What’s Changing?
- The non-UK domicile tax regime (remittance basis) is abolished from 6 April 2025. From that date, tax residency alone will determine tax liability in the UK. New arrivals will pay UK tax “as everyone else” after four years in the UK. (gov.uk)
- Transitional arrangements for those currently using remittance basis include options to rebase capital assets to 5 April 2019, a two-year temporary repatriation facility at 12% tax, and a 50% exemption for foreign income in the first year of the new regime. (gov.uk)
Implications for Your Tax Planning
| Area | What You Need to Know | Action Steps |
|---|---|---|
| Foreign Income & Gains | These will be taxed on UK basis rather than remittance basis. The first four years for new residents offers some transitional leeway. | Review foreign holdings, consider when to move or realise assets. Rebase where possible. Consider delaying income remittances to avoid unexpected liability. |
| Inheritance Tax & Trusts | Offshore trusts and IHT exemptions based on domicile will change. Estates may no longer use domicile to reduce IHT. Requires shifting focus to residency rules. | Reassess estate planning, wills, and trust structures before April 2025. Ensure long-term resident status aligns with your plans. |
| Investments & Residency Timing | Moving to or from the UK now carries new implications. You may trigger tax liability sooner than under the old rules. | Plan your move in relation to the April 2025 start date. If possible, accelerate or defer transactions to avoid overlap. |
Practical Example
Alice, an individual non-UK domiciled living in France, plans to move to London in May 2025. Under old rules, she’d have years to benefit from remittance basis. Under the new regime:
- She becomes UK resident April-year occupancy rule for 2025-26.
- First four years will still avoid full liability? Actually “new arrivals pay the same tax as everyone else after four years,” so first four years have special treatment (rebasing, possible exemption/repatriation facility). Alice should consider bringing in capital assets before start, rebase, or delay valuable foreign income until after arrival. She should engage advisors now.
Actionable Insights
- Act before 6 April 2025: adjust asset locations, estate plans, trust status.
- Document residence carefully: long-term UK residence plays new roles (e.g. for IHT) under Finance Act 2025. (legislation.gov.uk)
- Use transitional facilities: the rebasing option, repatriation facility at reduced rate.
- Engage specialist advice: foreign tax credits, double tax treaties, and timing will matter.
Understanding and preparing for this major regime shift is crucial for individuals and families with cross-border ties.