UK Non-Dom Reform – Election Update

July 1, 2024by Frontier Group

The UK will be heading to the polls on 4 July 2024 as the Government announced the early General Election. There are many who have been closely monitoring the situation for updates on the potential tax implications particularly for non-domiciled individuals.

Following the Budget back in March – please see the following link for our initial summary of the Conservatives announced changes due to come into force from 5 April 2025.

UK Government Non-Dom Reform

Labour issued a response to these changes back in April – the main differences in stance are as follows:

  • Consider incentives for new arrivers to invest in the UK
  • Want to adapt the plans for the transitional relief
  • Not implement the 50% discount on foreign income remitted during 2025/26
  • Not allow grandfathering of excluded property trusts set up before 6 April 2025

The comments from Labour are useful to obtain a sense of the intentions, however with no technical explanation the brief statement does not provide full clarity. Specifically regarding the treatment of excluded property trusts set up pre-April 2025, this would be very challenging to achieve through legislation given the complexities that arise with offshore settlements.

The impact of the early General Election is there will not be any draft legislation published this summer as originally expected and the consultation on the proposed inheritance tax changes will also be delayed.

At this stage, both the Conservatives and Labour have committed to non-dom reform in one version or another which means we can be fairly confident that there will be upcoming changes. Providing there is a clear majority in the election we will know which version is likely to be implemented; the uncertainty lies in the timing and effective date.

Once the Government session resumes, the main possibilities are as follows:

  • An Autumn Budget is announced and will confirm the reforms – although this would leave the Government very little time to prepare draft legislation and the planned IHT consultation.
  • The changes will be confirmed in a Spring Budget for 2025.
  • The changes may be postponed for longer whilst legislation is drafted and consultations undertaken.

If history has any lessons, it cannot be guaranteed that either party would implement the changes in full as announced, however it would be prudent to assume this will be the case until the position is clear.

Should you wish to discuss the potential impact for your affairs please do reach out to your usual Frontier contact and we will be happy to discuss this with you

Frontier Group