UK: The Proposed Abolition Of The Non-Dom Tax Regime – Don’t Panic!

Last Updated: 30 April 2015
Article by Dominic Lawrance

As discussed in our previous briefing, Labour calls time on the remittance basis, Ed Miliband has announced a policy of abolishing what he called the "non-dom tax regime", to be implemented in the event of a Labour victory in the coming election. Many individuals who are UK resident but non-UK domiciled ("RNDs") will be contemplating the implications for them of such a development, if Labour does indeed come to power, and wondering what steps they might take to mitigate its impact.

We would suggest that RNDs should try to resist the urge to panic, and should avoid kneejerk reactions. In our view, it would be highly premature to try to plan around the possible reform at this stage, when there is such uncertainty about which party or parties will make up the next government, and about the exact form of any changes to the tax regime, and indeed when those changes would take effect. It should be stressed that, as with previous changes to the RND tax regime, there is likely to be a consultation process regarding any proposed reform, which will (a) give professional advisers a good idea of how the legislation will be amended, before the changes are implemented, and (b) provide opportunities for advisers to comment and attempt to influence the new rules, to minimise unfairness to existing RNDs.

Nevertheless, there is definitely some merit in considering what kind of steps might be taken by existing RNDs (and some ideas are offered below). Non-UK residents who have been considering becoming RNDs but have not yet committed themselves would be well-advised to adopt a "wait and see" approach - postponing the commencement of UK residence, if possible, until there is greater clarity about the future of the tax regime.

It seems unlikely, in fact, that the remittance basis rules and the other tax rules relating to RNDs would be repealed in their entirety and struck from the statute book. That would present an amazing opportunity for former remittance basis users with unremitted foreign income and/or gains to remit them, after the repeal, without tax.

More likely (if Labour come to power and press ahead with this reform) is that the remittance basis rules remain applicable to historic unremitted foreign income and gains, but that from a specified date the availability of the remittance basis with respect to future foreign income and gains will be withdrawn, from all RNDs except those whose have been UK resident for less than a certain specified period. There is likely to be consultation, and "negotiation", on how long that period should be, so as to be "fair" to ordinary taxpayers but at the same time attract foreign migrant wealth and skills to the UK.

Making the assumption that this is what indeed happens, the question for RNDs who will lose the ability to use the remittance basis on that specified date is: what should I do, by way of a response to the change of regime?

For some RNDs who are using the remittance basis at present, this may not be too much of a conundrum. Undoubtedly there will be some for whom the remittance basis shields large sums from UK taxation, and who already spend a lot of time outside the UK. Some such individuals may be able to procure that their time in the UK is reduced sufficiently to achieve non-UK residence, without losing all their ties to the UK. Depending on the number of statutory ties to the UK, this may require limiting UK midnights to 120, 90, 45 or 15 per UK tax year. Because of the complexity of the rules, expert advice is advisable.

However, individuals in this position will of course need to consider whether the required change in travel patterns will make them resident anywhere else, and if so what their tax position would be in any new country of residence, factoring in not only the taxation of their income and gains but also wealth taxation, if applicable. And ceasing to be UK resident may not be an option for someone who in due course is seeking to apply for British nationality.

In cases at the opposite end of the spectrum there may, likewise, be little to debate. There are a significant number of individuals for whom the benefit, in pure tax terms, of the remittance basis is marginal. After remittance basis charges have been taken into account, and after tax has been paid on necessary remittances, the saving achieved by claiming the remittance basis may be modest; although there may be actual or perceived advantages in relation to keeping financial information confidential, reducing the scope for HMRC investigation into foreign wealth, and reducing compliance costs. Individuals in this camp are likely to move, without much demur, onto the arising (normal) basis of taxation, perhaps with only a slight increase in the annual tax cost. It is likely that they will need to continue to guard against remittances to the UK of foreign income and gains dating from previous years in which the remittance basis was claimed, which will necessitate on-going segregation of cash and assets with different tax statuses.

The more difficult cases will be those RNDs who currently use the remittance basis, where that basis of taxation avoids a substantial amount of UK tax on foreign income and/or gains, and where it would be impossible, or highly unattractive, to cease being UK resident. How such individuals should react to a withdrawal of the remittance basis will depend, to a large degree, on their personal circumstances – there are definitely no automatic or universally applicable solutions. But ideas that might be considered, with appropriate professional advice nearer the time, include:

  • Deferral of tax on investment gains by transferring assets to a company incorporated in a country with which the UK has a treaty which "blocks" the attribution of the company's gains to its UK resident shareholders, so that UK taxation of such gains is effectively postponed until a sale or liquidation of the company.
  • Deferral of tax on investment income by giving assets to an offshore trust, from which the RND and any spouse or civil partner have been excluded. This would potentially also be advantageous for inheritance tax (making the assumption that some aspects, at least, of the current inheritance tax regime for non-UK domiciliaries are retained). Investment gains might however continue to be taxable on the RND, notwithstanding his/her exclusion.
  • Deferral of tax on investment income/gains by investing in an appropriate offshore life insurance bond. Partial withdrawals of value from the bond might be possible without any tax being triggered. The bond might be held via an offshore trust, if that would be advantageous for inheritance tax.
  • Tax mitigation through the gift of assets to a non-UK resident family member who is resident in a lower (or zero) tax country. Obviously this involves a loss of control and indeed any ability to guarantee any future benefit from the assets given away. However, this simple approach may be attractive to RNDs with non-UK resident spouses, and RNDs from parts of the world where it is common for family wealth to be held by chosen family members as informal custodians.
  • The same idea but coupled with some sort of contractual mechanism (e.g. an option) to try to ensure that the assets that have been given away, or their value, can be retracted at a later date, perhaps after the RND has ceased to be UK resident.
  • The same idea but preserving influence/control over how the assets are invested. This might, for example, be achieved by means of a limited partnership or family investment company.

The above is not an exhaustive list of the options – it is intended as an illustration of the lines along which RNDs and their advisers should be thinking. It should be stressed also that, at this stage, these ideas are no more than possibilities. Their viability will depend on RNDs' personal circumstances and also on the details of how the tax regime is amended - assuming that there is, indeed, a significant change to the regime, of the kind which the Labour party has proposed.

RNDs should certainly be braced for possible change, and the need to take advice – neither of which will be particularly welcome. However, with appropriate planning, it may be that any reform of the tax regime will be manageable, and not quite as traumatic as currently feared.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.