The Chancellor has announced that the remittance basis will be abolished from 6 April 2025. It will be replaced with a residence-based regime. A similar regime will also be applied for Inheritance Tax purposes.
Key measures in respect of Non-domiciled individuals announced at Spring Budget 2024 include:
Non-Domiciled Regime
Abolition of the remittance basis
From 6 April 2025:
- The remittance basis of taxation for non-UK domiciled individuals will be abolished and replaced with a new residence-based regime.
- Individuals who opt into the new regime will not pay UK tax on foreign income and gains for the first four years of UK tax residence, provided they have been non-tax resident for the last 10 years.
- Existing UK tax residents, who have been tax resident for fewer than four tax years and are eligible for the scheme will also benefit from the relief until the end of their 4th year of tax residence.
- Individuals who have been tax resident in the UK for more than four years will pay UK tax on their foreign income and gains, as is the case for other UK residents.
- Transitional arrangements for existing non-UK domiciled individuals claiming the remittance basis will provide:
- An option to rebase the value of capital assets to 5 April 2017.
- A three-year Temporary Repatriation Facility to bring previously accrued foreign income and gains into the UK at a 12% rate of tax for the first two years and 15% for the final year.
See Remittance basis (overseas income)
Overseas Workday Relief
From 6 April 2025:
- Overseas Workday Relief (OWR) will be reformed with eligibility for the relief based on the new residence-based regime.
- OWR will continue to provide Income Tax relief for earnings from duties carried out overseas and will be available for four years in line with the new foreign income and gains regime.
See Overseas Workday Relief (OWR)
Non-Doms and Inheritance Tax (IHT)
From 6 April 2025 at the earliest:
- The government intends to move to a residence-based regime for IHT.
- A 10-year exemption period for new arrivals and a 10-year ‘tail-provision’ for those who leave the UK and become non-resident is proposed.
- The test for non-UK assets being within the sope of IHT, will be if the indivudual has been resident for 10 out of the previous 20 years preceding the chargeable event.
See Non-domicile status, deemed domicile & tax
Transfer Of Assets Abroad (TOAA)
From 5 April 2024:
- Legislation in Spring Finance Bill 2024 will prevent UK resident individuals from bypassing the TOAA provisions by using a close company to transfer assets offshore.
From 5 April 2025:
Various legislative changes are to be made to the rules, these include:
- Changes to the defintion of a person abroad.
- Modification to the benefits charge.
- Modification to the close family member rule.
- Removal of tainting concept.
- Updating the onward gifting rules.
Topical guides on this topic
Spring Budget 2024: At a glance
A summary of the key measures announced that affect individuals and businesses.
External links
Policy paper: Spring Budget 2024: Non-UK domiciled individuals policy summary
Policy paper: Technical note: Changes to the taxation of non-UK domiciled individuals