In the wake of news that a significant number of non-doms are leaving the UK, a somewhat surprised Chancellor Rachel Reeves has announced that upcoming legislation will be altered to help non-doms repatriate their funds to the UK.
We have previously made extensive comments here regarding the abolishment of the non-dom tax regime and introduction of the new Foreign Income and Gains Rules, including our comprehensive Autumn Budget 2024 Private client Update which can be found here.
It has been widely publicised in recent media and news publications that these changes have resulted in thousands of millionaires leaving the UK before these changes to the non-dom tax regime come into place, this exodus does include many of our clients.
In response to these recent headlines the Chancellor Rachel Reeves appears to have made some kneejerk comments telling the World Economic Forum in Davos that upcoming legislation will be altered to help non-doms repatriate their funds to the UK at a discounted tax rate.
This statement has little value and does not change the fact that as it stands the non-dom tax regime will be abolished from 6 April 2025 onwards.
The announcement suggest that the Temporary Repatriation Facility (TRF), which is designed to allow non-UK income and gains previously sheltered from UK tax by non-doms to remit those funds at a lower tax rate, may be altered. We do not know if this means the period that the TRF can be used will be extended beyond three years or perhaps if the tax rates which will be applied will be adjusted (currently 12% for two tax years, followed by 15% in the final year of the TRF).
We do not see how these changes are likely to encourage non-domiciled taxpayers to remain in the UK beyond 5 April 2025 if they are severely impacted by the abolishment of the non-dom tax regime and the introduction of the new long-term resident inheritance tax rules.
If you or your clients would like advice on how these changes impact your UK tax position please contact us.
