A FIG from the Ashes – A New Era for International Private Client Tax

A Turning Point for UK Tax

It was the 5th of April on Saturday, an event which doesn’t usually hold a lot of significance other than to mark the end of the tax year and produce a flurry of year-end financial planning.

However this year is much more important, the UK tax landscape for international private clients has changed dramatically.

Farewell to the Non-Dom Regime

After a much-commentated long farewell to the non-dom tax regime, it has finally happened.

From 6 April onwards, non-dom tax status is abolished and along with it the remittance basis tax regime.

Yes there are some transitional rules and there will be ongoing complexities for former non-dom remittance basis users, but for all intent and purposes the regime has ended.

Its been widely reported in the press again this weekend that there’s been a mass exodus of former non-dom remittance basis users from the UK and we have certainly seen some movement in our client base.

The Government failed to factor in that the targets for these changes get to choose where they live and spend their time and some have chosen to leave, or at least limit their time here to become non-resident.

The Rise of the FIG Regime

In place of the non-dom regime we have the new four-year foreign income and gains regime (FIG) which exempts foreign income and gains for up to 4 tax years for individuals that have been non-resident for 10 years prior to their arrival.

As the qualify conditions for the FIG regime are residency based, the new rules apply equally to returning Brits as they do to foreign nationals.

The FIG rules are very attractive for new arrivers, exempting overseas income and gains from UK tax and extends to exempt overseas workdays during the same period (subject to caps).

These new rules are much more generous than the non-dom regime, but only for the four-years.

After four-years have passed, individuals that might have previously be classed as non-doms will be rethinking their situation and considering whether to stay in the UK or to move on and utilise similar short term tax reliefs which exist around the world.

We wont feel the full impact of that four-year milestone for a while at least.

The New Reality

So as the FIG regime rises from it’s ashes, the tax world proclaims,

‘The non-dom regime is dead, long live the FIG’