UK Domicile and Non-Doms - What does it mean?

The abolition of domicile has been a hot topic for both Conservative and Labour governments. Both have confirmed that the concept is being abolished with effect from 6 April 2025, so what does it all mean?

Domicile refers to ‘a country that a person views as their permanent home’. Domicile status is usually established at birth, a child effectively inherits their domicile status, usually from their father. This is known as a ‘domicile of origin’. It is possible to change domicile status however, a domicile of origin is extremely cohesive so significant steps would need to be undertaken to renounce and to demonstrate that an individual has settled permanently in a new country.

Domicile is not directly related to an individual’s nationality, residence or ethnicity.

Non-dom is short for ‘non-domiciled’ and usually refers to someone who lives in the UK but does not see the UK as their permanent home.

As things currently stand, UK resident and domiciled individuals are subject to UK tax on their worldwide income and gains here in the UK.

If an individual is UK resident but non-UK domiciled then they can opt to be taxed on the remittance basis whereby non-UK income and gains are not liable to UK tax unless they are remitted to the UK. This can be an attractive option for non-doms however, the rules around this are complex.

Domicile is also a key factor in UK Inheritance Tax (IHT). UK domiciled individuals pay UK IHT on their worldwide assets whereas non-UK domiciled individuals’ exposure to UK IHT limited to their UK situs assets.

The concept of domicile is being abolished with effect from 6 April 2025, with the UK moving to a residency-based method of taxation. This will apply to income tax, capital gains tax as well as IHT.

This means that more people than ever could potentially find themselves within the scope of UK tax.

If the above impacts you then please do get in touch with our specialist team to explore potential planning opportunities and the transitional provisions available, ensuring that you are fully prepared for the upcoming changes.