Navigating the New Non-Dom Tax Landscape in Post-Budget Britain

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Navigating the New Non-Dom Tax Landscape in Post-Budget Britain

Published on
February 3, 2025

The recent British Budget announcement has ushered in significant changes to the UK's non-domiciled (non-dom) tax regime, leaving many resident non-doms contemplating their next steps. At Alpadis, we recognise the complexities these changes introduce and are committed to helping you understand and navigate this evolving landscape effectively.

Understanding the Changes

Effective from April 2025, the UK government will abolish the remittance basis of taxation. This pivotal change means that all UK resident individuals will be taxed on their worldwide income and gains, regardless of whether these funds are brought into the UK. The remittance basis, which previously allowed non-doms to pay tax only on income and gains remitted to the UK, will no longer be an option for most.

However, the introduction of the Foreign Income and Gains (FIG) Regime offers a transitional relief. This four-year regime is available to individuals who have not been UK residents in the ten years prior to moving to the UK. Under the FIG regime, qualifying individuals won't pay UK tax on foreign income and gains during this period, irrespective of remittance.

Moreover, Inheritance Tax (IHT) will shift to a residence-based system. Long-term UK residents—those who have lived in the UK for ten years—will become liable for IHT on their worldwide assets. This marks a significant change from the previous domicile-based system, potentially increasing the tax liabilities for many non-doms.

Implications for Resident Non-Doms

These changes necessitate a thorough reassessment of financial and tax planning strategies:

  • Global Taxation: The abolition of the remittance basis means that worldwide income and gains are now subject to UK tax. This could significantly increase tax liabilities for those with substantial foreign income or assets.
  • Estate Planning: The shift to a residence-based IHT system requires careful estate planning. Assets held worldwide could now be subject to UK inheritance tax, impacting succession plans and wealth preservation strategies.
  • Capital Gains and Property Ownership: Non-residents selling UK residential property will remain liable for Capital Gains Tax (CGT) on gains made. Additionally, rental income from UK property will continue to be taxed under the Non-Resident Landlord Scheme, irrespective of residence status.

Exploring Alternative Jurisdictions

For those considering relocation, several jurisdictions offer attractive tax regimes and lifestyle benefits. Below is an overview of key destinations:

  • Switzerland

Lump-Sum Taxation: Ideal for non-EU/EFTA nationals not engaged in gainful employment. Tax is based on living expenses, starting from CHF 250k–300k, depending on the canton.Investment Permits: High-net-worth individuals can secure residency by investing significantly in Swiss businesses or local economies.Pros: No federal capital gains tax on private assets, extensive double tax treaties, and no federal wealth or inheritance tax​.

  • UAE

Tax-Free Environment: No personal income tax, capital gains tax, or inheritance tax. Ideal for expatriates seeking a higher disposable income.Residency Options: Golden visas are available for long-term investors or individuals with substantial financial resources​.

  • Singapore

Regional Hub: With a stable economy and transparent tax system, Singapore is a preferred destination for business-minded non-doms.Incentives: Low personal income tax rates, no capital gains tax, and strong investor-friendly policies make it attractive for high-net-worth individuals. Fund Tax Incentive Schemes for Family Offices: Singapore offers tax incentives, such as Sections 13O and 13U, to encourage ultra-high-net-worth families to establish single-family offices (SFOs) and family-owned fund vehicles in the country. These schemes provide long-term tax exemptions on income generated by approved funds, ensuring both tax efficiency and certainty for qualifying investments. Applications must be submitted to and approved by the Monetary Authority of Singapore (MAS).

  • Hong Kong

New Capital Investment Entrant Scheme: Designed to attract asset owners, this scheme enables individuals to obtain residency by investing in financial assets and meeting portfolio maintenance requirements. Administered by Invest Hong Kong, it encourages wealth allocation and management in Asia's World City.Pathway to Permanent Residency: Applicants can apply for permanent residency after maintaining their investments and residing in Hong Kong for seven years.Pros: No capital gains tax, no VAT, and no tax on offshore income. Strategically located within the Guangdong-Hong Kong-Macao Greater Bay Area, Hong Kong serves as a bridge between East and West with its world-class financial infrastructure, thriving innovation ecosystem, and access to a vast talent pool.

  • Italy

Flat Tax Option: Non-domiciled individuals can elect to pay a €100,000 flat tax on foreign income. This regime applies for 15 years and can extend to family members at €25,000 each.Retiree Incentives: A 7% flat tax is available for retirees relocating to southern regions.

  • Monaco

No Personal Income Tax: Residents enjoy a tax-free income environment. Additional benefits include minimal inheritance tax for direct descendants and a favorable property tax regime.

  • Greece

Alternative Tax Regimes: Offers a 7% flat tax for retirees and a €100,000 flat tax for high-net-worth individuals relocating to Greece. Eligibility depends on residency history and investment in the local economy​.

Recommendations

  1. Evaluate Residency Status

Understanding residency criteria in these jurisdictions is key. For instance, Switzerland requires consistent annual renewal of permits, while the UAE grants longer-term options.

  1. Leverage Transitional Relief

Consider the FIG regime to restructure your assets before the new UK rules fully take effect.

  1. Plan for Estate and Succession

Explore trusts or family wealth strategies tailored to minimise global IHT exposure.

  1. Professional Advice

Each jurisdiction has unique benefits and requirements. Seeking guidance from experts can ensure compliance and optimal financial outcomes.

How Alpadis Can Assist

Navigating these changes requires expert guidance. Alpadis specialises in corporate services and private client solutions, offering tailored advice to help you:

  • Assess and Plan

We'll help you understand how the new tax regime affects your unique circumstances and develop a comprehensive plan to address your needs.

  • Implement Strategies

From restructuring assets to exploring relocation, we'll assist in implementing strategies that align with your financial goals and compliance requirements.

  • Ongoing Support

Tax laws and regulations continue to evolve. Our team stays abreast of developments to provide you with timely advice and support.

Conclusion

The upcoming changes to the UK's non-dom tax regime represent a significant shift in the financial landscape for resident non-doms. While the challenges are substantial, they also present a unique opportunity to reassess and optimise your financial affairs, including exploring alternative jurisdictions that align with your personal and financial goals. Destinations such as the UAE, Switzerland, Singapore, Hong Kong, Italy, Monaco, and Greece each offer distinct benefits, from tax-free environments to tailored flat-tax regimes and investor-friendly policies.

With careful planning and the right expertise, you can navigate this transition smoothly and strategically position yourself in a jurisdiction that supports your lifestyle and wealth preservation needs.At Alpadis, we specialise in guiding clients through complex international tax and relocation matters. Whether you are considering restructuring your assets, relocating to a more favourable jurisdiction, or optimising your estate plans, our team is here to provide the expertise you need.

Contact us today to discuss how we can support your journey in planning for a post-Budget Britain and beyond.

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