Entity Setup
Entity Setup & Residency Rules After UK Non-Dom Reforms (Effective April 2025)
Widely anticipated reforms to the UK’s non-dom regime are reshaping residency, trust treatment, and tax Exposure for entities and high-net-worth individuals alike.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## What Reforms Were Announced
Effective **6 April 2025**, new changes replace the remittance-basis regime for non-UK domiciled individuals with a **residence-based regime**. The key elements:
- New arrivals get **100% relief** on **foreign income & gains (FIG)** for the first four years of UK residency (if not UK resident in prior ten consecutive years). ([gov.uk](https://www.gov.uk/government/publications/2024-non-uk-domiciled-individuals-policy-summary/changes-to-the-taxation-of-non-uk-domiciled-individuals?os=.&utm_source=openai))
- Preferential tax treatment for trusts and overseas interest is removed for those who do not qualify.
- Inheritance Tax (IHT) exposure for non-UK assets now depends on a 10-year UK residency test: individuals resident for 10 prior years, or 10 years after leaving, will be in scope. Excluded Property Trusts cease to shield assets for those not qualifying. ([gov.uk](https://www.gov.uk/government/publications/2024-non-uk-domiciled-individuals-policy-summary/changes-to-the-taxation-of-non-uk-domiciled-individuals?os=.&utm_source=openai))
## Considerations for Entities and Tax-Structuring
- Trusts: Overseas property trusts or asset structures that were able to exclude certain property from IHT may now be caught. Trust setups must be reviewed urgently.
- Corporates & LLPs: Entity types may matter for how “settlor-interested” trust rules apply. Non-UK companies with trust arrangements should assess what parts of their structures may be indirectly capturing non-dom exposure.
- Residency planning: Individuals wanting to retain favorable tax treatment may need to limit UK residency or rebase foreign assets before April 2025 (to 5 April 2017) when conditions permit. ([gov.uk](https://www.gov.uk/government/publications/autumn-budget-2024-overview-of-tax-legislation-and-rates-ootlar/841ddc37-58e0-4d3f-9b53-123e8903d274?utm_source=openai))
## Action-Oriented Insights
- Review your domicile and residence history—whether someone might qualify as a “new arrival” under the 10-year rules.
- If you were using excluded property trusts, get legal advice to restructure or unwind before the new rules bite.
- Foreign assets acquired before 5 April 2017 may be rebased to that date—beneficial for gains tax. But only under specific conditions.
- Consider the impact on inheritance tax strategies: life insurance, wills, and trusts may need to be updated given the narrowed exemptions.
## Real-World Example
Suppose Alice is non-UK domiciled and enters UK residency in April 2025. She hasn’t been UK resident in previous ten years. She will:
- Pay UK tax on UK and foreign-source income and gains; but her foreign income/gains are tax-free for four years.
- If she owns foreign property in a trust, it may now be IHT transmissible depending on whether the trust structure qualifies under the new rules.
- Assets held in an excluded property trust will no longer protect everything—some will be brought into IHT scope if residency tests are met.
## Key Takeaway
For entities, family offices, trust beneficiaries, and high net worth individuals: **structure matters** under these new rules. Early planning, transparent documentation, and possible asset repositioning before April 2025 are likely to yield substantial savings or reduce exposure under the reformed non-dom and IHT regime.