The upcoming changes in the UK Non-Dom status and considerations for strategic offshore planning
In April 2025, the non-domiciled (non-dom) status will undergo a reform in UK tax law. This reform is poised to impact thousands of individuals who have leveraged this status to efficiently manage their tax position.
With this change on the horizon, it will be crucial for non-doms and high-net-worth individuals to assess their current position and strategically plan ahead to optimise their long-term financial gains and asset protection.
What is Non-Dom Status?
The non-domiciled status in the UK allows individuals who are residents but not domiciled in the UK to choose how their foreign income and gains are taxed. Traditionally, non-doms have had the option to use the remittance basis of taxation, which means they only pay UK tax on income and gains brought into the UK. This scheme has been highly beneficial for many wealthy individuals who have substantial foreign income or gains.
What are the upcoming changes in the Non-Dom Status?
The suggested changes, which the UK Government will implement in April 2025, cover the remittance basis, transparency and reporting requirements and inheritance tax rules.
The remittance basis will be available for a limited period. After a certain duration of UK residence, individuals will no longer be able to claim the remittance basis and will be subject to UK tax on their worldwide income and gains.
There will also be more stringent reporting requirements, making it mandatory for non-doms to disclose detailed information about their overseas income and assets. And finally, non-doms will face changes in the IHT regime, potentially bringing more of their global assets into the UK tax net.
Key benefits in offshore planning
Given the impending changes, many individuals under the non-dom status may consider restructuring their assets to other jurisdictions to manage their tax liabilities and protect their wealth. Offshore structuring has always been a favoured strategy that high-net-worth individuals have adopted.
Offshore structures, such as trusts, foundations or companies, established in jurisdictions with favorable tax treaties can benefit from reduced or even zero percent corporate tax, capital gains tax and inheritance tax. Offshore structuring can also provide a layer of protection against political or economic instability. Assets held in well-regulated offshore jurisdictions can be more secure and resilient to external pressures.
Offshore trusts and foundations are effective tools for estate planning, ensuring that wealth is transferred according to the individual’s wishes. They are especially effective at preserving wealth for future generations in a stable and efficient environment.
While transparency requirements are increasing, certain offshore jurisdictions still offer a degree of privacy that can protect the identity of beneficiaries and the details of their assets. Offshore structures can offer also more flexibility in terms of investment options and control over assets, allowing individuals to tailor their wealth management strategies to their specific needs and circumstances.
What steps should non-doms take?
To navigate these changes effectively, non-doms should firstly engage with tax advisors who can advise on international tax planning to understand the full implications of the new rules. In addition to this, they can provide advice on offshore structuring options.
April 2025 is just around the corner and early planning is crucial to ensure any restructuring plans are in place prior to the deadline. Once the individual is satisfied with their tax advice, they should seek assistance from a professional Corporate Service Provider who can provide bespoke consultancy on corporate structuring, asset protection and estate planning.
Affinity Group
At Affinity Group, we have been assisting private and corporate clients with luxury asset structuring, wealth management and corporate structuring since 2004. Our personal approach involves bespoke consultancy to understand and implement the client’s long-term goals.
We have formed and managed many trusts with a variety of purposes holding and managing assets across a myriad of jurisdictions and business sectors. Trusts are especially attractive to individuals, families and companies alike and have a wide range of uses such as property, investments, estate planning and asset protection.
Our offices across jurisdictions, including the Isle of Man, Malta, Cayman Islands and South Florida, provide our clients with vast opportunities. The stability and robust environments, in addition to the flexible structures and efficient financial regimes in place, protect their assets and drive prosperity for years to come. Contact our team today for a one-to-one conversation and we can provide you with a variety of offshore structuring options to meet your desired goals.
Affinity are a regulated Corporate/Fiduciary providers, we are not professional tax advisors. No information provided by Affinity should be construed as specific VAT or taxation advice. Any information provided is based on our Company’s many years of experience in the industry and practical knowledge of workable solutions. We always recommend that clients obtain independent advice prior to committing to a structure.