In this article, we cover the upcoming changes to non-dom tax rules, the effects this may have on individuals’ international income, and what steps you should take to protect your wealth.

As of next month, April 2025, the non-domiciled (non-dom) tax status will be abolished, with a flexible transition period in place to ease the change. These updates could significantly affect the tax position of those working internationally or who have overseas income.

What does Non-Dom Mean?

Someone who lives in the UK but has their permanent home, or ‘domicile’, outside the UK for tax purposes is classed as a non-dom. Under the current system, this allows you to:

• Pay UK tax only on UK income
• Avoid UK tax on foreign earnings and capital gains unless brought into the UK (remitted)

This has provided a legal tax advantage for many, particularly those with foreign investments or business interests.

Upcoming Changes

The current non-dom system will be replaced by a residence-based model, as of April 2025. The upcoming changes include:

• Removal of Non-Dom Status – Long-term UK residents will be taxed on their worldwide income.
• Four-Year Grace Period – New arrivals to the UK have a four-year period where foreign income remains untaxed.
• Extended Transition Period – Those currently using non-dom status will have three years to adjust and potentially bring overseas wealth into the UK at a reduced rate.
• Inheritance Tax Impact – Foreign assets will fall within the scope of UK inheritance tax after this transitional period.

Why?

The changes aim to simplify the tax system and increase revenue for public services.

Who Will Be Affected?

• Existing Non-Doms – Those already in the UK must plan for the three-year transition period.
• New UK Residents – Anyone arriving after April 2025 must factor in the four-year exemption and prepare for worldwide taxation.
• Business Owners & Investors – Those with international income need to revisit their tax strategies, possibly restructuring how their foreign income is managed.
• Non-UK Residents Working in the UK

How to Plan

Although the changes may reduce certain tax advantages, there are still opportunities for careful financial planning:

• Temporary Repatriation Facility – The government is encouraging non-doms to bring foreign wealth into the UK at more favourable rates during the transition.
• Advance Tax Planning – This is the ideal time to review investments, residency status, and inheritance tax exposure.

What Should You Do?

If you currently have non-dom status or earn income from overseas, it’s important to understand how these changes may affect you. We recommend:

• Reviewing your residency and domicile status
• Speaking with a tax specialist to plan ahead
• Exploring whether the Temporary Repatriation Facility could work for you

At Whittaker & Co., we’re here to help, if you have any questions about how these changes may impact you, get in touch.

Click this link for more information: Changes to the taxation of non-UK domiciled individuals – GOV.UK

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