Starting next year, non-doms will face a tougher tax climate as Labour takes steps to fix what they see as outdated tax perks and overhaul Inheritance Tax (IHT) rules.<\/p>\n
<\/p>\n
Before the election, former Chancellor Jeremy Hunt revealed in the Spring Budget that the UK would be eliminating non-dom status and gradually phasing out the remittance basis.<\/p>\n
The new Government is set to strengthen these plans with a \u201cmodern scheme\u201d designed solely to support those who are \u201cgenuinely in the country for a short time.\u201d<\/p>\n
However, unlike the Conservatives, Labour does not intend to have the transitional phase, which offered a 50 per cent reduction in tax on foreign income for individuals losing access to the remittance basis during the first year of the new regime.<\/p>\n
The new regime<\/strong><\/p>\n The new resident-based regime for IHT is set to come into force on 6 April 2025, but full details on rebasing dates will not be available until the next Budget.<\/p>\n Domicile will no longer be the primary factor for inheritance tax liability. Instead, it\u2019s proposed that inheritance tax will automatically apply to an individual’s global estate after they have been a UK tax resident for 10 years.<\/p>\n There will also be a 10-year \u201ctail\u201d for those who leave the UK after reaching this milestone.<\/p>\n These changes will impact the range of property subject to UK inheritance tax for individuals and trusts.<\/p>\n The new rules will not be applied retroactively, so any estates of individuals who pass away before the effective date will not be affected.<\/p>\n Additionally, there will be no further public consultation on these changes, as the Chancellor will consider responses from the previous Conservative non-dom consultation.<\/p>\n There will be a four-year foreign income and gains (FIG) regime, which will provide 100 per cent relief on FIG for new arrivals to the UK during their first four years of tax residence.<\/p>\n This does not apply if they were a UK tax resident in any of the 10 years immediately before their arrival.<\/p>\n UK residents who don\u2019t qualify for the four-year FIG regime or choose not to use it will face capital gains tax (CGT) on their foreign gains as usual.<\/p>\n Temporary repatriation facility<\/strong><\/p>\n Starting April 2025, income and gains within settlor-interested trust structures will no longer be tax-protected.<\/p>\n A new temporary repatriation facility (TRF) will be offered to individuals taxed on the remittance basis.<\/p>\n Those who have used the remittance basis before will still be able to bring back foreign income and gains accrued before 6 April 2025, and benefit from a reduced tax rate for a limited period after a remittance basis ends.<\/p>\n The rate and duration of this facility will be designed to make it as appealing as possible.<\/p>\n What\u2019s next?<\/strong><\/p>\n Further details on the regime will come in due course.<\/p>\n The first Labour Budget of this parliament is set to take place on 30 October 2024, which should confirm their plans and provide further details.<\/p>\n Contact our team if you have any questions.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Starting next year, non-doms will face a tougher tax climate as Labour takes steps to fix what they see as outdated tax perks and overhaul Inheritance Tax (IHT) rules.<\/p>\n","protected":false},"author":2,"featured_media":5882,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,125,54],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5879"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=5879"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5879\/revisions"}],"predecessor-version":[{"id":5880,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5879\/revisions\/5880"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/5882"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=5879"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=5879"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=5879"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}