How to Plan for the Abolition of the Non-Dom Regime in 2025/26

 Introduction: The End of an Era for UK Tax Residents

In a significant shake-up to UK tax rules, the government has announced that from 6 April 2025, the concept of “non-domiciled status” (non-dom) will be abolished for tax purposes.

For decades, non-doms have enjoyed the option to be taxed on the remittance basis, meaning their foreign income and gains were not subject to UK tax unless brought into the UK. This has made the UK a popular destination for internationally mobile individuals.

With this major change on the horizon, it is critical for anyone currently relying on non-dom tax status to understand the implications and take proactive planning steps now—before the 2025/26 tax year begins.

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 What Is the Current Non-Dom Regime?

The non-dom regime allows UK residents who are not domiciled in the UK (typically those born abroad to non-UK parents) to:

• Choose to be taxed on the remittance basis

• Pay UK tax on UK income and gains, but only pay UK tax on foreign income or gains when they are brought (“remitted”) into the UK

• Avoid Inheritance Tax (IHT) on foreign assets for up to 15 years of UK residency

However, this generous treatment comes at a cost:

• A remittance basis charge of £30,000–£60,000 per year (depending on length of residence)

• Loss of personal allowance and CGT exemption if the remittance basis is claimed

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 What’s Changing in April 2025?

From 6 April 2025, the following key changes will take effect:

 Abolition of the Remittance Basis

• All UK tax residents will be taxed on their worldwide income and gains, regardless of their domicile status

• Non-dom status becomes irrelevant for Income Tax and Capital Gains Tax (CGT) purposes

 Changes to Inheritance Tax (IHT)

• IHT will be based on residence, not domicile

• Individuals who have been UK resident for 10 out of the previous 12 years will become subject to IHT on worldwide assets

• Assets will fall out of the IHT net only after 10 years of non-UK residence

This means long-term residents will no longer be able to shield foreign wealth from UK IHT by claiming non-dom status.

More info:
 HMRC Guidance – Inheritance Tax: Domicile and IHT

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 Who Will Be Most Affected?

This reform will hit hardest:

• Wealthy international families who have chosen the UK as a base

• Individuals with significant overseas assets, investments, or income

• Long-term UK residents who have never formally “acquired” a UK domicile

• Foreign domiciliaries who inherited non-UK wealth via offshore trusts

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 Case Study: What It Could Look Like

Example: Ana, an Italian Entrepreneur Living in London

Ana has lived in London since 2012. She:

• Owns a €4m investment portfolio in Italy

• Claims the remittance basis

• Pays the £60,000 annual charge

• Has never brought the funds into the UK

From April 2025:

• Ana’s foreign investment income will be taxable in the UK whether or not it is remitted

• If Ana dies after 2025 and has been UK resident for over 10 years, her Italian portfolio will be subject to UK IHT at 40%

• She must now restructure or relocate her investments or risk a massive tax bill

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 6 Planning Steps to Take Before 5 April 2025

1. Rebase Your Overseas Assets

The government is expected to offer a rebasing option—meaning the cost basis for CGT could reset to 6 April 2025.

Action: Review your foreign portfolio and prepare to document market values as of 6 April 2025 to reduce CGT later.

2.  Accelerate Income or Realise Gains in 2024/25

Because 2024/25 is the last year of the remittance basis:

• Bring forward dividends, gains or income before 5 April 2025

• Remit foreign income now (if needed), while the current rules still apply

 Tip: If you don’t need the funds in the UK, you might avoid remittance tax altogether this year.

3.  Review Offshore Trusts and Structures

Many non-doms have used excluded property trusts to protect foreign wealth from UK IHT.

From April 2025, existing trusts may lose their excluded property status if the settlor has been UK resident for 10+ years.

Action Plan:

• Get existing trusts reviewed immediately

• Settle new trusts before 5 April 2025, while rules still apply

• Consider moving trustees offshore if appropriate

4.  Reassess UK Residency

If the UK is no longer tax-efficient, relocating could protect foreign wealth and delay worldwide taxation.

• Consider moving before April 2025 to avoid triggering UK tax on worldwide income and gains

• If leaving, explore split-year treatment and statutory residence rules

More here:
HMRC – Residence, Domicile and the Remittance Basis

5.  Consider Business or Investment Migration

For business owners or investors:

• Offshore holding companies may now be less efficient

• You may wish to bring structures onshore to benefit from UK reliefs like Business Asset Disposal Relief, EIS, or SEIS

• Alternatively, move investments overseas and become non-resident to avoid UK tax🧠 Pro tip: Work with a UK-based tax specialist familiar with cross-border structuring.

6.  IHT Planning for Global Assets

• Prepare for UK IHT on worldwide assets if resident 10+ years

• Use trusts, life insurance, and spousal exemptions where available

• Consider gifting assets before the 10-year window closes

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 Example Planning Timeline

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 How Merranti Can Help

At Merranti Accounting, we understand that this change isn’t just about tax—it’s about life planning, asset protection, and wealth preservation.

We can help you:

• Navigate the remittance window for 2024/25

• Reorganise or rebase your global assets

• Work with legal advisers to review or create trusts

• Plan for future IHT exposure

• Assist with residency reviews and relocation modelling

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 Final Thoughts: The Clock Is Ticking

The abolition of the non-dom regime represents a fundamental shift in the UK tax landscape. Waiting until April 2025 to act will significantly limit your options.

Whether you are:

• A long-term UK resident with overseas income

• An international business owner

• A wealthy family with intergenerational trusts

you need to act now to preserve your wealth and ensure your tax strategy remains efficient.

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 Take Action with Merranti Today

We work with individuals, families, and their legal teams to offer strategic, independent tax guidance tailored to your personal and international needs.

Book your Non-Dom Strategy Review today.

Contact Merranti Accounting