Tim Crook, our Head of Private Clients at OCG Legal, takes a look at the Spring Budget in detail.
Non-Dom Tax Regime
The Chancellor announced the abolition of the non-dom tax regime and provided some detail on the new system that would replace it from April 2025. However, there are still many questions that need to be answered.
The new system will be based on tax residency rather than domicile, which is no bad thing with the lack of certainty surrounding the archaic concept of domicile.
The suggestion was that for the first four years of tax residency, an individual would not pay tax on non-UK income and gains, but that after that period they would be taxed in the same way as everyone else.
There would be transitional arrangements over a period of two years during which non-doms would be encouraged to bring their wealth to the UK.
However, there was no mention in the speech of what the IHT position would be, with non-doms currently only paying IHT on UK-situs assets until such time as they become deemed domiciled (after 15 years of tax residence). Even then, non-doms had the possibility of sheltering non-UK assets from IHT using an offshore trust set up before they became domiciled and there was no mention of what would happen to such trusts, which form a fairly standard part of tax structuring for such individuals.
For any questions on the above, or more information as to how our Private Client team can help you, please contact privateclient@ocglegal.co.uk
