On 6 March 2024, the then Chancellor, Jeremy Hunt, announced the end of non-dom status and a move towards a residence-based approach to taxation with tax advantages for new arrivals to the UK will be limited to four years, after which their income will be taxed in the same manner as other UK residents. Significant reforms to Inheritance Tax rules were also proposed, which were to be subject to consultation.
Along with transitional arrangements for those already claiming non-dom status, it appeared that existing excluded property trusts would retain existing protection from Inheritance Tax.
However, Labour have indicated that they will remove some of these transitional arrangements and, potentially more significantly, remove the potential grandfathering of existing trusts. This is likely to cause concern for many non-doms and may trigger a review of their own UK presence as well as the status of any trusts that they may have settled.
The first budget of the new Labour government is unlikely to be before September 2024, given the ten weeks’ notice required by the Office of Burget Responsibility for forecasting, but non-doms and trustees will already be giving consideration to any steps that may be taken to mitigate tax implications.
More details will follow.