Non-Doms, Non-Residents & Overseas Wealth

The UK has changed the basis of taxation for individuals who come to live here, from a domicile-based tax regime to one centred on the individual’s residence status.

Non dom tax and a new regime

The concept of domicile has been part of the UK’s tax system for centuries and certain elements of the old approach remain relevant even after the move to the residence basis.

Under the old regime, where certain criteria were met, non-doms benefited from a special tax regime that exempted overseas income and capital gains from UK tax provided it was kept outside of the UK. There was also a favourable Inheritance Tax regime applying to non-UK assets.

The rules were complex but, in principle, as your connections to the UK increased, either through personal circumstances or by virtue of the duration of your residence, your exposure to UK tax also increased.

However, these rules were abolished with effect from 6 April 2025. From that date the residence status of the individual is the relevant factor. Consequently, the application of the Statutory Residence Test will be an area of increasing focus.

With these changes in mind, the need to seek specialist advice is paramount. There remain planning opportunities, particularly for those considering coming to the UK and planning prior to your arrival can result in significant tax advantages going forward. Whilst more limited in scope, there are also potential opportunities for those already resident in the UK who were previously taxed as a non-dom.