Press release
6 March 2024
The Chancellor announced today that current rules for non-UK domiciled individuals will be abolished from 6 April 2025 and be replaced by a new residence-based regime. Rachel McEleney, associate tax director at Deloitte, comments on the changes:
“Under the current rules, non-UK domiciled individuals can have their foreign income and gains taxed on the remittance basis, meaning that only the portion of income brought into the UK is taxed here. This treatment can apply for the first 15 years that the individual lives in the UK, but a levy of £30,000 normally applies after seven years of residence, rising to £60,000 after 12 years. Individuals are normally deemed to be UK domiciled after 15 years of UK residence.
“Under the new regime, taxpayers will not be taxed in the UK on their foreign income and gains for their first four tax years of UK residence, provided they have not been UK resident in the previous ten tax years. After that point, they will be taxed in full on their worldwide income and gains. Unlike the current system, it will be possible to bring the untaxed foreign income and gains to the UK without triggering a tax charge. There will also be transitional rules for those who are already using the current regime, some of which are intended to encourage them to bring funds to the UK.
“The scope of inheritance tax currently also depends on domicile. Broadly, non-UK domiciled individuals are only subject to inheritance tax on assets that are situated in the UK, whereas UK domiciled individuals’ worldwide assets are taxed. As for income tax, individuals are normally deemed to be UK domiciled for inheritance tax after 15 years of UK residence. A consultation will be held on moving to a long-term residence-based inheritance tax system.
“The new regime will provide a clearer and more objective test than the current rules, but there will inevitably be a lot of complexity in the transition. There may also be winners and losers. Those who come for four tax years or less should be better off, whereas those who wish to come for longer may not.”
Ends
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Deloitte spokespeople
Deloitte has a range of spokespeople available to comment on today’s Spring Budget. They can be reached on 020 7007 3333 or 0207 303 5054 or one of the following numbers:
• Debapratim De - senior economist (07884 765916)
• Amanda Tickel - head of tax policy (07920 270 964)
• Rachel McEleney - personal tax (07826 891 752)
• Zubin Patel - corporate tax (07586 511 104)
• Michael Nicolaides - employment tax (07768 178264)
• Richard Johnson – business rates (07774 337 581)
• Toby Price – stamp duty (07774 337 581)
• Gareth Pritchard – indirect tax (07586 511 104)
About Deloitte
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Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.
The information contained in this press release is correct at the time of going to press.
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