Charlie Sosna
Partner, Head of Private Wealth and Tax
Hi Annie, it’s been a tumultuous time for the non-doms recently, a lot of work since we did our webinar after the Budget in October last year. Is anything now certain for them?
Annie Bouch
Managing Associate, Private Wealth and Tax
Well, we are in the next tax year so that is some certainty, which started on the 6 April, but it really is a new era for the non-doms. The Finance Act 2025 has now passed and so now we do know what the rules are going to look like but we are expecting some further guidance this month.
Charlie Sosna
Partner, Head of Private Wealth and Tax
Perhaps it would be useful to get a very high level recap of what the new regime actually looks like.
Annie Bouch
Managing Associate, Private Wealth and Tax
Yes, so from the 6 April 2025 individuals who are now moving to the UK will benefit from a new regime called FIG relief, which relates to their foreign income and gains. So for their first four years, provided they’ve been non-UK tax resident for ten consecutive years prior, they will not be subject to UK tax on their foreign income and gains, which is a very big change to how they’re taxed. After that four year period, they will then be subject to the arising basis of taxation on worldwide income and gains, including, you know, related and connected trusts.
Charlie Sosna
Partner, Head of Private Wealth and Tax
So that’s kind of clear for those coming to the UK. What about those that are already here?
Annie Bouch
Managing Associate, Private Wealth and Tax
So, for those that are already here, they can still benefit from the FIG regime but it really depends on how long they’ve been here and what their tax profile looks like so, provided they were non-UK tax resident for ten years prior to coming to the UK, if they’re within their first four years they can still benefit from this FIG relief for the remainder time. So, say someone came on the 6 April 2024, in the ’24/25 tax year, they will have three more years of the FIG relief before they are then subject to worldwide taxation.
Charlie Sosna
Partner, Head of Private Wealth and Tax
That’s clear. And obviously we’ve got a lot of clients who’ve already been here for more than four years, it sounds like the changes are, are more significant for them. What are you seeing with that?
Annie Bouch
Managing Associate, Private Wealth and Tax
It really is, so for those clients since the 6 April 2025, they have now been subject to tax in the arising basis, they no longer can benefit from the remittance basis. The Government did introduce two concessions, one being a rebasing election and one being a temporary repatriation facility for a limited period so, we are finding a lot of clients can rely on that, but again we’re expecting further guidance on how that will work in practice later this month. But Charlie, how are you finding clients are dealing with this and what steps are they taking?
Charlie Sosna
Partner, Head of Private Wealth and Tax
Yeah, look, with a big change there’s always opportunities and there’s a lot of discussions going on with clients at the moment about how best to manage things for them going forward. I think clients are mainly falling into three categories and we talk about sort of individual clients rather than trustees. Those are in the UK and are looking to stay here, despite these changes, the UK is sort of for whatever reason the place that they need to be. We’re spending a lot of time with them talking about those reliefs that you’ve talked about, looking at how their investments are structured and their overall structure is, just to get them in the most tax efficient way going forward. So it’s not like there’s a, a complete exodus of everyone. Saying that, the second pot our clients who have looked to leave the UK, partly driven by the tax changes and maybe lifestyle reasons as well. A lot of work spent with them ensuring a smooth transition out, making sure their affairs are in the best way possible, making sure they go non-resident under the statutory residence test and remain non-resident and also a smooth entry for where they’re going to because there’s always, you know, an arrival point as well. And then the final category are those still looking at the UK. The UK is still seen as really attractive for many clients, there’s always push and pull factors wherever they’re coming from, the four year regime is a short period but I think what we’re looking at with clients is structure not just for that four years but actually how they can manage their affairs beyond that if they were to remain in the UK longer because I don’t think it’s a cliff edge after four years and you can still get yourself in a good position. You know, as you said, there’s still a lot of information coming through so, I think what we’re seeing is a lot of clients signing up to our non-dom hub as well where we’ve got the latest information and updates on so that we can continue to help them as things develop.