[World Tax News] UK Abolishes ‘Non-Dom’ Tax Regime | New Arrivals to Pay Tax on Global Income After 4 Years and More

Editorial Team – [2024] 161 taxmann.com 436 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. UK abolishes ‘non-dom’ tax regime; new arrivals in UK pay tax on global income after expiry of 4 years

In the UK’s Spring Budget 2024, Chancellor Jeremy Hunt announced the abolition of the remittance basis for income tax and capital gains tax for non-UK domiciled, UK resident individuals (the “Non-Dom Regime”) starting April 6, 2025.

During his budget speech, the Chancellor said that ‘I have always believed that provided we protect the UK’s attractiveness to international investors, those with the broadest shoulders should pay their fair share.’

So the Government will abolish the current tax system for non-doms, get rid of the outdated concept of domicile and the remittance basis in the tax system, and replace it with a modern, simpler and fairer residency-based system, he further said.

The proposed tax regime suggests that individuals relocating to the UK, who haven’t been UK tax residents in the past ten tax years can, upon annual claim, avoid taxation on non-UK source income or gains for up to four tax years.

This exemption applies for the first four tax years of their UK tax residency, allowing them to bring non-UK source income or gains into the UK tax-free. Claims must be made annually, and it’s not necessary to claim for all four relevant tax years.

Moreover, this new tax regime extends to individuals residing in the UK for less than four tax years by April 2025 (provided they were non-UK tax residents for ten consecutive tax years prior to this), enabling them to utilize the new regime for any subsequent tax year of UK tax residency within the remaining four tax years. After four tax years of UK tax residency, individuals will be subject to UK tax on their worldwide income and gains at prevailing rates, akin to other UK tax residents.

In short, from April 2025, new arrivals to the UK will not be required to pay any tax on foreign income and gains for their first four years of UK residency, a more generous regime than at present and one of the most attractive offers in Europe.But after four years, those living in the UK will pay the same tax as other UK residents.

Source: Spring Budget 2024

2. Sri Lanka publishes guidance for taxpayers to obtain Tax Residence Certificate (TRC)

The Sri Lanka Inland Revenue Department has notified the following steps to be followed to obtain Tax Residency Certificates (TRC):

(a) A request for TRC should be made to the Commissioner (International Tax Affairs) via e-mail.

(b) The following details should be provided:

• • Name of the Person
  • Type of person – Individual/Company/Partnership
  • Taxpayer Identification Number (TIN)
  • Current address
  • Contact number and official e-mail address of the person
  • Business activity of the person
  • Copy of Business Registration Certificate
  • Reason/s for applying for TRC
  • In case of an individual, the following additional information is required:
    • Scanned copies of National Identity Card, Front page of the Passport with all Visa-issued pages and pages of arrival and departure date stamps
    • Countries for which TRC is required

(c) If a TRC has already been issued for a previous year, attach a scanned copy of that certificate.

Source: Notice to Taxpayers by Sri Lanka Inland Revenue Department

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