Following announcements at the Spring Budget, changes and restrictions will be introduced to the Resident Non-Domiciled (RND) regime, although it will keep some of its spirit to continue to attract entrepreneurs and foreign talents to emigrate to the UK.
The new RND rules take inspiration from other neighbouring countries, including France, Italy and Spain.
Notable changes are the abolition of the notion of domicile and the concept of remittance. While we await further clarification from the government, the key elements include:
- The current regime will be abolished, to be replaced with a four-year, residence-based regime, with effect from 6 April 2025
- There will be transitional provisions, which will allow for a repatriation of foreign income and gains, taxable on remittance to the UK, for two years from 6 April 2025 at a flat rate of 12%
- For current non-domiciled individuals there will be a 50% reduction in personal foreign income subject to UK tax in 2025/26 (i.e. in the year of transition) and capital assets can be rebased to values at 5 April 2019 for disposals after 6 April 2025, provided the assets were held at 5 April 2019
- It is understood that excluded property trusts established prior to 6 April 2025, should retain protections for earlier years, but from 6 April 2025 any income and gains arising within them will be taxable on the settlor. It is believed that Inheritance Tax (IHT) protections should endure but we recommend clients should seek further clarification and professional advice
- Under the new rules, individuals who come to the UK will only be taxable on their UK income and gains for the first four years of UK tax residence, assuming they’ve not been UK tax resident in the preceding 10 years. They will be able to remit foreign income and gains (arising in those four years) to the UK during that time, as we understand, with no further tax charges.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.