With effect from 6th April 2025 the tax rules for non-doms is to be abolished and replaced with a new regime.
All non-residents (including returning British nationals) who arrive to reside in the UK and who have qualified as not-resident for the previous 10 consecutive tax years can opt for their overseas income and gains to be exempt from UK tax for the first 4 tax years of UK residence, which includes split years. After those 4 years they will be liable for UK tax on worldwide income and gains.
However, if opting for this method they will lose their entitlement to claim the tax free personal allowance and annual capital gains tax exemption.
There will also be a 3 year Temporary Repatriation Facility for the remiittance of pre-6th April 2025 foreign income and gains. For 2025/26 and 2026/27 a reduced tax rate of 12% will apply. For the final year 2027/28 the tax rate will be 15%.
Baktax 02/03/25
Making Tax Digital for Income Tax and Self Assessment (MTD for ITSA) - digital record keeping and quarterly reporting - the replacement for the self assessment tax return will commence on 6th April 2026. Initially, this will apply to those sole traders and landlords with gross income over £50000. Those with gross income of over £30000 up to £50000 will join MTD for ITSA on 6th April 2027. Those with gross income of over £20000 up to £30000 will now join MTD for ITSA from 6th April 2028. General partnerships will join at a later date to be annonced.
However, it was announced in the Spring 2025 Budget that those who are required to complete the supplementary page SA109 of the tax return ie those claiming non-resident status or those who are UK resident and claiming exemption in respect of foreign income/gains (see previous section on the replacement of the non-dom tax rules) will now not be brought into MTD for ITSA until 6th April 2027.
For landlords where the rental property is jointly owned, the threshold(s) mentioned above relate to each individual landlord’s total share of the gross rents and not the total gross rents from the property.
Quarterly filing is to be made within 30 days of the end of each quarter i.e. 5th July, 5th October, 5th January and 5th April to avoid penalties.
Baktax 27/03/25
With the closure of HMRC's offshore disclosure facilities on 31st December 2015, the incentives of a reduced penalty for the declaration of previously undisclosed income and gains to bring one's tax affairs up to date are no longer available. (That is with the exception of the Let Property Campaign which is still available to declare income from rental property).
However, a Worldwide Disclosure Facility was opened in 5th September 2016 to give a last opportunity for declarations to be made, before HMRC introduce new tougher sanctions from 1st October 2018.
100 countries have signed up to exchange information on a multilateral basis which will dramatically increase transparency for international tax purposes.
Baktax 21/09/16