Labour and the non-dom reforms: A closer look

The Labour Party, now in government, has committed to introducing significant reforms to the non-domiciled (non-dom) tax status from 6 April 2025, as outlined in their first non-dom policy paper which was released on 29 July 2024.

While the paper doesn’t offer many new details, it reinforces the government’s determination to eliminate the non-dom regime entirely.

Key points from the policy paper include the trimming down of some transitional provisions, such as the removal of the first-year discount on foreign income. Additionally, there is an implied increase in the tax rate for the Temporary Repatriation Facility, and the status of ‘excluded property trust’ will be abolished, although there may be transitional provisions for already established trusts.

Whilst this news may be disappointing to some non-doms, who were hoping for a delay or amendments to these proposals, the government’s firm stance provides clarity on their position, marking a definitive step forward. The detailed rules will be revealed on 30 October 2024, during Rt Hon Rachel Reeves’ first Autumn Budget. Despite the upcoming budget, a reversal of the proposed changes seems unlikely given the clear intent expressed in the policy document.

In summary, while some may find the government’s clear stance helpful for future planning, the impending reforms signal a substantial shift in the UK’s approach to non-dom taxation, with the final details eagerly awaited.

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If you have any queries in the meantime or would like to discuss the potential impact of these changes on your personal tax position, please contact us.