Non-dom status, or Non-Domicile Status to give its’ full title – is the status which many dream of, few pursue and even fewer achieve.
Non-dom describes a UK resident whose permanent home, or domicile, for tax purposes is outside the UK. It refers to a person’s tax status, and has nothing to do with their nationality, citizenship or resident status – although it can be affected by these factors.
A non-dom only pays UK tax on the money they earn in the UK. They do not have to pay tax to the UK government on money made elsewhere in the world (unless they pay that money into a UK bank account).
For decades, non-dom status was the stuff of legend: a kind of fiscal Narnia where wealthy residents could live in the UK, but not really live in the UK—for tax purposes. All the perks of British living, without the pesky burden of contributing too much to HMRC’s coffers.
One could sip tea in Mayfair and still declare your tax home as, say, Monaco.
But times are changing. Initially led by Jeremy Hunt, who introduced a transitional window of two years where non-doms would pay a reduced rate of taxation on their foreign earnings. Rachel Reeves has now taken up the mantel and doubled down with the abolition of the non-dom status from April 2025.
So, what’s new in this marvellous mayhem of fiscal reform?
The new regime is refreshingly straightforward. If you live in the UK for more than four years, you are now taxed like the rest of the kingdom’s citizens. The remittance basis (once the belle of the tax ball) will be replaced with a time-limited grace period, and after that, it’s full British tax treatment for all.
Who does this affect?
Rich people. More specifically, very rich people with accountants who have other accountants in different time zones. The sort of people who refer to Britain as “the tax-efficient country of residence formerly known as home.”
What happens next?
Some will no doubt leave, decamping to sun-drenched havens where income tax is a whisper and taxmen are unicorns. Others will stay, perhaps deciding that relative political stability, freedom of speech and the British lifestyle are a price worth paying for.
Tax experts, accountants, and asset managers will be lobbying to persuade the Government to ease these rule changes as it will negatively impact a key source of their revenue.
But the days of the non-dom appear to be over once and for all.
Author
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Foresight Wealth Strategists have been providing extensive financial planning advice to Hale and the surrounding areas for 25 years - info@foresightws.co.uk
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