Non-domiciled individuals in the United Kingdom can access certain tax reliefs and benefits that can help reduce their UK tax liability. These reliefs are often designed to encourage investment and financial activity in the UK while also attracting high-net-worth individuals to establish residency in the country. However, it’s essential to note that tax laws and regulations can change, so it’s crucial to consult with a tax advisor or legal professional for the most up-to-date information and personalized guidance. It’s essential to remember that the tax status of non-domiciled individuals and the available reliefs can change over time, and the specifics can vary based on an individual’s circumstances. Additionally, some of these reliefs may have conditions and limitations. Therefore, it is highly recommended that non-domiciled individuals seek professional tax advice to ensure they are compliant with UK tax laws and to optimize their tax position based on their unique financial situation.
Here are some common tax reliefs and benefits available to non-domiciled individuals in the UK:
Remittance Basis: Non-domiciled individuals have the option to be taxed on the remittance basis. Under this basis, they are only taxed on income and gains that are brought (remitted) into the UK. This means that income and gains earned abroad and kept offshore are not subject to UK tax in most cases.
Foreign Income Taxation: Income earned from foreign sources and kept offshore is generally not subject to UK income tax. Non-doms are only liable for UK income tax on income that is brought into the UK.
Overseas Workday Relief: Non-doms who are UK residents but work for a foreign employer and have significant duties performed overseas may be eligible for Overseas Workday Relief. This relief can exempt a portion of their foreign earnings from UK taxation.
Business Investment Relief (BIR): BIR allows non-doms to invest foreign income or gains into qualifying UK businesses without triggering a tax liability. This is designed to encourage investment in UK businesses and startups.
Annual Remittance Basis Charge: Non-domiciled individuals who have been UK residents for a certain number of years (usually 7 out of the previous 9 tax years) may be subject to an annual remittance basis charge. This charge allows them to continue using the remittance basis but at a cost, which varies depending on the number of years of UK residency.
Double Taxation Treaties: The UK has a network of double taxation treaties with many countries. These treaties can provide relief from double taxation on income and gains for non-doms who have income taxable in both the UK and their home country.
Inheritance Tax (IHT) Planning: Non-domiciled individuals may use IHT planning to minimize the impact of UK inheritance tax on their worldwide assets. The availability of the domicile status and the relevant rules can affect the IHT treatment of their estate.