19 Jul Large-scale reform to the tax regime for non-UK domiciled people

In the Spring Budget on 6 March 2024, the UK chancellor announced large-scale reform to the tax regime for non-UK domiciled people including an intention to move to a residence-based regime for inheritance tax (IHT), from no earlier than 6 April 2025 (subject to consultation).

It is proposed that under the new regime, regardless of domicile, there will be UK IHT payable on worldwide assets owned outright when a person has been resident in the UK for 10 years. A person will only lose liability for IHT on worldwide assets when they have been non-resident for 10 years.

Foreign assets held in trusts set up after 6 April 2025 will be taxable on the trustees if the settlor:

• has been resident for 10 years; or (having been taxable on worldwide assets), has been resident at some point during the last 10 years.

It is currently (at date of writing) still possible for a non-domiciled settlor to set up an excluded property (IHT exempt) trust up to 6 April 2025.

The IHT legislation is subject to consultation and with the recent change in government may not come into force as outlined. However, it is worth bearing these proposed changes in mind for future planning in case they are introduced as there is potentially only a limited planning window.

For further information, please contact PX Wealth on 03300 947 477 or by email to welcome@px-wealth.com and we’ll be pleased to assist.