What’s Next for US Expats in the UK?

Written by Edward Fricker

The UK tax landscape is undergoing a seismic shift. As of 6 April 2025, the long-standing non-domicile (non-dom) tax regime will be replaced with a residence-based taxation model. This means that all UK residents, regardless of their domicile status, will be taxed on their worldwide income and gains.

For US expats and other international professionals in the UK, this transformation raises many questions about financial planning, tax exposure, and investment strategies. Let’s break down the key changes and how they might impact you.

Key Tax Implications and Planning Strategies

From 6 April 2025, all UK residents will be taxed on their worldwide income and gains. However, transitional reliefs have been introduced to ease the financial burden.

• The Foreign Income and Gains (FIG) Regime provides a four-year exemption from UK tax on foreign income and gains for new UK residents and returning UK citizens who have spent at least 10 consecutive years abroad. During this period, foreign income and gains can be brought into the UK without additional taxes.
• The Temporary Repatriation Facility (TRF) offers a reduced tax rate for unremitted foreign income and gains earned before April 2025. A 12% tax rate applies for tax years 2025/26 and 2026/27, increasing to 15% for 2027/28. This presents an opportunity to remit funds at a significantly lower tax rate.
• Rebasing of Foreign Assets allows individuals who have previously claimed the remittance basis and are not deemed domiciled before April 2025 to rebase their foreign assets to their value as of 5 April 2017. This means UK Capital Gains Tax (CGT) will only apply to gains made after this date, reducing potential tax liabilities.

With the abolition of deemed domicile status, the scope of UK Inheritance Tax (IHT) will significantly expand. Long-term residents (those who have spent at least 10 out of the last 20 years in the UK) will have their worldwide assets subject to UK IHT.

If you have spent 10-13 years in the UK, your estate will still be liable for UK IHT for three years after departure. For those who have spent 20+ years in the UK, the liability period extends up to 10 years after leaving the country.

Careful estate planning and structuring of wealth across jurisdictions will be essential to mitigate unexpected tax burdens.

Proactive Planning: Essential Steps for Preparing Ahead

At MASECO Private Wealth, we are actively advising clients on how to prepare for these changes. Key strategies include:

• Timing asset sales in light of the incoming changes in April 2025.
• Electing for the remittance basis in 2024/25 to optimise tax positioning.
• Using the TRF opportunity to remit historical foreign income and gains at lower tax rates.
• Reassessing trust structures to align with new tax rules.
• Planning for increased IHT exposure with a strategic long-term tax plan.

Next Steps:

Consult a tax specialist to review your financial situation and assess opportunities to minimise exposure through strategic planning. Stay informed, these rules are evolving, and expert guidance is key.

Do not let excessive tax erode your wealth, act now to optimise your financial future!

The Legal Stuff

• This document is intended for the recipient only.
• The information contained herein is subject to copyright with all rights reserved. The document may not be copied, forwarded or otherwise distributed, in whole or in part, to any other party without our written consent.
• Any impact from the actual or speculative tax changes contained in this document will depend on the individual circumstances of each client and may be subject to change in the future.
• Nothing in this document constitutes investment, tax or any other type of advice and should not be construed as such.
• MASECO is not a tax specialist and we recommend that anyone considering investing seeks their own tax advice.
• Information about tax changes is based on our current understanding of the changes that might be announced by the Chancellor.
• The views expressed in this article do not necessarily reflect the views of MASECO as a whole or any part thereof.
• This document is provided for information purposes only and is not intended to be relied upon as a forecast, research or investment advice.
• This document does not constitute a recommendation, offer or solicitation to buy or sell any products or to adopt an investment strategy.

Information about potential tax benefits is based on our understanding of current tax law and practice and may be subject to change.  The levels and bases of, and reliefs from, taxation is subject to change.  The tax treatment depends on the individual circumstances of each individual and may be subject to change in the future.

MASECO LLP (trading as MASECO Private Wealth and MASECO Institutional) is established as a limited liability partnership under the laws of England and Wales and has its registered office at The Kodak Building, 11 Keeley Street, London, WC2B 4BA.

MASECO LLP is authorised and regulated by the Financial Conduct Authority for the conduct of investment business in the UK and is registered with the US Securities and Exchange Commission as a Registered Investment Advisor.