UK Global Tax

The UK 2024 Spring Budget announced an important initiative regarding tax, the current income and gains rules for non-UK domiciled individuals, or “non-doms” will be reformed in April 2025.

HM Treasury’s full document on the changes are available here, it highlights that the UK government is planning to move away from the domicile system to a residency system. A non-dem is a person that resides in UK but has a permanent home elsewhere, and under the current regime, does not have to pay UK tax for foreign income and capital gains (“FIG”) made outside the UK but still pay tax for UK-derived income and capital gains.

The new tax rule removes this preferential tax treatment based on domicile status for all new FIG.

There will be full tax relief for a four-year period of subsequent UK tax residence on FIG arising during this four-year period, during which time this money can be brought to the UK without an additional tax charge.

Under the new system, regardless of where an individual is domiciled, and after transitional arrangements, anyone who has been tax resident in the UK for more than four years will pay UK tax on any newly arising FIG, as is the case for all other UK residents.

This tax reform is relevant for BNO visa holders that plan to move to the UK while maintaining properties and stocks overseas.

For BNO visa holders who wish to gain UK residency and subsequently return to Hong Kong, this new tax rule may result in double taxation where they would pay both HK and UK taxes for their Hong Kong-based income.

It is therefore necessary to ensure tax compliance and seek professional assistance to optimize tax solutions.