The UK’s proposals for non-doms and their structures (as of 10 March 2025)

Budget 2024 – Non-dom

Budget 2024 – Non-dom proposalsThe concept of “Long-Term Resident”The core of the new test is that a person will be “Long-Term Resident” in a given tax year (and so exposed toIHT on their worldwide assets) if they have been UK tax resident in 10 or more of the preceding 20 tax years.So, subject to the points made below, the starting point is that a person will be Long-Term Resident witheffect from 6 April 2025 if they have been UK tax resident in 10 or more of the tax years between 2005/06and 2024/25 inclusive.The most obvious example of this will be at the beginning of the 11th year after 10 consecutive tax years ofbeing UK tax resident. However, it can also apply to those with gaps between years of UK tax residence asshown in the diagram below:Became a UKtax resident2 years ofNon-UK residenceSatisfies the 10/20 testto become“Long-Term Resident”Taxyears1 2 3 4 5 6 - - 7 8 9 10Future years ofUK tax residenceplus any “tail”(see below)IHTexposureIHT only on UK situated assetsIHT onworldwideassets= tax year of UK residence= tax year of non-residenceIf a person ceases to be UK tax resident after 9/20 tax years, then they will never become Long-TermResident.However, once a person satisfies the 10/20 test and becomes Long-Term Resident, they will retain thatstatus for:• as long as they remain UK tax resident; and• for a number of years even after ceasing to be UK tax resident.9

Budget 2024 – Non-dom proposalsThe number of years of non-UK residence required to lose Long-Term Resident status can be thought of asa “tail”. The length of the tail depends on a combination of factors but can be summarised in most casesusing the flow chart below:START HEREWas the individual domiciled outsideof the UK on 30 October 2024?YesDid they become non-UK res in2022/23 or earlier?YesNo tailNoNoHow many tax years were they taxresident in the UK in the 20 taxyears preceding their first year ofnon-UK residence?NoDid they become non-UK res in2023/24 – 2025/26?AnswerTail lengthYes9 or fewer No tail10-13 3 tax yearsWere they tax resident in the UKfor 15 or more of the 20 taxyears preceding their first year ofnon-UK residence?NoNo tail14 4 tax years15 5 tax yearsYes3 tax years16 6 tax years17 7 tax years18 8 tax years19 9 tax years20 10 tax years10