Government Confirms End of Non-Dom Status

HM Treasury has confirmed that non-domicile tax status will end next year. The widely-publicised policy builds on measures announced by former Chancellor Jeremy Hunt earlier this year, but goes further.

“The government is committed to addressing unfairness in the tax system, so that everyone who is long-term resident in the UK pays their taxes here,” declares a new official Policy Paper. “The government will therefore remove the outdated concept of domicile status from the tax system and implement a new residence-based regime which is internationally competitive and focused on attracting the best talent and investment to the UK.”

The non-dom tax break for wealthy globe-trotters will formally end in April 2025.

In its place, a “foreign income and gains” regime (known as FIG) will allow internationally-minded HNWIs to not pay UK tax on overseas earnings for four years (much less than the 15-year non-dom allowance).

So far, identical to the previous Tory proposal (which was itself based on a Labour pledge). But new Chancellor Rachel Reeves’ team says “this approach left several advantages for existing non-doms, which the government is committed to ending.”

So there are big changes to Inheritance Tax on the way. IHT will be payable on worldwide assets if the person was a UK resident for ten years – and a “10-year tail” means one would need to be non-resident for at least a decade to avoid paying UK Inheritance Tax.

Trusts are also in the firing line, with as-yet unspecified measures on the way to “end the use of offshore trusts to avoid inheritance tax.”

Non-doms paid nearly £9bn in UK taxes last year, the highest sum recorded since 2017.