with international earnings. We covered this in more detail here. What Has Changed? Since 2025-26 tax year, the government has implemented several significant reforms. These reforms include: 1. End of Non-Dom Status All UK tax residents will now owe UK income tax on all global income and gains, regardless of whether these were brought into the country or not. 2. Inheritance Tax (IHT) on Foreign Assets Non-doms could previously avoid UK Inheritance Tax on assets they held outside the UK; now individuals who have lived here for more than four years will be liable for IHT on all their global estate assets. 3. Temporary Reliefs To assist the transition, temporary measures include the following: Tax Year 2025-26 will see a 50% reduction on foreign income tax. Capital Gains Tax (CGT) laws allow us to rebase overseas assets based on their value as of April 2019 for CGT purposes. Temporarily, bringing money from abroad may not incur full tax charges upon entering the UK. Why Has the Government Made These Changes? According to Labour, eliminating non-dom status will provide many advantages: Enhance tax fairness Raise extra funds to support public services Close longstanding loopholes used by the wealthy Rising Tax Bills HNWIs with overseas assets and income will now face significantly increased tax obligations that may have an effect on personal finances, family planning and wealth transference. Making Decisions About Moving Abroad Some individuals are already leaving the UK in order to settle in countries with more advantageous tax regimes. Some common destinations for relocation include: United Arab Emirates (UAE) does not levy income or capital gains tax Switzerland provides fixed annual tax arrangements for its most wealthy citizens Italy - flat tax of EUR100,000.000 on foreign income for new residents Monaco does not levy personal income tax for residents Concerns Raised About Impact Within Industry Concerns are being expressed that this could lead to a decrease in: Investment into UK businesses Jobs funded by private wealth Donations to UK Charities What About Entrepreneurs? Many entrepreneurs utilise non-dom status to reduce tax on international business earnings, however, these changes could require: Establishing headquarters or structures outside the UK Reconsider ownership of intellectual property or company shares An investigation of how profits and dividends are managed is important to ensure long-term growth. What Should Be Done Now? If you or those you work with have been affected, taking immediate steps is key to their safety. Here are a few things you can do. 1. Consult With A Specialist Tax Advisor Every situation varies. Seek tailored guidance from someone familiar with both UK and international tax regulations. 2. Evaluate Your Financial Structures Evaluate how you hold assets - for instance through offshore companies or trusts. Any necessary changes must be implemented for optimal efficiency and compliance purposes. 3. Consider Relocating If the UK's new tax rules no longer suit, you might wish to explore living elsewhere where tax liabilities would be lower. Be sure to carefully consider all legal, financial, and family aspects prior to making any decisions. Summary The changes to the non-dom tax regime mark a profound transformation for those who rely on global income and wealth for tax payments, especially those living abroad. Although intended to increase fairness, these reforms also pose challenges to those accustomed to using it. Now is the time to review your plans, secure your assets, and seek professional guidance. How Can We Assist? At our offices in both the UK and UAE, we assist individuals, entrepreneurs and professional advisors in making well-informed decisions. If you have any queries about this article or need advice then get in touch.
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