Non-doms: Key UK tax strategies for summer 2024

For offshore trustees, please see our article here for our suggested strategy.

This is a good opportunity to reflect on the actions we feel that non-doms should take over the summer, given, at the time of this post, we have less than nine months until the proposed regime may come into effect.

For those without an offshore trust structure as part of their personal wealth – or where there is material personal wealth outside the structure – there are still some very important decisions to make over the coming months.

We have explained the potential new regime here, so we won’t repeat them in this post. Instead, we want to simply reflect on the actions we feel that non-doms should consider taking over the summer.

There are likely to be opportunities for those who are still able to claim the remittance basis in 2024/25 to restructure their investments before 6 April 2025 to mitigate the full effects of the changes and perhaps even significantly reduce their UK tax exposure from 2025. However, since restructuring is reliant on having retained your non-UK domicile status, we recommend a formal review of your domicile position, collating evidence to support your claim to being domiciled outside of the UK. We expect HMRC to be quite aggressive with its enquiries into domicile status for those claiming the remittance basis in 2024/25. Therefore, having a formal report supported by contemporary evidence demonstrating your non-UK domicile status will be your best defence against a challenge from HMRC. A successful challenge by HMRC to a non-UK domicile in 2024/25 could cause them to revisit earlier years.

Once this review is successfully completed, we recommend evaluating your investments/assets for restructuring opportunities, such as realising unrealised capital gains and/or bring forward income where possible. We also recommend exploring future investment options that may permit a deferral on your UK tax liability once the changes come into effect, such as life insurance investment bonds.

You should also consider how to use the proposed Temporary Repatriation Facility (TRF) to make the most of what is likely to be a 12% tax rate (versus the current maximum of 45%).

Perhaps the single biggest concern of most non-doms will be the potential Inheritance Tax (IHT) implications, should you decide to stay in the UK. Although the proposals are very vague at present, at 40% of your personal wealth, this is not an aspect to brush over.

If you wait until the legislation is drafted, likely in autumn 2024, it will leave very little time to review both your domicile status and the options available.

Our Private Client & Trusts team have a wealth of experience and knowledge on the UK tax regime for non-doms and offshore trust structures, and will stay on top of important updates. For further advice, please get in touch.