UK Softens Non-Dom Tax Reforms
The UK government is set to soften some of its planned changes to the non-domicile tax regime following concerns about a potential departure of wealthy individuals, the Treasury has confirmed.
The long-established non-domicile system allows individuals who live in the UK but are domiciled elsewhere for tax purposes to avoid paying UK tax on overseas income and capital gains for up to 15 years.
However, during the October budget, the government announced that the regime would be abolished from April 2025, making long term residents liable for inheritance tax on their global assets, including those held in trusts.
Since then, Chancellor Rachel Reeves revealed that an amendment to the Finance Bill would be introduced to improve the temporary repatriation facility (TRF). This scheme enables non-doms to transfer funds to the UK at a reduced tax rate of 12%,
Double Tax Agreements remain unchanged
Overseas investors were also reassured by Reeves that the UK’s double taxation agreements would remain unchanged. A Treasury spokesperson confirmed that the government aims to encourage non-doms to transfer their funds to the UK to stimulate investment and spending.
The October Budget’s non-dom crackdown was part of a broader set of policies aimed at high net-worth individuals, including increased taxation on private equity executives, private schools, second homes, and private jets. Critics warned at the time that such measures could lead to an exit of wealthy individuals, potentially undermining investment and economic growth.
Temporary Repatriation Facility (TRF)
As mentioned above, an amendment to the Finance Bill would be introduced to improve the temporary repatriation facility (TRF) which will enable non-domiciles to transfer funds to the UK at a reduced tax rate of 12%,
Most eligible HNW taxpayers will wish to make full use of the temporary repatriation facility or at least ensure that the correct steps are taken before April 5, 2025 to ensure they are eligible for the TRF post April 5, 2025.
Please contact our team for further information.