What these new changes mean for those that are non-domiciled in the UK
The UK’s non-domiciled (non-dom) tax rules were originally designed to offer certain tax advantages to individuals who live in the UK but are not domiciled there. Significant changes to these rules have sparked widespread discussions and concerns about what the future holds for non-doms in the UK, as well as the potential tax consequences they may face.
Knowing your status
Knowing your domicile status is crucial to understanding your tax position, both in the UK and your country of origin. It’s essential to have a clear understanding and a plan in place to manage the tax consequences if you’re looking to change your domicile from one of origin to one of choice.
It is important to understand that the term of one’s “domicile” is a complex legal concept that generally refers to the country a person regards as their permanent home or with which they have a substantial connection. This differs from one’s nationality or place of residence. For tax purposes, there are two main types of domicile status to consider: one being Domicile of Origin which is acquired at birth, usually through the father and Domicile of Choice which can be acquired if a person moves to a new country with the intention of living there permanently or indefinitely.
The current tax rules in the UK
At present, non-doms have a choice in how their foreign income and gains are taxed in the UK. There are two main approaches: the ‘Arising Basis’ and the ‘Remittance Basis’. Under the Arising Basis, all worldwide income and gains are taxed as they are generated, whereas the Remittance Basis taxes only UK income and gains, and any foreign income or gains that are brought into the UK. The term 'remittance' refers to bringing foreign income or gains into the UK, which then becomes taxable. This can include transferring money into a UK bank account, using foreign income to pay for goods or services in the UK, or gifting or loaning money to a family member who then spends it in the UK.
UK law states that after an individual has been resident for 15 of the last 20 years, they are considered "deemed domiciled" and lose access to the Remittance Basis, meaning they will be taxed on their worldwide income and gains.
What’s changing?
In the 2024 Spring Budget, former Chancellor Jeremy Hunt outlined the Conservative Party’s future plans for non-doms, which included abolishing the Remittance Basis. This has long been a policy pledge of the Labour Party, and now with Labour in government, the future for non-doms in the UK remains uncertain, but according to the website blickrotherberg.com, from 6 April 2025, the Government has now confirmed that the non-domicile regime will end.
The new regime will be based on residency and the concept of domicile will be eliminated. Starting from 6 April 2025 (the 2025/26 tax year), non-domiciled individuals will no longer be able to use the remittance basis of taxation. As a result, all UK residents (except those qualifying for the new Foreign Income and Gain (FIG) regime) will be taxed on their worldwide income and capital gains, including carried interest, from 6 April 2025.
What lies ahead for non-doms?
Starting from 6 April 2025, a new Foreign Income and Gain (FIG) regime will be introduced.
This regime will be available only to individuals who have been UK tax residents for less than four tax years following a period of at least 10 years of non-residence. Qualifying individuals will not be taxed on FIG earned during their first four tax years of UK residency and can transfer these funds to the UK without incurring additional charges. However, like the current regime, those opting into the FIG regime will not be entitled to the personal allowance or the annual Capital Gains Tax (CGT) exemption.
After four tax years of UK residency, the FIG regime will no longer apply, and individuals will be taxed on their worldwide income and gains.
Non-doms should take the time to carefully consider the potential tax implications of any changes. With this in mind, non-doms are strongly advised to reflect on the following:
• Whether any assets they hold in the UK have increased in value
• The current tax structures they have in place
• The impact of double taxation and how their assets may be taxed
Are you one of the many that’s strongly considering leaving the UK?
The anticipated changes to non-dom tax rules have prompted an increase in the number of people currently planning leaving the UK. It is thus no wonder that tax-friendly countries such as Malta have become extremely attractive destinations for non-doms looking to relocate to in light of these upcoming changes in the UK.
Why Malta?
This small country has a long affiliation with the UK and was once the late Queen Elizabeth II’s home for several years, which she described as her happiest. Not only does Malta offer a desirable lifestyle but also significant financial advantages for residents. For those looking to invest in property, Malta’s appealing tax regime makes it an even more attractive destination. And if you’re considering the move or simply to invest in real estate, Homes of Quality, can help you find the perfect residence to suit your needs as well as assist you inestablishing residency and even citizenship.
Who is Homes of Quality?
Homes of Quality is the flagship luxury arm of Frank Salt Real Estate. For over 55 years, Frank Salt Real estate has been helping people achieve their real estate objectives across the Maltese islands. This includes being the trusted partner for many foreign nationals each year looking at relocating to Malta and making it their home. Apart from being leaders in the market when it comes to all aspects of real estate, the group is also aligned with ancillaryprofessional services and service providers that specialise in personal and household insurance, relocation, immigration and tax.
