In January this year, the current government said:

“We recognise the significant contribution that non-UK domiciled individuals make in the UK, creating jobs and inward investment. This is why we stand firmly behind the remittance basis of taxation”.

This came hot on the heels of an announcement of a significant increase in the remittance basis charge for non-doms who have lived in the UK for more than 12 years and was in the context of a consultation proposing that someone claiming the remittance basis would have to continue to claim it for at least three years resulting in a tax charge over the three year period of at least £270,000 for individuals who have been in the UK for 17 years or more.

And now Ed Miliband has said that Labour will abolish the nondom rule and replace it with a new regime which distinguishes between temporary residence and permanent residence. The SNP has confirmed it will support this.

In order to minimise the political damage, George Osborne has said that the Conservatives will consider withdrawing non-dom tax privileges for people who have “inherited” their non-dom status.

The Lib Dems have pledged to review eligibility for non-dom benefits and also propose to further increase the non-dom annual tax charge.

So one thing is clear – whatever government we have after the election is going to make changes to the existing non-dom tax regime.


At the moment, we only have a very broad idea of what Labour is proposing. The highlights are as follows:

  • There will still be some form of limited taxation. This may be similar to the existing remittance basis but it may instead be a (more generous) rule which simply limits liability to tax to UK income/gains. If so, overseas income/ gains could be brought to the UK tax free.
  • It will only be available for people living in the UK for a relatively short period of time. Anything from 2-5 years has been mentioned. There will be consultation on this aspect.
  • The rules will be modelled on what other countries do.
  • Everybody else will pay tax on their worldwide income.

There is competition internationally to encourage wealthy, entrepreneurial individuals to move to particular countries. France, Spain, Portugal, Ireland and Switzerland all have incentives. Italy is reported to be on the verge of introducing something equivalent to the UK’s non-dom regime.

It is likely that these competing regimes will be taken into account in formulating any changes in the UK. This may have an impact on the length of time for which any new basis of limited taxation is available for foreigners moving to the UK.

So although Labour has grabbed the headlines with a commitment to abolish the non-dom tax regime, in reality, what is being proposed is that the regime will be limited to a specific period of residence in the UK rather than being able to go on indefinitely and may be more generous than the existing regime in that overseas income/gains can be used in the UK tax free.

What the Lib Dems also have in mind when they talk about reviewing the eligibility criteria for the remittance basis of taxation is likely to be a repeat of their 2010 proposal to limit the benefits of the current regime to seven years. 

The Conservatives do not go quite as far as this. There is no proposal to limit the period of time for which the remittance basis is available for somebody who has moved to the UK. What they are proposing is instead to remove the ability for somebody who is born in the UK to benefit from the remittance basis of taxation even though that person may be non-UK domiciled as a result of their parents having a non-UK domicile.

At the moment, the details are sketchy and we may not know much more until after the election.


Labour has said that it wants to have draft legislation including the non-dom changes available on the first day of a Labour led government. It will however allow a transitional period (two years has been mentioned) for existing non-doms to reorganise their affairs – i.e. they may be able to continue to claim the remittance basis of taxation during this period. This is another aspect on which it is proposed that there will be consultation.

It has been reported that no new non-dom remittance basis claims will be possible after April 2016. However, some people may qualify for the new limited taxation regime which Labour proposes to introduce depending on how long they have been resident in the UK and the reason why they have come here. New arrivers should also be able to benefit from any new regime if they are planning to be in the UK for a limited period of time.

There is no detail on the timing of any changes which the Lib Dems or Conservatives have in mind but it would not be unreasonable to suppose that, if the benefits of the remittance basis are to be withdrawn entirely from certain people (i.e. individuals who have lived in the UK for more than a set period of time or individuals who were born in the UK) they would again be given time to reorganise their affairs before any changes take effect.


Non-doms who have been living in the UK for some time including anybody born in the UK should start to make contingency plans but clearly should not take any action until the results of the election are known.

For those clients who will no longer be able to benefit from any limited basis of taxation, some of the things they will need to think about include the following:

  • Whether to leave the UK – and, if so, where to go.
  • Restructuring non-UK trust/company structures.
  • Restructuring business interests.
  • Possible tax deferral vehicles.
  • Gifts to family members.
  • Use of UK corporate structures.
  • Use of double tax treaties.

Individuals who have only been in the UK for a relatively short period of time may still be able to benefit from some sort of limited basis of taxation and there is probably no point in such individuals thinking too much about alternatives until details of the changes are known.

Anybody thinking of becoming UK resident should, if possible, defer any move until the details of any changes are known.

A week is still a long time in politics and we would expect there to be a proper period of consultation after the election and a review of the regimes available in other countries before any proposals are finalised. Although it is impossible to quantify, there is no doubt that non-doms provide a significant benefit to the UK economy and all of these factors will influence the precise form of any changes.