.png)
Expanding on our previous article, written on the subject in March 2024, the changes to the non-dom rules become reality on 6th April 2025, so if you think you are affected by virtue of being non-domiciled and UK resident, or currently non-domiciled and anticipating becoming UK resident, or even if you are a repatriating Brit, returning after a 10-year absence from the UK, read on...
What is 'UK resident'?
Those who are deemed UK resident essentially spend, during the tax year, a threshold of time in the UK which is subject to other factors, such as previous residence, family ties etc., plus UK work and accommodation status. You will be deemed 'automatically' UK resident, regardless, if you spend 183 or more days (days passed through midnight) in the UK during the tax year, however, can be deemed UK resident for less days as determined by the RDR3 Statutory Residence Test. This publication can be widely accessed by searching the term on the internet.
What is 'non-dom'?
While the overall definition of domicile is complex, in basic simplification, if your 'permanent home' is deemed as not within the UK under the domicile 'condition rules' (as per the April 2017 changes), you will be a 'non-dom'.
So, if you are deemed both UK resident and non-dom, or have been absent from the UK for ten tax years, regardless of domicile, you will be subject to the changes.
What are the changes?
Up to April 5th 2025, deemed non-dom individuals are subject to a UK tax calculation on their foreign income on the 'remittance' basis, which means that tax is calculated only on amounts actually brought into the UK. This distinction is being removed on 6th April 2025, whereby, non-doms will become taxable as per the balance of the UK domiciled and resident population. Thus, they will thereon be taxed in the UK on their worldwide income and gains on the 'arising' basis. There will, however, be a transitional period available for new and long-term absent returning arrivals to UK residency called the 'FIG' (Foreign Income and Gains) regime.
What is 'FIG'?
The Foreign Income and Gains (FIG) regime has a duration of four years fixed from the point of deemed inception for any individual and will be available to those who have been non-UK resident for at least the previous ten tax years, regardless of domicile. Eligible claimants, who have been resident in the UK for less than four tax years as at the 6th April 2025, will be able to claim for the balance of the four-year period remaining. During this four-year period, qualifying new (and recent) arrivals, or long-absent returns, to UK residence will have the option not to be subject to UK tax on their foreign income and gains, which will also include distributions from non-resident trusts. Once the four-year period is over, individuals will be taxed on their worldwide income and gains as per the normal tax rules for UK residents.
The regime is flexible whereby, for the fixed four-year duration, the individual can opt 'in and out' for particular tax years within the period, however, in any tax year of election the individual loses their entitlement to UK personal allowance and capital gains annual exempt amount (AEA). Accordingly, attendance to the matter by an expert, such as those provided at Taxeezy, is recommended in order to ensure that the claim is tax efficient and that maximum benefit is achieved.
Any claim needs to be made via a self-assessment tax return by 31st January in the second tax year following the applicable tax year of claim and it is necessary to nominate the sources of FIG that apply to the claim. Separate claims must be made for income and gains and either will precipitate the loss of allowances as aforementioned.
Other effects of the FIG regime
There will be some other effects, including to employees and employers in certain circumstances plus other transitional effects on those that have been previously subject to the 'remittance' basis, however, these finer points are not within the scope of this article, which principally caters for the bulk of ongoing self-assessment tax return filing for applicable individuals.
Please note that some technical taxation terms used within this article are further explained within our 'Tax Tutor' resource