Labour has confirmed the changes that are coming for non-domiciled taxpayers

The contents of the paper are unsurprising. Labour will largely implement the proposals that were made by the previous government back in March as part of the Spring Budget, albeit amended in line with public comments made in response by Rachel Reeves in the weeks that followed.

Although widely expected, the publication of the proposed new regime will no doubt make disappointing reading for many UK-resident non-domiciled individuals. We still have insufficient detail to be sure of the wider impact of these changes, but it's likely to be the case that Brits returning from a long period overseas will in fact see their tax position improve as a result.

The key points to highlight are as follows:

• The 4-year foreign income and gains (FIG) regime will replace the current remittance basis of taxation, and grants 100% relief on all non-UK income and gains (including in trust) for the first four years of UK tax residence.
• The FIG regime will only be available to new arrivals from April 2025 onwards, and any taxpayer who has been UK tax resident in any of the 10 previous tax years will be unable to benefit.
• Transitional measures have been tightened since the announcements in the Spring Budget, but there will be a Temporary Repatriation Facility to encourage the remittance of previously untaxed income and gains, potentially including those arising to trustees. The rate of tax that will apply and the length of the transitional provisions is to be determined.
• So-called “protected settlement status” will be scrapped from April 2025, meaning the income and gains of settlor interested trusts will be taxable as they arise for any year in which the settlor is UK tax resident.
• There will be government consultation and engagement in relation to a reformed version of “Overseas Workday Relief”.
• There is a longer-term plan to reform various pieces of offshore anti-avoidance legislation, likely from 2026.
• From April 2025, an individual’s worldwide estate will be within the scope of UK inheritance tax if they have been UK tax resident for 10 or more years or if they die within 10 years of ceasing UK tax residence, if they met the 10-year criteria at the point of leaving.
• Assets held in trust will no longer benefit from special IHT protection, once the settlor has been resident in the UK for 10 years. Transitional provisions are being considered in relation to existing Excluded Property Trusts.
• The government has confirmed it won't be engaging in a formal consultation on the detail to IHT changes, a departure from the approach that was taken following the Spring Budget. Instead, they'll focus on feedback received from the ‘listening sessions’ hosted by HMRC earlier this year, followed by some external engagement with stakeholders.

There are of course a lot of questions that remain unanswered by the new policy paper, such as whether there will be any anti-forestalling provisions to discourage planning, the rebasing date for unremitted gains and the scope of the Temporary Repatriation Facility.

What seems clear is that, for non-domiciled individuals who choose to stay in the UK, future tax planning will begin to look similar to that used by UK domiciliaries - with a shift away from trusts towards other (often highly effective) structures such as family investment companies.