UK: New proposed tax regime may make United Kingdom less attractive to migrate

The UK government is set to implement a new tax regime in April 2025, which will impact non-resident Indians (NRIs) and recent migrants residing in the country. This change will abolish a 200-year-old feature of the British tax system, potentially increasing the tax burden for individuals and families planning to make the UK their new home.

According to an ET report, tax experts and lawyers have been strategizing to mitigate the effects of this upcoming tax overhaul. The proposal aims to end the current tax treatment for UK resident non-domiciled (non-doms) individuals. Indian income and capital gains of NRIs are currently not taxed unless remitted to the UK.

Under the new regime, individuals arriving in the UK will not be taxed on their foreign income for the first four years of residency. However, starting from the fifth year, UK residents will be liable to pay taxes on their worldwide income, including earnings from sources like rent, bank fixed deposits, and stocks in India.

Existing NRIs who migrated two years ago as non-doms will be able to claim tax relief on their foreign income for the remaining 2 years period. Dinesh Kanabar, CEO of Dhruva Advisors LLP was quoted as saying, “Present tax rates in the UK for the highest tax band is 40% for dividend income and 45% for other income. As against this, the tax rate for the highest band in India is 10% for dividend income under the India-UK tax treaty, 28% on rental income after considering standard deduction and 40% for other income. So, this will lead to additional tax leakage of 30% on dividend income, 17% on rental income and 5% on other income for NRIs under the new regime.”

The proposed framework outlines that NRIs who have been in the UK for a decade and are currently non-doms will face a tax rate of 50% on their foreign income in the initial year. Additionally, remittances towards pre-2025 foreign income will be taxed at 12% for the first two years.

Kanabar suggested that Indian families considering migration to the UK may postpone their plans until after the next UK election, anticipating a possible revision of the tax regime by the incoming government. Families already residing in the UK are advised to assess the impact of the new tax rules on their income sources and inheritance planning.

Wealthy NRI families with offshore trusts may need to reevaluate their trust structures and distribution strategies to align with the changing regulations. Mitil Chokshi, a senior partner at Chokshi & Chokshi, emphasized the need for strategic financial planning in light of the impending tax adjustments.

The debate is ongoing on whether the shift towards taxing global income will diminish the appeal of the UK as a destination for wealthy individuals. The reduction of the non-dom period to four years may make the UK less attractive compared to countries like Spain, Portugal, and Switzerland, which offer more favorable tax regimes.

Experts in the field, including Rajesh Shah from Jayantilal Thakkar & Company and Uday Ved from KNAV, highlighted the potential need for NRIs to restructure their investments and income streams due to the new tax regulations.

15 August 2025

UAE: How AI Can Help the UAE Sustain Its Post-Grey List AML Reforms

Following almost two years spent on the Financial Action Task Force’s (FATF) so-called ‘grey list’, which identifies countries with notable deficiencies with regard to their anti-money laundering

Read More
25 October 2024

US: SEC Chairman Addresses AI and Cryptocurrency Regulation Challenges

Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), recently highlighted the challenges of regulating artificial intelligence (AI) and cryptocurrencies in the financial sector.

Read More
26 June 2025

UAE: UAE Central Bank fines exchange house Dh200m for breaking anti-money laundering rules

An exchange house has been fined Dh200 million ($54.45 million) by the UAE Central Bank for breaching anti-money laundering regulations, as the fight against illegal financial activity continues. The

Read More
19 February 2024

ASIA: Asia’s family offices increase focus on digital assets amid growing market interest

According to a Feb. 19 article from Nikkei Asia, Zann Kwan, the managing partner and chief investment officer at Revo Digital Family Office, has highlighted a growing trend among family offices in crypto.

Read More