Q&A: Why returning to the UK could be a tax positive experience

The seismic shift in UK personal taxation, culminating in the abolition of the non-domicile regime from April 6, 2025, has ignited a flurry of activity among international clients and their advisors. While headlines often focus on the exodus of high-net-worth individuals (HNWIs) facing increased tax burdens, a deeper dive reveals strategic opportunities and a need for proactive planning. We sat down with Tracey Neuman, Executive Director, to examine the key implications and actionable steps for navigating this evolving landscape.

Q: What pivotal change does the end of the non-dom regime represent?

A: The elimination of the non-domicile regime signifies a fundamental restructuring of UK tax policy for international clients. This transition to a residence-based system has undeniably triggered a reassessment of UK residency for many HNWIs, prompting some to relocate.

Q: Amidst the upheaval, are there any silver linings for clients?

A: Absolutely. While the shift necessitates careful planning, it also introduces a simplified tax environment for newcomers to the UK. Advisors are now empowered to deliver strategic guidance, enabling clients to optimise their positions under the new residence-based framework. This presents an opportunity to solidify client relationships by offering indispensable expertise.

Q: How does the new residence-based regime enhance clarity and efficiency?

A: By anchoring taxation to residency rather than the often-ambiguous concept of domicile, the new regime fosters greater certainty. This reduces the scope for protracted HMRC inquiries, streamlining the process and alleviating client anxieties.

Q: What strategic implications does the statutory residence test (SRT) hold for clients?

A: The SRT, with its more rigid parameters, demands meticulous attention to residency status. Advisors must adopt a proactive approach, conducting regular reviews and offering timely counsel to ensure unwavering compliance. The days of ambiguous interpretations are over; precision is paramount, but with that precision comes certainty.

Q: Who emerges as the primary beneficiary of the UK income tax and capital gains tax (CGT) reforms?

A: Short-term arrivals in the UK stand to gain significantly. The introduction of a four-year Foreign Income and Gains (FIG) regime, offering tax exemption for those with ten consecutive years of non-UK tax residency, represents a compelling incentive.

Q: What are the critical reporting requirements for leveraging FIG relief?

A: To capitalise on FIG relief, meticulous reporting of all income and gains sources is mandatory. Comprehensive record-keeping of worldwide financial activities is essential. Initiating these discussions early facilitates efficient data collection and ensures seamless compliance.

Q: How does this new regime impact individuals with UK domicile?

A: Surprisingly, UK-domiciled individuals who have maintained non-UK residency for ten years or more gain access to both the four-year FIG regime and the new inheritance tax (IHT) rules. This represents a substantial advantage compared to the previous system.

Q: What transitional provisions are available for those previously utilising the remittance basis?

A: Two pivotal transitional measures are in place: a temporary repatriation facility (TRF) offering preferential tax rates and the option to rebase non-UK assets using the existing remittance basis. These provisions provide a crucial window of opportunity for strategic tax planning.

Q: What strategic considerations should non-doms planning to depart the UK bear in mind?

A: Timing is of the essence. Astute planning can leverage transitional provisions to mitigate IHT liabilities, which may persist for up to ten years post-emigration.

Q: Will domicile retain any relevance within the UK tax framework?

A: For the majority of clients, domicile will fade into the background for tax purposes. However, it will continue to play a role in specific legal domains, such as succession planning and estate tax treaties. 

Q: Will the remittance basis retain any relevance within the UK tax framework?

A: For those individuals who have historically claimed the remittance basis and do not fully utilise the TRF, then the remittance rules will continue to apply to their funds offshore. 

How can Ocorian help?

It’s important to 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.

Alternatively, do take a look at our dedicated res-non-dom support hub, which hosts a number of useful tools and regular updates as they become available.