B Law & Tax
04 April 2024

Will the NON-DOM regime in the UK come to an end? What are the alternatives?

During the presentation of the national Budget last Wednesday, the UK Chancellor of the Exchequer announced the abolition of the “Non-Domiciled” tax regime, a feature of the UK tax system with more than two centuries of history, from 6 April 2025.

In this article we will analyse the consequences of the possible end of this special tax regime, and the alternative posed by the Beckham Law for people who intend to move to other more favourable regimes, such as Spain.

What does it mean to be a Non-Dom?

Non-Doms are individuals resident in the UK who declare their domicile, in the sense of centre of their vital interests, outside the UK, which gives them favourable tax treatment.

Until now, Non-Doms were only taxed on income generated within the UK and were exempt from tax on their overseas earnings until they were remitted to a UK bank account.

Non-Doms establish their domicile according to criteria of origin (such as place of birth or parents’ place of birth outside the UK) or choice (being over 16, having left the UK and residing indefinitely in another country).

Until 2022, almost 70,000 people enjoyed this tax regime in the UK.

What is the new regime?

From April 2025, it has been announced that individuals moving to the UK who have not been continuously resident there for at least 10 years will enjoy full tax relief for the first four years on all their foreign income and gains, which can be repatriated to the UK without incurring additional tax charges.

This special tax regime rivals the Beckham Law in Spain, which is available to individuals as long as they have not been resident in Spain for the last five years and can be enjoyed for six years: the year of acquisition of tax residency, and five more.

For this reason, for many, the Beckham Law may be more beneficial, as it has more lax eligibility requirements.

On the other hand, existing Non-Doms who have been resident in the UK for less than four years will retain this benefit until this period is completed. There will also be a two-year transition period during which Non-Doms will be incentivised to bring their foreign assets into the UK tax system, through the approval of certain tax incentives.

The aim of these measures is to avoid a flight of foreign investment to other countries.

With the implementation of this new tax scheme, any individual tax resident in the UK for more than four years will be taxed in the same way as other UK residents.

The tax treatment of inheritances, which are currently not taxed on non-UK assets, will also be based on residence rather than domicile.

While these reforms are subject to possible adjustments, they represent a significant change in the UK’s tax attractiveness to high net worth individuals, even in the face of possible political changes at the next General Election.

In view of these changes, other regimes are emerging as possible alternatives, such as the Spanish Beckham Law, or the special tax regime applicable to workers, professionals, entrepreneurs and investors moving to Spanish territory.

It is important to note that under this special tax regime, in Spain only income obtained in Spanish territory is taxed at a flat rate of 24% up to €600,000, and thereafter at a rate of 47%.

If you would like to find out more or understand how this change could affect your personal situation, as well as explore tax residency options with attractive regimes, please do not hesitate to contact us. At B LAW & TAX we are experts in international taxation.

B Law & Tax International Tax & Legal Advisors.


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