Domicile status will be removed from the tax system next year, chancellor Rachel Reeves has announced in the Autumn Budget.
In her speech, Reeves labelled domicile status as an “outdated concept”.
Instead, the chancellor said she will introduce a ‘simpler’ residence-based scheme with considerations for workers coming to the UK on a temporary basis.
According to the Office for Budget Responsibility, the measures will raise £12.7bn over the next five years.
Brendan Harper, head of HNW technical services at Utmost International, said: the changes confirmed by the chancellor brings “months of uncertainty” for UK resident non-domiciled individuals to an end.
“With the scrapping of the regime, if non-domiciled individuals decide they want to live in the UK past four years they will need a long-term solution and alternative strategies to manage and protect their wealth effectively. For many, they may need to think beyond establishing trusts in order to shelter offshore income and gains for the long-term and to protect their estates from inheritance tax.
“We suspect that after this announcement we will continue to hear clients talk about making plans to move to other jurisdictions such as Portugal, the UAE and Monaco where we have seen the highest levels of interest this year.
“High-net-worth individuals and their intermediaries now have certainty to take stock of the reforms and begin adjusting their financial plans accordingly.”
Responding to the announcement, Craig Ritchie, partner at GSB Wealth, said: “The abolition of the non-domicile scheme and move to a residency based scheme presents huge opportunities for UK expats, who intend to remain outside of the UK to pass on wealth free of UK IHT.
“For those transitioning back to the UK, there is an opportunity to take advantage of the generous four-year foreign income and gains (FIG) regime.”
See also: Autumn Budget 2024: Capital gains tax hiked to 24%
