UK tax changes to hit expats

A proposed change by the UK Government of its tax regime to one taxing foreign income and gains on a residence basis will have significant consequences for South Africans planning to emigrate to the UK. A Business Day report says the change would cause the scrapping of the centuries-old nondomicile (nondom) tax regime. From 6 April 2025, all UK residents will be subject to taxes on all foreign income and capital gains, regardless of their domicile status. Institute for International Tax and Finance CEO Michael Kransdorff said that under the proposed regime SA expats would no longer be able to shield their SA assets from the UK tax authority. ‘South Africans that move to the UK will be subject to UK tax on SA income earned and on the gains made on the disposal of their SA assets, including the withdrawal of their SA retirement savings,’ he said. Kransdorff said that nondom tax status allowed UK tax residents who could cite another country as their real domicile, to pay taxes only on their UK sourced income and assets, with the option of electing to pay UK tax on their foreign income and gains only if they remitted that money to the UK. ‘This benefited many SA-born UK tax residents over centuries who sheltered their offshore earnings and assets from UK taxation.’ To avoid discouraging foreign immigrants from moving to the UK and to soften the blow for existing nondomiciled residents, the UK Government has established transitional rules that will allow new immigrants to receive a four-year tax holiday on their non-UK income and gains, regardless whether the funds are remitted to the UK.