“Every dog has its day… or century or two”: The end of the remittance basis of taxation etc PART ONE
Andy Wood • February 18, 2025
This is the first in 3-part series on "The End of the Remittance Basis of Taxation"
Background – The British Bulldog v French Bulldog
PART 2
At the dying end of the 18th century, a little man with a big ego was throwing his weight around in Europe. His name was Napoleon. You might have heard of him.
At the same time, William Pitt the Younger, at an impossibly young age of 24, was the UK’s prime minister. He wasn’t given a particularly easy ride as, at the same time, King George III was losing his marbles.
In 1799, young Pitt introduced for the first time an income tax in order to pay for his fight with the angry little Frenchman. It was at this same time that he also introduced a remittance basis of taxation for overseas civil servants who, in today’s terminology, might be referred to as non-doms. The idea was to provide them with relief from these new taxes in relation to their overseas property.
Little did young Pitt know that he was creating a political football and a fiscal tightrope for centuries to come. Something that would only be cast aside some 226 years later.
So, it was a surprise when Jeremy Hunt the Beiger announced in Spring Budget 2024 the abolition of the remittance basis of taxation and, more generally, the removal of domicile as a main determining factor for UK taxation.
It was perhaps less of a surprise when Chancellor Rachel Reeves, with a slightly less impressive CV (even the made up one) when compared to Pitt, flourished the pen to sign the non-dom demise.
So, has the UK’s big tax dog finally had its day?
A woof guide to domicile.
So what is domicile and, by negative extension, non-domicile?
Although, unusually, domicile has had an important impact on a person’s tax position in the UK it is not a pure tax construct. It is a concept of general law.
It is therefore important to note that the proposed abolition of the non-dom tax changes are merely changes to the tax consequences of such a status. It does not change the position from a general law perspective. For example, they will apply to things like the law of succession and will even continue to be relevant for some double tax treaties.
Dicey, in his tome Conflicts of Laws, provides the authoritative definition of domicile of origin:
'every person receives at birth a domicile of origin…A legitimate child born during the lifetime of his father has a domicile of origin in the country in which his father was domiciled at the time of his birth'
In sum, one inherits a domicile of origin (“DO”) at birth. To use archaic terminology, where one is ‘legitimate’, then you inherit your DO from your father. Where your mother and father are not married, then a DO is inherited from one’s mother.
A DO is rather sticky and tenacious. There must be strong evidence that a domicile of choice (“DC”) has been acquired elsewhere for it to be overtaken. Indeed, one does not completely shed a DO. Instead, think of the DO as the foundation of a building. It will remain as it is until someone takes the trouble to build something on top of it. A DC might be built on this foundation.
Again, Dicey provides us with the commentary:
‘every independent person can acquire a domicile of choice by the combination of residence and intention of permanent and indefinite residence, but not otherwise’
As such, in order to build a DC, it is necessary to have:
- intention to reside permanently / indefinitely in a place; and
- physical residence in that place.
Where this is the case, and can be backed up by evidence, the edifice will remain strong.
However, where an element is missing then the walls will come tumbling down and you will be left with the foundations. In other words, your domicile of origin.
But this is a double edged sword.
What if little ‘ol me tried to assert I was domiciled in Spain? I have a domicile of origin in the UK (or should that be the People’s Republic of Yorkshire?) In order to develop a domicile of choice in Spain I would need to both be resident in Spain, but also show, and evidence, my intention to reside there indefinitely.
Of course, if I came back, or even just hopped across the border to France, then I no longer reside there and would no longer have a DC in Spain. My DO in the UK would revert. And that simply wouldn’t Labra-doo.
In part 2 of our series, we look at the pre-6 April 2025 rules, covering income tax, CGT, IHT, and trust regulations.
Find out what’s changing, why it matters, and how it could impact your financial planning.
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We all think about the future, but how many of us feel confident about our retirement savings? In the UAE, that question is becoming more urgent. A new report shows that more people in the UAE, especially experienced employees and professionals, are asking for better, more personalised retirement planning. They don’t just want end-of-service benefits. They want flexibility, investment choices, and long-term financial security. This shift is important. It’s not just about pensions . It’s about how people feel about their jobs, their financial freedom, and their lives after work. What the Report Found The research, carried out by recruitment experts in the UAE, found that: Many mid-to-senior-level professionals now want a tailored approach to retirement savings. People are asking employers for more investment options, not just a lump sum at the end. There is a growing interest in structured retirement accounts, including schemes where employers contribute monthly, like pensions in the UK or US. It’s a signal that the typical end-of-service benefit (gratuity) may no longer be enough for the modern workforce. The Current Retirement Model in the UAE Right now, most private sector workers in the UAE receive an End-of-Service Benefit (EOSB). This is a lump sum based on how long you've worked for your employer and your final salary. But: It’s not invested, so the value doesn’t grow with time. You only receive it when you leave the company. If a company closes down or faces financial trouble, you may lose out. While the UAE has made improvements, such as introducing savings-style EOSB schemes, many companies still use the traditional model. Why Employees Are Asking for More Here are just a few reasons UAE professionals want better retirement planning: 1. Job Security Is Less Certain People change jobs more often than they used to. Relying on a lump sum after years of service isn’t practical for mobile careers. 2. Higher Earnings = Higher Expectations Professionals in sectors like tech, finance, and consulting are earning more, and they want retirement planning to match their income and ambitions. 3. Inflation and Cost of Living Even in a tax-free environment, the long-term cost of living matters. A static lump sum at the end of your career doesn’t keep up with real-world inflation. 4. More Global Workers Many people in the UAE have worked in multiple countries. They’re familiar with international pension schemes, and they want similar options here. What Are the Alternatives? Several companies and free zones in the UAE are already offering new models for retirement planning: Monthly savings schemes with employer contributions Access to regulated investment funds tailored to retirement Portable savings accounts that follow you between jobs Dubai International Financial Centre (DIFC) launched the DIFC Employee Workplace Savings (DEWS) Plan, which has been a model for reform. Other areas may follow suit. What You Can Do Whether your employer offers advanced schemes or not, you can still take control of your retirement plan: Start a private pension or regular investment plan with expert advice Set up a monthly savings goal, even if it’s small to start Ask your employer if they’re willing to make monthly contributions Consider tax and currency implications if you plan to retire abroad Final Thoughts The way people think about retirement in the UAE is changing, and fast. It’s no longer about waiting for a lump sum and hoping it’s enough. UAE residents want to invest, plan ahead, and build financial independence while they’re still working. If you're living and working in the UAE, the best time to plan for retirement isn't when you're 60. It’s now! We help people across the UAE, UK and other jurisdictions set up private pension plans, understand retirement investments, and structure savings that work whether you retire in Dubai, UK or move abroad. Speak to one of our advisers today for clear, practical help with your long-term planning.