How to invest as a former non-dom

The 2025 Finance Act introduced far-reaching changes to the tax treatment of those who were resident in the UK for tax purposes but not domiciled there ('non-doms').

Prior to this change, a non-dom was taxed on the remittance basis, meaning no UK tax was levied on offshore income and gains unless or until they were remitted to the UK. Offshore structures could also be used to shelter offshore investments from income tax, capital gains tax and inheritance tax.

The new Act effectively abolished the non-dom regime from April 2025, although the old rules remain relevant for offshore income and gains received before that date.

In addition to raising new tax concerns, the 2025 changes will impact how former non-doms invest and how they hold their investments. In this article, we share some thoughts on these investment changes and how we can help.

While Rothschild & Co does not provide tax advice, we work alongside tax advisers to ensure the optimal outcome for clients.

What the Act means for investors

From 6 April 2025, UK residents are now taxed on their worldwide income and gains, unless they qualify for the four-year FIG regime (which is explained later in this article).

It is therefore no longer possible to invest in many overseas assets with a view to sheltering profits from tax. This change requires former non-doms to examine, and possibly adjust, their investment approach.

For example, with fewer benefits associated with investing overseas, UK assets may become more attractive. However, inheritance tax must also be considered for those who have not yet been resident for 10 years.

Former non-doms will also face increased tax bills. This may encourage them to hold their investments via 'wrappers'.

Wrappers are tax-efficient structures that enable taxation on investment returns to be deferred until the interest in the wrapper is disposed of (thereby providing the benefit of compound growth).

In keeping with this, an increasing number of individuals are holding their investments via a family investment company (FIC). There is no tax charge on the individual until they dispose of their shares in the FIC and, in the meantime, investments are subject to corporation tax rates, which are typically lower than personal rates. Other tax-efficient wrappers include offshore bonds and funds.

We can assist you, in conjunction with your tax adviser, to select the wrapper which is most suitable for your needs and investments.

Are bank accounts affected?

Many non-doms established offshore bank accounts to ensure they could remit monies to the UK in the most tax-efficient manner.

These bank accounts would typically include a ‘clean capital’ account, and a capital gains account. Interest earned from these accounts would be mandated to a separate income account.

Some of these offshore accounts should be maintained in the new 2025 regime, but others should be adjusted. For example, in many cases, a new income account may be required to hold interest arising after 6 April 2025.

As a minimum, former non-doms should review their offshore accounts to see what changes may be required. We have extensive experience in the operating of such bank accounts and can work with your tax adviser to provide the best structure for the future.

Navigating the FIG regime

To mitigate, at least in part, the abolition of the remittance basis, the four-year FIG (foreign income and gains) regime was introduced in April 2025.

FIG is available to ‘new arrivals’ in the UK for their first four years of UK residence.
Broadly, a new arrival in this context is an individual who has not been a UK resident in each of the 10 tax years prior to the use of the FIG regime.

Those who qualify can elect not to pay tax on their overseas income or gains, even when these funds are brought to the UK.

The regime is potentially very attractive due to its generosity of scope, extending in some cases to UK nationals returning after a lengthy period abroad, even if they were never domiciled outside the UK.

Your tax adviser can help you consider if you qualify for the regime and, if so, how you may benefit from it. We can then work with you and your tax adviser to structure your investments to harmonise with the FIG regime.

For example, even if you qualify for the regime, you may wish to have fewer UK assets or, at least, hold them via an offshore structure (such as a Luxembourg SICAV).

Similarly, you may wish to rebase your investments before the end of the four-year period in order to capture any growth tax free. Please get in touch with us to discuss how we can help you set clear and appropriate investment objectives while the regime applies.

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