The significant changes expected to the Non-Dom rules announced last week in the Autumn Budget are broadly in line with the reforms we were anticipating.
More details will follow in terms of our FAQs, but modifications have included the following:
- The previously announced relief known as the Temporary Repatriation Facility or TRF under which former remittance basis users will be able to designate and remit foreign income and gains that arise prior to the changes at a reduced rate, have been extended from two to three years from 6 April 2025, i.e. to the end of Tax Year 2027/2028.
- The Chancellor had previously announced in her July 2024 Statement that the Government had planned to close the loophole offered by the previous Tory Government’s final pre-election Budget with respect to the IHT protections available to non-UK resident trusts established by non-UK domiciled individuals resident in the UK. It was widely hoped that the Chancellor might introduce a “grandfathering” of existing trusts, but she now confirms the rules for relevant property trusts will apply to all settlements regardless of when the property became settled. With effect from 6 April 2025 (and under the new measures), the Settlor’s long term UK residence status will determine the extent to which the trust assets are considered excluded property, regardless of the Settlor’s domicile.
- Relieving provisions do, however, include “grandfathering” provisions for excluded property trusts established prior to 30 October 2024. These indicate that the trust’s non-UK assets will not be subject to the Gift With Reservation of Benefit (GROB) Rules, although the trust itself may come within the new regime for relevant property triggering ten year charges (and exit charges). In certain circumstances this will mean that non-UK assets of existing trusts will not be within the estate of the Settlor even under the new rules.
- In addition, in the context of the new IHT changes, where a long-term UK resident leaves the UK and continues to be within the scope of IHT for up to the following 10 years, known as the 10 year tail, there are relieving provisions in place to shorten the tail with such provisions applicable where an individual has only been UK resident for between 10 and 19 years out of the previous 20.
For advice and assistance relating to any of the matters discussed in this Briefing Note, please contact Chris Cooke, Karen Methold, or Robert Drysdale.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Please consult with a qualified legal professional before making any decisions based on this information.
