UK Non-Dom Tax Rules: The End is Nigh, But What Next?

For over two centuries, the UK’s non-domiciled tax regime and its remittance basis has been a cornerstone of tax planning for wealthy expats and international families.

It was introduced, along with income tax, by Willian Pitt the Younger at the very end of the 18th century. It was part of the fiscal firepower necessary to battle Napoleon Bonaparte. And, like income tax, it had pretty much been a constant feature of the UK’s system ever since.

But in March 2024, the then Chancellor, Jeremy Hunt, rang the death knell for the remittance basis, with Labour’s Rachel Reeves – who would succeed Hunt a few months later - declaring she would have abolished it anyway.

The end is therefore very much nigh for the UK’s non-dom tax regime. More specifically, the end is 6 April 2025.

However, out with the old and in with the new’ goes the saying. As such, the ‘what comes next’ will reshape the tax landscape for non-doms, expats, and international investors with a UK footprint (or those considering creating one).

What is Domicile (and Non-Domicile)?

Domicile is not a straightforward concept like tax residence. The latter is largely about physical presence (or otherwise) in a particular.

Instead, as well as physical presence, it also requires an understanding of your future intentions. Is a place somewhere that you intend to live permanently or indefinitely.

There are two main types of domicile that I will discuss here:

• Domicile of origin: This is inherited at birth, usually from your father (if you think that is misogynistic then I don’t make the rules, OK?). You do not lose your domicile of origin. However, think of it as the foundations of a building. You can a domicile of choice on top it.

• Domicile of choice: You build a new domicile of choice by achieving two things. Firstly, by physically residing in place and, secondly, by forming the intention to stay in that same place permanently or indefinitely. Both must be present.

As you can see, the domicile of origin is ready to rise back from the dead as soon as either ‘intention’ or physical presence changes.

On the other side of the coin, those with domiciles of origin outside the UK who have moved to UK have been able to reject a UK domicile of choice as long as they have not formed the intention to stay in the UK.

As I say, domicile of origin is a sticky thing. Difficult to shake and always ready to return.

The UK’s Non-Dom Rules (Before 6 April 2025)

“So what?” I hear you say.

Income tax & CGT

Well, under the current system, non-doms can elect to be taxed on something called the remittance basis for (broadly) up to 15 years of UK residence. This means:

· Foreign income and gains are only taxed if brought into the UK (remitted).

· A £30,000–£60,000 annual charge applies after 7 years of residence.

· After being resident for 15 /20 tax years, non-doms become deemed domiciled and their remittance basis rights are revoked.

Inheritance Tax (IHT):

· Broadly speaking, non-doms only pay IHT on UK assets.

· Foreign assets remain outside the scope unless they become deemed domiciled after 15 /20 tax years.

· For UK domiciled individuals, and those who have become deemed domiciled, then their worldwide assets are subject to UK IHT. Those non-doms approaching deemed domiciled could often use ‘excluded property trusts’ to park assets outside the scope of UK into the future.

These rules have been criticised for benefiting the ultra-rich. Regardless, they have also, undoubtedly, made the UK an attractive hub for international wealth, talent and investment.

So, what do the changes look like from April?

The New Rules from 6 April 2025

Out with the old

As I’ve already alluded too, the remittance basis will be abolished and, more broadly, the link between domicile status and tax will be (almost) entirely removed.

There are some transitional rules for those former remittance basis users.

In with the new: Income Tax & CGT

From 6 April 2025, we will have a new and shiny regime called the Foreign Income and Gains (FIG) Exemption which includes:

· A 100% exemption for foreign income and gains for the first 4 years of UK residence for new arrivers in the UK (as long as have not been resident in the UK in any of the previous 10 years)

· After 4 years, all worldwide income and gains will be fully taxable in the UK.

In with the new: IHT: The End of the Domicile Link

There will also be a new residence-based system for IHT purposes:

· Non-doms will now become subject to UK IHT on their worldwide assets if they have been UK resident for 10 out of 20 years.

· This replaces the old 15-year deemed domicile rule with a 10-year exposure period, but crucially, non-doms leaving the UK will remain within the IHT net for up to 10 years after departure—making long-term estate planning far trickier.

Once caught, IHT applies at 40% on worldwide assets. Controversially, this will include pre-existing offshore trusts and other structures (beyond the scope of this article but anyone effected should review as soon as possible).

An Unexpected Fairytale for Expats?

Long-Term Expats and IHT

For long-term expats, there new rules provide much more certainty around their IHT exposure. Previously, they would have had to be confident they were non-domiciled in order for their non-UK assets to escape the IHT net. Even then, any planning was dependent on not disturbing their domicile of choice – a precarious status (see the example of Barrie above).

However, someone who has not been resident in the UK for 10 out of the last 20 tax years will benefit from non-Uk assets in their death estate being outside the scope of IHT and will be able to make outright gifts of non-UK assets which are disregarded for UK IHT purposes.

It is worth noting that, unless some relief or exemption applies, then any person with UK assets will be in the scope of UK IHT. Even if they have never set foot there!

Returning Expats and the FIG Regime

The FIG regime also offers a clear plan window for returning long-term expats. If they have been non-UK resident for 10 years, the FIG regime will apply for the first 4 tax years.

Conclusion

The UK will shortly wave a tearful farewell to the remittance basis of taxation. Whether the new FIG regime will be attractive enough to tempt international mobile wealth remains to be seen.

However, as we have seen, the new rules do provide some un-expected benefits for long-term expats in the form of certainty when it comes to estate planning and an attractive benefit for those returning to the UK.

With that, I can hear the bell tolling.

At Mosaic Chambers Group, we help private clients make sense of these changes and create strategies that protect their wealth across borders.

Contact Us

Are you living in Dubai and want to know what the new Spring Statement means for your financial future, then join us on 24th April 2025 at the Avani Palm Hotel Dubai, for an evening of expert analysis, practical advice, and strategic networking. Our Founder Andy Wood will discuss tax policies already outlined in this area – in relation to income and gains and, importantly IHT for Non-UK long-term residents – and any new nuggets unveiled by Mrs Reeves.

RSVP Here

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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.

UK Non-Dom Tax Rules: The End is Nigh, But What Next?