Through its longstanding and proud history in the country, the group has successfully forged professional connections with Malta’s leading immigration and tax specialists, but yet remains independent. This has resulted in Frank Salt Real Estate and Homes of Quality being able to offer a holistic but bespoke service that befits its discerning clients from around the globe.
We look at the incredible advantages Malta has on offer should you decide to make it your home:
No Wealth Tax in Malta
One of Malta’s most appealing features for wealthy individuals is its lack of a wealth tax. Unlike the UK's impending tax plan, which could apply to assets like property, shares, and savings, Malta does not impose any wealth taxes. This means that, once you relocate toMalta, you will not be taxed on your worldwide assets just for owning them. This alone makes Malta an attractive proposition for high-net-worth individuals seeking to protect their wealth.
No Inheritance Tax
Another significant financial advantage of moving to Malta is the absence of inheritance tax. In the UK, inheritance tax can take a substantial portion of your estate, with rates as high as 40% on estates valued above the tax-free threshold. Malta, however, does not impose an inheritance tax, allowing you to pass on your wealth to your loved ones without the burden of high taxation, by simply by paying 5% causa mortis duty. This is particularly important for those looking to secure financial stability for future generations. With Homes of Quality, you can find properties that not only serve as beautiful homes but also smart investments to pass on to your heirs without tax concerns.
Malta’s Favourable Residency and Tax Programmes
Malta offers several attractive residency programmes for foreigners, including the Malta Permanent Residence Programme (MPVP) and the Global Residence Programme (GRP). Both schemes provide favourable tax rates for expatriates, including a flat tax rate of 15% on foreign-sourced income brought into Malta in the case of the GRP. This is particularly beneficial if you plan to maintain global income streams while minimising your tax liability. By purchasing a qualifying property through Homes of Quality, you can ensure you meet the requirements to benefit from these advantageous residency programmes. You can also look at acquiring Maltese Citizenship through the Malta Citizenship by Naturalisation for Exceptional Services by Direct Investment (NESDI) regime. This allows third-country nationals the opportunity to obtain Maltese and EU Citizenship. The new rules allow individuals, along with their family dependants, to obtain Maltese citizenship by making a direct investment in the country. This will also grant applicants other benefits that come part and parcel with obtaining a Maltese passport, with Malta being a full member of the EU, including increased mobility to European countries and visa-free travel to more than 180 countries. Have a look at all the different residency options here.
Malta’s Thriving Property Market
Malta’s property market is thriving, making it a solid investment opportunity. Whether you’re looking for a luxury villa in the countryside, a modern seafront apartment, or a charming townhouse in a historic city, Homes of Quality has a range of high-end properties available. Purchasing property in Malta not only offers the chance to live in a beautiful Mediterranean setting but also provides a way to grow your wealth through real estate, especially in areas with strong rental demand. With no wealth or inheritance tax concerns, your investment in Maltese property will remain intact for you and your family’s future. If you want to know more about purchasing property in Malta, click here.
A Lifestyle like No Other
Beyond the tax benefits, Malta offers an unparalleled lifestyle. With over 300 days of sunshine a year, stunning coastlines, a rich cultural history, and excellent healthcare and education systems, Malta provides the perfect balance between work, relaxation and raising a family. Its strategic location also makes it ideal for frequent travellers, with easy access to Europe, North Africa, and the Middle East. Want to know more about Malta? Click here.
Why Choose Homes of Quality?
For those considering a move to Malta, Homes of Quality is your go-to partner for providing your property solutions. Their people have all the required characteristics and experience to deliver and ensure you achieve the very best experience when it comes to your property and relocation goals. Whether you’re looking for a permanent residence or an investment property, their expert team will guide you through every step of the process—from property selection to legal and financial advice. Read more about Homes of Quality here.
Final Thoughts
As the UK prepares to implement the changes that will affect your current tax situation, moving your residency or domicile to Malta can be a strategic way to protect your assets while enjoying a more favourable tax regime. With no wealth tax, no inheritance tax and a highly appealing lifestyle, Malta is an excellent option for anyone looking to safeguard their financial future. If you're thinking of making the move, now is the time to contact Homes of Quality and benefit from their trusted partnership. Let them help you find the perfect solution that complements your financial goals. If you are in Malta, visit us at 211 Tower Road, Sliema SLM 1602, Malta, Europe or call us on (+356) 2277 0620 or email us at info@hoq.com.mt