U.K. Adjusts Non-Dom Tax Rules to Retain Wealthy Residents

The U.K. government is adjusting its controversial non-domicile (non-dom) tax rules in response to concerns about a significant exodus of wealthy individuals from the country. Approximately 10,800 millionaires left the U.K. in the past year, representing a 157% increase compared to 2023.

The non-dom regime has allowed individuals living in the U.K. but domiciled elsewhere to avoid taxes on overseas income and capital gains for up to 15 years. The government plans to abolish this regime starting in April 2025.

In response to concerns from the non-dom community, the government intends to propose an amendment to the Finance Bill that will enhance the temporary repatriation facility for non-doms. This facility enables them to bring funds into the U.K. with minimal tax implications. Finance Minister Rachel Reeves emphasized that existing double taxation agreements with other countries, such as India, will remain unaffected by these changes.

The amendments aim to encourage non-doms to invest and spend their money in the U.K., while the government maintains an estimated £33.8 billion in tax revenue over the next five years. This clampdown on non-doms is part of a broader strategy to tax the wealthy, which also includes new taxes on private equity bosses, private schools, second homes, and private jets.

Source: CNBC