The Spring Budget 2024: significant changes for non-doms

06 March 2024

The special tax rules for UK resident non-domiciled individuals (RNDs) have been a key feature of the UK tax regime for many years.

RNDs pay UK tax on UK source income and gains as they arise but only pay UK tax on non-UK income and gains when they bring them to the UK.

Such a regime – which attracts wealthy internationally mobile individuals to make their home in a jurisdiction by offering them beneficial tax treatment – is by no means uncommon, and similar regimes can be found throughout Europe.

For some time, a key policy of the Labour Party has been to abolish the non-dom regime. However, until recently, there have been no signs that this plan would be taken up by the current Government. Indeed, at a Treasury Select Committee session in November 2022, the Chancellor expressed concerns that reforms to the regime “would cost us more money than it would make us”. However, in today’s Budget, likely the final major fiscal event before the next general election, the Chancellor announced the abolition of the non-dom regime, to be replaced with a new residence-based regime.  


If the new rules are implemented, the existing non-dom regime will remain in place until April 2025, with a new four-year residence-based regime applying from 6 April 2025.

Who is eligible for the new regime?

Individuals will qualify for the new regime if they have been non-UK tax resident for at least 10 consecutive years, regardless of their domicile status, with the new regime applying for their first four tax years of UK residence. So this new regime will apply to returning UK domiciliaries.

Taxation of personally held assets

Under the current non-dom regime, RNDs are able to claim the remittance basis of taxation. This shelters the RND’s non-UK income and gains from UK income and capital gains tax, provided that such income and gains are not “remitted” to the UK. Once a RND has been UK resident for at least 15 out of the previous 20 tax years, they are “deemed domiciled” in the UK and no longer eligible for the remittance basis of taxation.

Following today’s announcements, the remittance basis is to be scrapped in its entirety; instead, non-UK income and gains can be brought to the UK without such funds being taxed in the UK for as long as the individual qualifies for the new regime (i.e. a maximum of four years). Budget policy papers emphasise that “this is much simpler and more attractive than our current approach, as these individuals will be able to bring [foreign income and gains] into the UK without attracting any tax charge, encouraging them to spend and invest these funds in the UK”. It also appears that – unlike the remittance basis regime – there will be no annual charge payable in order to take advantage of this new regime.

Once an individual ceases to qualify for the new regime (i.e. after the initial four years of UK residence), they will pay UK tax on their worldwide income and gains on the arising basis (as is currently the case for UK residents who are also UK domiciled or deemed domiciled).

Taxation of assets held in trust

Following reforms to the non-dom regime in 2017, non-UK trusts established by RNDs before they become deemed domiciled in the UK benefit from “protected settlement status”, meaning that the settlor is protected from an immediate tax charge on income and gains arising within the trust structure once they are deemed domiciled in the UK. Instead, the settlor (and other UK resident beneficiaries) pay tax in respect of trust profits only to the extent that they receive a benefit from the trust which is “matched” with income or gains within the trust structure (with such benefit also taxed on the remittance basis).

However, from 6 April 2025, protected settlement status is to be removed from all trust structures (including those already in existence). Under the new regime, for as long as an individual qualifies for the new four-year regime, they will not pay UK tax on the income and gains of the trust as they arise or on receipt of trust distributions. Once the individual is no longer eligible for the new regime, they will be obliged to pay UK tax on all profits arising within a trust structure which they have established.

Transitional provisions for current non-doms

The Government recognises that these reforms “represent a significant change” for existing RNDs and has confirmed that a number of transitional arrangements will be made available. These include:

  • 50% reduction to tax on foreign income for one year
    RNDs who move from the remittance basis of taxation to the arising basis on 6 April 2025 (and who do not qualify for the new four-year regime) will, for the 2025-26 tax year only, pay tax on 50% of their foreign income. Note that this reduction will not apply to foreign gains.
  • Rebasing
    In 2017, personally held non-UK assets of a RND who became deemed UK domiciled as a result of the 2017 reforms were automatically rebased to their value on 5 April 2017.
    A similar rebasing relief is to be introduced as part of these new reforms. Individuals who have previously claimed the remittance basis of taxation (and are neither UK domiciled nor deemed domiciled by 6 April 2025) will be able to elect to rebase assets held personally to their value at 5 April 2019, in respect of disposals on or after 6 April 2025. It is unclear why 5 April 2019 has been chosen as the rebasing date.
  • Temporary Repatriation Facility for two years
    RNDs who have previously been taxed on the remittance basis will be able to elect to remit foreign income and gains that arose before 6 April 2025 to the UK at a reduced tax rate of 12%. Such an opportunity will only be available for the 2025-26 and 2026-27 tax years and remittances made in subsequent years of such income and gains will be taxed at the usual rates; this seems to be intended to act as an encouragement for RNDs (and indeed former RNDs who still have unremitted income and gains offshore) to bring those income and gains into the UK as soon as possible. It should be noted that the “technical note” published by the Government on the proposed changes states that the Temporary Repatriation Facility “will not apply to pre-6 April 2025 [foreign income and gains] generated within trusts and trust structures”.  It is unclear from this whether the facility will apply to trust distributions which are matched with trust non-UK income and gains.  In our view it should do so. However, the position will hopefully be clarified in due course.
  • Pre-6 April 2025 foreign income and gains within non-UK trust structures
    Any foreign income and gains which arose prior to 6 April 2025 in non-UK trust structures that benefited from protected settlement status will not be taxed unless matched with distributions or benefits paid to individuals who have been UK resident for more than four years.

Inheritance tax

The proposed reforms go far beyond changes to the remittance rules and will affect inheritance tax as well.

Currently, an individual’s liability to inheritance tax depends on their domicile status and the location of the asset in question.  However, the Government has announced today that it intends to move to a residence-based regime for inheritance tax from 6 April 2025. Although there will be a consultation on how this is best achieved (and so the timing of any legislation enacting the changes is unclear, especially in light of the upcoming general election), it is suggested that an individual’s worldwide assets would fall within the scope of UK inheritance tax once such individual has been UK resident for ten years, and once within the scope of UK inheritance tax will remain as such for ten years after the individual ceases UK residence.   

Under current rules, non-UK assets, held in trust structures which were established by RNDs before they became deemed domiciled in the UK, are outside the scope of UK inheritance tax (even after the RND becomes deemed domiciled in the UK). In an attempt to provide certainty to affected taxpayers, the Government has confirmed today that “the treatment of non-UK assets settled into a trust by a non-UK domiciled settlor prior to April 2025 will not change, so these will not be within the scope of the UK IHT regime”. This may therefore provide a reason for some individuals to retain existing trust structures despite the loss of protected settlement status. 


The announcements today probably represent the single biggest change to the way in which non-UK domiciled individuals are taxed in the UK. Further details will emerge in due course, hopefully well in advance of April 2025 to allow taxpayers time to prepare for the new regime. This is an area which is likely to continue to develop especially as there will be a general election before these new rules come into effect and a change of government may well bring further changes to these rules, especially around the transitional provisions.