Non-doms and the General Election: How do Labour and Conservative proposals compare?
In his Spring Budget 2024 speech on 6 March 2024, Jeremy Hunt announced radical proposals to the non-domicile tax regime, undoubtedly in an attempt to take the wind out of the sails of Labour’s promised non-dom reform. But how do the two proposals compare?
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Conservative |
Labour |
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Four-year “FIG” exempting foreign income and gains from UK tax for individuals who have not been resident in the UK for a 10-year period |
This proposal is supported by Labour |
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50% reduction in foreign income (but not gains) subject to UK tax during 2025/26 only for those losing access to the remittance basis |
Labour will not give a 50% discount |
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Rebasing of personally held assets to market value at 5/4/2019 |
Labour hasn’t commented on this proposal |
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Remittance of previous foreign income and gains at a preferential rate of 12% for 2025/26 and 2026/27 |
Labour has said it will explore ways to encourage people to remit stockpiled foreign income and gains, potentially over a longer period than 2 years |
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From 6/4/2025, income and gains arising within excluded property trusts will be taxed on UK resident settlors |
This proposal is supported by Labour |
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Inheritance tax (IHT) on worldwide assets for those who have been UK resident for 10 years, including a 10-year “tail” for those leaving the UK |
This proposal is supported by Labour |
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Non-UK assets settled into trust by a non-dom settlor pre 6/4/2025 will remain excluded property and outside the scope of IHT |
All foreign assets, whether held within an offshore trust or not, will be subject to UK IHT once an individual is UK resident for 10 years. This is a very significant difference to Conservative proposals and there will undoubtedly be significant complexity to legislate for |
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The Conservative party hasn’t proposed a UK investment incentive |
Consider whether there should be an investment incentive for UK investment income during the 4-year window so as not to disincentivise UK investment versus foreign investment |
Whichever party gains power, it’s clear that significant non-dom reforms are here to stay. However, both parties need to be careful not to force non-doms to exit the UK for more favourable tax regimes. One study suggests non-doms pay 13 times the amount of income tax than UK-doms! For the internationally mobile, beneficial regimes in France, Portugal, Italy and Switzerland, which exempt foreign income for eight years or more, could prove a more attractive option.
For more information on the Conservative non-dom proposals, see our blog Non-domicile taxation of individuals – what’s changing?
Please note: this blog is correct at the time of writing, however, proposals are not legislated and therefore could change at any time.
Alex Coghill
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