Chancellor Rachel Reeves has confirmed plans to abolish non-dom tax status from April 2025, replacing it with a residence-based regime. Speaking at the World Economic Forum in Davos, Reeves announced a 'tweak' to the transition period, extending it to three years to encourage wealthy individuals to bring foreign wealth into the UK system.
The move follows concerns that the original two-year transition could prompt an exodus of millionaires. A recent report by New World Wealth and Henley & Partners indicated over 10,000 millionaires left the UK in 2024, a 157% increase on the previous year, partly attributed to the non-dom changes. Reeves stated: 'We have been listening to the concerns that have been raised by the non-dom community.'
Non-dom status allows UK residents whose permanent home is abroad to avoid UK tax on overseas earnings, unless the money is brought into the UK. The government expects the abolition to raise £12.7bn over five years, building on the previous Conservative plan that aimed to raise £2.7bn annually by 2028-29.
Under the new rules, individuals moving to the UK from April 2025 will not pay tax on foreign income for the first four years. After that, they will be taxed like other residents. The changes also bring foreign earnings into the UK inheritance tax system. HM Revenue & Customs data shows 74,000 people claimed non-dom status in 2022-23, up from 68,900 the previous year.
