Major Tax Shifts in 2025: What Non-Doms and Employers Need to Know Now

As the UK government prepares to roll out one of the most significant tax regime changes in over a decade, two groups in particular need to be paying close attention:

• Foreign domiciled individuals (non-doms) with overseas income or assets

• Employers offering benefits such as company cars, fuel, or accommodation

These changes, due from April 2025, may not have grabbed headlines, but they’ll have deep and lasting effects — especially for high net worth individuals, international professionals, and businesses with benefit-in-kind arrangements.

Here’s everything you need to know — and why taking action now could save you thousands later.

Non-Doms: The End of the Remittance Basis

For years, foreign domiciled individuals — often referred to as non-doms — have been able to shelter foreign income and gains (FIG) from UK tax under the remittance basis. Under this system, tax was only paid if the money was brought into the UK.

That all changes from 6 April 2025.

The New Regime – Residence-Based Taxation

From April 2025, the remittance basis will be abolished. Instead, UK tax will apply based on residence status, not domicile.

Who qualifies for the exemption?

If you become UK tax resident on or after 6 April 2025 (and have not been resident in the UK in the previous 10 tax years), you can:

• Opt into a new 4-year FIG regime

• Be exempt from UK income tax and CGT on most foreign income and gains during that period

This regime can also apply retrospectively to individuals who returned to the UK between 2022/23 and 2024/25, for the years that fall after April 2025.

However, opting in does come with trade-offs, such as losing the personal allowance and CGT annual exemption — so advice is essential before electing into the regime.

What If You Have Existing Foreign Income or Gains?

If you’ve built up foreign income under the remittance basis before April 2025, it will still be taxed if brought into the UK after that date.

Temporary Repatriation Facility (TRF): A One-Time Opportunity

To ease the transition, a Temporary Repatriation Facility will allow you to bring in pre-April 2025 foreign income at reduced tax rates:

• 12% in 2025/26 and 2026/27
• 15% in 2027/28

Any funds repatriated under this facility must be identified on the tax return and remitted in the relevant or later year. After 2028, standard tax rules apply again.

Inheritance Tax: Worldwide Exposure for Long-Term Residents

From 6 April 2025, Inheritance Tax (IHT) will also shift to a residence-based system.

• You’ll be taxed on worldwide assets once you’ve been UK resident for 10 of the last 20 years
• This applies regardless of domicile status
• For younger individuals under 20, IHT will apply if they’ve been UK resident for the majority of their life
• After leaving the UK, your estate may still be liable for up to 10 years, depending on prior residency

These changes bring more estates into the IHT net, especially for globally mobile individuals who have spent a decade or more in the UK.

What This Means in Practice

Example 1 – Maria, International Executive

Maria moved to the UK in 2026 after 12 years abroad. Under the new regime, she qualifies for the 4-year FIG exemption and pays no UK tax on her overseas earnings until 2029/30.

But by 2036, if she remains in the UK, her worldwide assets will be fully within IHT scope.

Example 2 – Ahmed, Long-Term Non-Dom Investor

Ahmed has significant foreign investment income that he’s kept offshore under the remittance basis. From April 2025, if he remits those funds, he’ll face UK tax — unless he uses the TRF and pays tax at 12%, saving tens of thousands in tax liabilities.

Big Changes for Employers Too: Benefits, Vans & Payrolling

Company Cars: Tax on the Rise – Especially for Electric Vehicles

From 2025/26, benefit-in-kind (BIK) rates on company cars increase by 1 percentage point across the board. While this might seem small, for electric cars it represents a 50% jump in taxable value — from 2% to 3%.

By 2029/30, even electric vehicles will be taxed on 9% of their list price — 4.5 times higher than today.

The taxable value of free business fuel increases to £28,200, and electric vans remain tax-free, making them a smart option for employee fleets.

Double Cab Pick-Ups (DCPUs): A Costly Reclassification

From April 2025, DCPUs with a payload over 1 tonne will no longer be treated as vans for tax purposes. For new acquisitions:

• They will be treated as cars, not commercial vehicles
• The BIK will be based on list price and emissions rating, not a flat benefit
• Employers may lose tax advantages previously claimed on DCPUs

Vehicles acquired before April 2025 will retain the old, favourable tax treatment until April 2029.

Official Rate of Interest: More Tax on Employer Loans

The official rate of interest — used to calculate tax on low-interest or interest-free loans from employers — rises to 3.75% from 2.25% in April 2025.

From then on, this rate can change quarterly, creating more complexity when calculating benefits on employee loans.

Mandatory Payrolling of Benefits: Coming April 2026

From April 2026, employers must payroll most taxable benefits (e.g. company cars, private medical insurance), rather than reporting them on P11Ds.

This shift will:

• Simplify PAYE processing long-term
• Require employers to update payroll systems and processes
• Demand planning and software readiness well before the deadline

Summary: Who Should Be Paying Attention?

Non-doms with foreign income, offshore trusts, or overseas investments
UK returnees who may qualify for the new 4-year FIG exemption
Employers offering company cars, loans, or taxable benefits
Business owners using DCPUs or providing staff vehicles
Estate planners and wealth managers dealing with global assets

What You Should Do Now

With major tax rule changes just 12 months away, don’t leave planning to the last minute.

Merranti Accounting can help you:

• Review non-dom status and optimise use of the new FIG regime
• Plan overseas income remittances to use the TRF efficiently
• Review benefit-in-kind arrangements and vehicle tax strategy
• Prepare payroll systems for 2026 payrolling obligations
• Navigate complex IHT exposure for global assets

Book a personalised tax review today — and stay ahead of the curve.