The UK’s proposals for non-doms and their structures

The UK’s new tax

The UK’s new tax regime for internationally connected individuals and their structures (as of 25 June 2025) The length of the tail period depends on a combination of factors but can be summarised in most cases using the flow chart below: START HERE Was the individual domiciled outside of the UK on 30 October 2024? Yes Did they become non-UK res in 2022/23 or earlier? Yes No tail No No How many tax years were they tax resident in the UK in the 20 tax years preceding their first year of non-UK residence? No Did they become non-UK res in 2023/24 - 2025/26? Answer Tail length Yes 9 or fewer No tail 10-13 3 tax years Were they tax resident in the UK for 15 or more of the 20 tax years preceding their first year of non-UK residence? No No tail 14 4 tax years 15 5 tax years Yes 3 tax years 16 6 tax years 17 7 tax years 18 8 tax years 19 9 tax years 20 10 tax years 12

The UK’s new tax regime for internationally connected individuals and their structures (as of 25 June 2025) Two visual examples of how the tail operates in practice are shown below: = tax year of UK residence = tax year of non-residence Satisfies the 10/20 test to become “Long-Term Resident” Ceases to be UK tax resident Ceases to be “Long-Term Resident” Tax years 10/20 years of UK tax residence 11 12 1 2 3 4 onwards IHT exposure IHT only on UK assets IHT on worldwide assets IHT only on UK assets Satisfies the 10/20 test to become “Long-Term Resident” Ceases to be UK tax resident Ceases to be “Long-Term Resident” Tax years 10/20 years of UK tax residence 11 12 13 14 14 15 1 2 3 4 5 6 onwards IHT exposure IHT only on UK assets IHT on worldwide assets IHT only on UK assets A different rule for those aged 20 and under If the 10/20 test applied to everyone then many children who have only ever lived in the UK would not satisfy it, e.g. a 9 year old would not yet have accrued 10 years of UK tax residence. To address this issue, those aged 20 or younger are Long-Term Resident if they have been UK resident for at least 50% of the tax years since their birth. A child under the age of 1 will not be Long-Term Resident in the tax year of their birth even if born in the UK. Transitional rules for some non-doms When the IHT changes were first announced there was a concern that individuals who had ceased to be exposed to IHT on their worldwide estates under the previous domicile based tests would be pulled back into the IHT net by the new regime. There is a transitional rule for those who would otherwise be in this position and this is why the flow chart above begins by asking whether the individual was domiciled outside of the UK on 30 October 2024. 13