After months of uncertainty, non-UK domiciled individuals finally have some clarity over what to expect come April 2025. The Government published a policy paper last week (29 July 2024) summarising the changes that will be implemented.

The headline messages of the paper are largely as expected, bearing close resemblance to the rules proposed in March 2024 by the then-Conservative Government and then publicly supported by the Labour Party – save for a few key differences – before their election win in July.

The policy paper published now confirms that:

• The Foreign Income and Gains (FIG) regime will be introduced from 6 April 2025, with anyone who has not been UK resident for 10 consecutive years prior to their arrival likely to be eligible for the regime. During their first 4 years of residence, from the 2025/26 tax year onwards, those eligible will not be subject to UK tax on their FIG or on distributions from offshore trusts and will be able to bring those funds to the UK freely without any further UK tax charges.

• The income tax and capital gains tax (CGT) trust protections available to non-domiciled or deemed domiciled settlors of settlor-interested trusts will cease from 6 April 2025, unless they are eligible for the above FIG regime.

• The Conservative’s previously announced proposal to reduce the foreign income subject to tax in the 2025/26 tax year by 50% for individuals who are losing the ability to claim the remittance basis in this year has been scrapped.

• A Temporary Repatriation Facility (TRF) will be introduced, whereby those who have previously claimed the remittance basis can bring pre-April 2025 “tainted” funds to the UK and pay a reduced rate of tax for a limited time only. The tax rate and time period will be revealed at the Autumn Budget, which is scheduled for 30 October 2024.

• The paper also hints at the TRF potentially being extended to include stockpiled income and gains within overseas structures, but more details on this will be announced in the Budget.

• Individuals who lose access to the remittance basis from April 2025 will have the opportunity to rebase their foreign assets, so that they will only pay CGT on the increase in value from the rebasing date to the date of sale. The rebasing date will also be announced in the Autumn Budget.

• The current inheritance tax (IHT) regime will be changed to a residence-based system from 6 April 2025, bringing the worldwide estates of individuals who have been UK resident for 10 years into the scope of IHT. There will also be a provision to keep a person in the scope of IHT for 10 years after they leave the UK.

• The IHT protection for excluded property trusts (i.e. those settled by non-domiciled individuals) will end on 6 April 2025. The paper suggests that there will be some transitional arrangements for affected settlors, but again further details will be revealed in the Autumn Budget.

• A form of Overseas Workday Relief will be retained, details of which will be revealed in the Budget.

• The Government intends to undertake a review of the complex offshore anti-avoidance legislation, including the Transfer of Assets Abroad and Settlements legislation, with the aim of modernising the rules and removing ambiguity or uncertainty in how they should be applied. Any resulting changes will take effect from April 2026 at the earliest.

While we still must wait until Budget Day (30 October 2024) for some of the finer details to be announced, this additional information will hopefully allow many non-doms to think about their options now with a little more certainty.

If you have any queries or would like to discuss how the above will impact you or your clients, please reach out to your usual Wilson Wright contact, or liaise with Sharlene using the contact details below.