Spring Budget 2024: UK Residency and Domicile

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Andrew McQueen

Spring Budget 2024: UK Residency and Domicile

Significant tax changes have been announced for individuals who are tax resident in the UK but not permanently settled here (known as non-domiciled).

While individual who is resident and domiciled in the UK must pay UK taxes on their worldwide income and capital gains, UK resident but non-domiciled individuals can claim a ‘remittance basis’ of taxation for overseas income and capital gains. In return for paying a remittance basis charge of up to £60,000 a year, non-domiciled individuals can shelter their overseas income and capital gains from UK taxation, as long as they do not bring (remit) those monies to the UK.

The remittance basis of taxation will be abolished from 6 April 2025. It will be replaced with a simpler residence-based regime and new arrivals to the UK will not pay UK tax on their overseas income and gains for their first 4 years of UK residence.

In addition, inheritance tax rules apply to the worldwide assets of a UK-domiciled individual but, broadly, just to the UK assets of a non-UK-domiciled individual. The non-domicile rules for inheritance tax are also likely to move to a residence-based regime from 6 April 2025 but the government plans to consult on options.

If you are not domiciled in the UK, please talk to us about how the new rules and the transition to them will affect you.