Labour's general election win: expected implications for UK non-dom

The votes are in, and The Labour Party have won the UK 2024 General Election.

In this article, Tracey Neuman – Private Client Executive, addresses key concerns surrounding changes to the non-dom regime which are expected to take effect from 6 April 2025.

What are Labour’s proposed changes to the UK non-dom regime?

1. Abolish domicile as a tax concept.
2. Replace with a four-year residence regime that allows the tax-free importation of non-UK income and capital gains earned during that time.
3. Liability to income tax and capital gains tax on a worldwide basis from the fifth year of residence, including those held within non-UK structures in many cases.
4. Liability to inheritance tax on worldwide assets at 40% on death, including those in non-UK structures established by you after ten years of residence and a ten-year tail after leaving.
5. Offshore trusts and some foundations with UK resident settlors / founders will be subject to inheritance tax, usually on the ten-year anniversary or distributions of capital.
6. Limited ability to import historic income and capital gains at a reduced rate of tax.

The new regime must strike a balance between fairness and maintaining the UK's competitiveness as a business destination. We'll continue to monitor developments and share further updates as information becomes available.

In light of the change in government, what steps should UK res non-doms be taking?

1. Do not bury your head in the sand

While details remain scarce, past non-dom regime changes suggest a potential information gap. Legislation might not be finalised before implementation, likely leading to high demand for advisors as the deadline approaches.

2. Speak to the experts

Reach out to your advisors now or ask the trustees / board to do so.  They can help you explore pre-emptive strategies to limit the impact of the tax changes. 

3. Do not panic

Industry stakeholders are actively advocating for a more measured approach. While acknowledging the limitations of the remittance basis, they're pushing for a new regime that prioritises these key elements:

• Simplicity and clarity: The new system should be easy for individuals to understand and comply with, minimising administrative burdens.
• Focus on attracting talent and investment: The regime should encourage high-net-worth individuals and their investments to remain in the UK, fostering economic growth.
• Maintaining a fair and balanced system: The new rules should address concerns about fairness while remaining competitive with other jurisdictions.
   

Reach out to Ocorian

Remember, the impact of these changes depends on your unique circumstances. Our Private Client team has extensive experience navigating complex tax situations. We can help you explore personalised strategies to minimise the impact on your family's finances.

Don't wait – reach out to the Ocorian team to discuss in more detail.