New non-dom rule may benefit returning ex-pats

I think some folks may very well benefit from the new proposals should they come into effect next April, assuming no changes to the proposals following a General Election later this year.

https://www.lawsociety.org.uk/topics...ch-2024-budget

Under the current proposals of both the Conservative and Labour parties, ANYONE, including UK-originating expats, would be able to return to the UK after 10 years of non-UK tax residence, from April 6, 2025, and benefit from 4 years of tax-free foreign income and capital gains (FIG). The reforms will eliminate domicile as it applies to tax and replace it with a residence-based system. Additionally, UK inheritance tax will no longer be coupled to domicile, but residence instead. So anyone coming to or returning to the UK after 10 years of non-UK tax residence will not be subject to IHT until after 10 years of tax residence, but there will a 10 year tail for IHT if you leave the UK after that. This is especially good news for those who have permanently left the UK, since after 10 years of non-UK tax residence, there will be certainty of no liability for IHT. The differences in policy between the two parties announced so far only apply to current resident non-doms. So it is almost certain the archaic concept of domicile is gone for good from the tax system, and a much simpler and fairer residence-based system will be replacing it.

I think some folks may very well benefit from the new proposals should they come into effect next April, assuming no changes to the proposals following a General Election later this year.

https://www.lawsociety.org.uk/topics...ch-2024-budget [nofollow]

Under the current proposals of both the Conservative and Labour parties, ANYONE, including UK-originating expats, would be able to return to the UK after 10 years of non-UK tax residence, from April 6, 2025, and benefit from 4 years of tax-free foreign income and capital gains (FIG). The reforms will eliminate domicile as it applies to tax and replace it with a residence-based system. Additionally, UK inheritance tax will no longer be coupled to domicile, but residence instead. So anyone coming to or returning to the UK after 10 years of non-UK tax residence will not be subject to IHT until after 10 years of tax residence, but there will a 10 year tail for IHT if you leave the UK after that. This is especially good news for those who have permanently left the UK, since after 10 years of non-UK tax residence, there will be certainty of no liability for IHT. The differences in policy between the two parties announced so far only apply to current resident non-doms. So it is almost certain the archaic concept of domicile is gone for good from the tax system, and a much simpler and fairer residence-based system will be replacing it.

Is there any indication whether this will apply retroactively? We relocated to the UK last year after being away since 1995. It'd be great if any of these changes would help us reduce some potential tax costs in the coming years.

Is there any indication whether this will apply retroactively? We relocated to the UK last year after being away since 1995. It'd be great if any of these changes would help us reduce some potential tax costs in the coming years.

No idea I’m afraid. I haven’t dug too deeply since I think it won’t affect myself or my wife. Our daughter moved back in November 2022 and I doubt it would affect her but it would certainly be nice for her if it does.

Good timing as I'm planning a return to the UK in 2026 after 30+ years in US 

I'm wondering if the "4 years of tax-free foreign income and capital gains" might help avoid UK taxes on a 401k to mega-backdoor Roth conversion after return to UK? Not sure how that would be classified

Good timing as I'm planning a return to the UK in 2026 after 30+ years in US 

I'm wondering if the "4 years of tax-free foreign income and capital gains" might help avoid UK taxes on a 401k to mega-backdoor Roth conversion after return to UK? Not sure how that would be classified

 My wife and I did that under the current rules. Lump sum conversions to Roth, taxed only in the US.

I think some folks may very well benefit from the new proposals should they come into effect next April, assuming no changes to the proposals following a General Election later this year.

I assume there will be changes from 4 July when the Labour party form a government. All that planned spending will have to come from somewhere and the Labour Party always raise money through tax. Who could forget that last time they were in government, they brought in children paying tax even though they didn't reach their tax allowance

The Non-Domicile “Non-Doms” Regime Tax Reform discussed in this thread should be safe as it was originally a Labor proposal before being adopted by the current UK Government. There is some chatter about them wanting to prevent the 50% exemption for foreign income in 2025/26 which the see as a loophole. I havent heard anything about the 4 year tax relief for newcomers which Im hoping would go forward as it could increase long term revenue