ProACT Sam Orgill clarifies how non dom changes have positive and negative benefits for expats Living and Working Abroad.
Non Dom changes introduced since the Halloween Budget of 2024 are still evolving and could be subject to further changes in an autumn 2025 budget.
While the changes added restrictions and increased periods of tax liability, there are some opportunities to save tax or plan ahead to avoid tax when you live , earn, save , invest , retire or die.
The UK taxman is tightening his grip – pensions are now being locked into Inheritance Tax at 40%. This tax creep shift could cost expats and international families far more than they realise.
Inheritance Tax Tail
From April 2025 new non dom rules apply for expats entering or leaving the UK. If you have lived and been tax resident in the UK within the last 20 years – any single year since 2004/5 – then the UK can use those years or residence or tax residence to claim capital and inheritance taxes.
All British citizens are deemed domicile unless they are non domiciled to the UK.
If domiciled the 40% Inheritance tax tail is firmly pinned on you.
This a minimum UK inheritance tax liability for 3 years or maximum 10 years of going abroad.
Conversely the new tax rules are much clearer than the previous system where an expat could be discretely forgotten by the UK taxman … but still potentially liable.
An expat of many years could be UK domiciled the day they return the UK for whatever reason, this being seen by HMRC as intent to be seen to be British Domicile.
Now Inheritance tax and non dom law offers you a clear path of tax liability to pay.
New expats arriving in the UK are non domicile for foreign income and capital gains including inheritance tax for a clear 4 tax years.
Domicile and Liability
UK inheritance tax is 40% of world wide assets if you are UK domiciled.
UK Inheritance tax is 40% of UK assets if you are considered UK non domicile.
Electronic border controls using fingerprints , retina scans and facial recognition offers evidence to your big brother of where you are or have been in any country Living and Working Abroad.
Banks, pensions, investments and payrolls all use identity and social insurance verifications for reference of your declared residence. Exchange of information between the financial institutions and tax offices connect the dots for the tax man.
Your residence isn’t your tax residence automatically but each country of residence, will exchange financial data with your tax residence country and the and receive data from your financial transactions around the world in property, investments and business.
Clear Vision
In the 2020’s it is clear that you need to organise your financial affairs to declare and pay the right amount of tax in the right place at the right time.
All organisations in property, business, investment, pensions and residency are exchanging data.
No man is an island entire in their own little world. We are all part of a continent, a part of the maine.
Give the radical changes and tax creep that follows it is important to review your capital and income tax planning.
ProACT Partnership office advice and guidance consultations to update your :
● Residency
● Tax Residency
● Make a Will
● Probate Administration
● Family Trusts
● Estate Planning Gifts
● Investment Trusts
● Business Administration
● Company Administration
ProACT Partnership consultants can be with you every step of the way to protect your family and business from income, capital, dividend, pension, business and company from tax creep, to save tax efficiency entry and effectively, across border and down generation.
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