UK Abolishes Non-Dom Tax Status - What It Means for High-Net-Worth UK Residents
As of 6 April 2025, the UK officially abolished its non-domiciled (non-dom) tax regime. Announced in the Spring Budget 2024 and now in full effect, these reforms represent the most significant shake-up of the UK’s international tax framework in two decades.
Under the previous regime, UK residents who were non-doms could elect to be taxed on a remittance basis, meaning they only paid UK tax on foreign income and gains if and when those funds were brought into the UK. This approach offered international professionals and high-net-worth individuals a reliable and completely legal way to manage their tax exposure on foreign assets. However, that option is now gone.
What Changed?
The UK has now moved to a residence-based tax system for all individuals, regardless of domicile. The key changes include:
- Worldwide taxation: All UK residents are now subject to tax on their worldwide income and capital gains, even if those assets are never remitted to the UK.
- Abolition of the remittance basis: The option to only pay tax on foreign income when it enters the UK has been removed.
- End of trust protections: Previously, non-doms could set up settlor-interested offshore trusts that were protected from UK taxation. As of April 2025, foreign income and gains in offshore trusts are now taxed annually if the settlor is UK-resident.
- Inheritance Tax (IHT) Reforms: The UK is transitioning from a domicile-based to a residence-based IHT system. Individuals become subject to UK IHT on worldwide assets after 10 years of UK tax residence and may remain exposed for up to 10 years after leaving.
- Temporary repatriation facility: A transitional window until April 2028 allows historic foreign income and gains to be remitted to the UK at reduced rates (12% or 15%).
- New 4-Year relief for inbound UK residents: New UK residents who were non-resident for at least 10 of the past 12 years may benefit from a temporary exemption on foreign income and gains for up to four years.
For globally mobile professionals and wealth holders, these changes substantially increase their long-term tax costs of maintaining UK residency. Offshore structures that were once effective for deferral and asset protection are now subject to annual taxation, making them far less effective. As a result, estate planning must be revisited in light of the UK’s move to a residence-based IHT regime.
Cyprus: A Strategic and Tax-Efficient Alternative
In response to the UK’s changes, many
British nationals are now evaluating relocation. Cyprus has emerged as a
leading alternative, combining transparent tax laws, a common law legal system
familiar to UK nationals, EU alignment, and an exceptional quality of life.
Key Benefits of Becoming a Tax Resident in Cyprus
- Attractive Non-Dom regime
Cyprus offers a highly attractive non-dom regime. Qualifying individuals benefit from zero tax on dividends and passive interest for 17 years, regardless of remittance or location. - Low and progressive income tax
If you earn over €55,000 annually, you may qualify for a 50% income tax exemption, drastically reducing effective tax rates. Combined with the exemptions from Special Defence Contribution (SDC) on dividends, interest, and rental income, your overall tax burden can fall as low as 3.6% to 17.5%. - No wealth, gift, or inheritance taxes
Cyprus imposes no taxes on global assets, wealth transfers, or gifts, making it an optimal jurisdiction for long-term wealth preservation and succession planning. - Flexible Tax Residency Options
Cyprus offers two routes to tax residency. The first is the 183-day rule, which grants tax residency to individuals who spend at least 183 days per year in the country. Alternatively, the 60-day rule allows individuals to qualify for tax residency by spending a minimum of 60 days in Cyprus, provided they maintain a permanent residence (either owned or rented), have business or professional ties in Cyprus, and not reside in any single country for more than 183 days.
Real Estate: Your Gateway to Relocation and Tax Freedom
Cyprus’s Permanent Residency Program is one of the most straightforward in Europe and offers a compelling route for
third-party nationals, including British citizens, to secure EU residency through real estate investment. By investing a minimum €300,000 + VAT in eligible residential property, individuals and their families can obtain permanent
residence. This enables access to Cyprus’s generous tax benefits without the need for complex offshore structures, while enjoying the lifestyle advantage of an EU Mediterranean country.
At Domenica Group, we specialise in premium properties in Paphos, from seaside villas with panoramic views to modern city apartments with top-tier amenities and proximity to international schools. We provide full-service guidance from property selection to legal and residency support, ensuring a smooth and confident relocation to Cyprus.
Ready to Take Control of Your Financial Future?
The UK’s recent tax reforms have fundamentally changed the long-term implications of maintaining UK residency, especially for high-net-worth individuals and families with international ties. These changes are prompting many to reconsider where they live, invest, and build their future.
Relocating to Paphos offers lifestyle, stability, and tax efficiency in a transparent EU jurisdiction with straightforward residency through property investment, allowing you to plan with confidence and protect your family’s future.
Contact our expert team at Domenica Group to explore how Cyprus can offer not just residency, but lasting freedom and financial peace of mind.
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