It has been a busy start to 2025 for STEP’s UK Technical Committee, which, has diligently articulated several key technical considerations to HMRC regarding the proposed abolition and replacement of the UK’s non-domiciled tax regime.

Having carefully considered the content of the Finance Bill 2024-25, STEP’s representations have emphasised the importance of clear guidelines to ensure that advisors and clients can navigate the new rules effectively. This applies to both the transition to the residence-based tax system and the introduction of a four-year grace period for non UK residents.

By and large, these reforms represent the most significant shift in the UK tax landscape in 50 years, posing serious challenges. With the risk of losing substantial foreign investment due to an exodus of high-net-worth individuals, well-designed transitional measures will be crucial in mitigating the departure of offshore investment and easing compliance burdens.

As such, we have advocated for targeted adjustments, including ensuring that the extension of the benefit charge under the Settlements Code does not create unintended immediate tax liabilities. Our representations to HMRC address these technical concerns. We suggest transitional provisions to help provide clarity and fairness, reducing the risk of unnecessary disruption to international investment and existing estate plans.

We have also raised concerns regarding the practical implementation of the Temporary Repatriation Facility (TRF). We recommend that HMRC provide comprehensive guidance on the designation process, applicable tax rates and the treatment of previously untaxed foreign income and gains.

We welcome the retention and reform of Overseas Workday Relief (OWR). We call on the government to provide guidelines on its application, including the calculation of the cap and the removal of the requirement for income to remain offshore.

We support the opportunity for current and past remittance basis users to rebase foreign assets to their 5 April 2017 value. However, the government must clarify the specific conditions and procedures to ensure taxpayers can effectively utilise this provision.

HMRC has invited further comments from STEP and industry bodies, asking for our top five points for urgent guidance. We have submitted this supplementary paper, which focuses on the following issues:

• the treatment of remittances involving intangible property, particularly under new section 809L9A(b);
• the implications of amendments to section 809P(12) regarding previously remitted funds;
• confirmation on the application of the Temporary Repatriation Facility (TRF) to offshore income gains matched against trust distributions;
• the inheritance tax treatment of excluded property under the reservation of benefit rules; and
• the need for further clarification on the designation of qualifying overseas property under the TRF, especially in cases where multiple assets derive from the same unremitted income or gains.

Ensuring comprehensive and timely guidance on these matters will be critical to navigating a smooth transition to the new rules.

Read STEP’s consultation responses:

• Reforming the Taxation of Non-UK Domiciled Individuals – Policy Points Arising Out of the Draft Finance Bill Legislation
• STEP Supplementary Comments: Non-Dom Changes – Drafting Points on the Draft Finance Bill Legislation

Ben Bell, Government Affairs Manager at STEP