Labour's manifesto launch on 13 June made two things clear in relation to their proposals for non-doms:

1. Non-dom reform is a central part of Labour's fundraising plans; and
2. Labour have doubled down on removing inheritance tax protection from existing trusts.

On the first point, the manifesto anticipates Labour raising a further £7.35 billion to fund its policy commitments. Of that, changes to the non-dom regime and other measures in relation to tax collection are projected to raise £5.23 billion (more than 72% of the total).

In other words, the non-dom reforms are absolutely central to Labour's spending plans. This supports our previous comments (What a 4 July 2024 General Election in the UK means for the non-dom changes (burges-salmon.com)) that if Labour win the election on 4 July they will be strongly incentivised to implement the proposed changes by 6 April 2025. Anyone assuming that the changes will be delayed is running a material risk.

Another noticable statement in relation to non-doms was “We will end the use of offshore trusts to avoid inheritance tax so that everyone who makes their home here in the UK pays their taxes here”. There had been rumours that Labour might water down their proposal to remove excluded property status from existing trusts settled by non-domiciled individuals but the manifesto suggests Labour remain committed to this. We may yet see some measures to soften the blow for those with existing trusts who would find it costly to unwind them but any form of grandfathering now looks highly unlikely.

The manifesto also says “We will abolish non-dom status once and for all, replacing it with a modern scheme for people genuinely in the country for a short period”  (emphasis added). Previous Labour announcements on non-dom changes have suggested the tax regime that will replace the remittance basis will be available for the first four years of tax residence, regardless of whether the individual intends to remain in the UK for longer than that. We suspect that the reference here to those “genuinely in the country for a short period” is meant to confirm that the tax reliefs offered by the new regime will only be available for a relatively short period, not that they will only benefit those who intend to stay in the UK for a short period, but we will await further detail on this. 

Our summary of Labour's proposals more generally can be found here: Labour's plans in relation to the non-dom regime (burges-salmon.com)

Our message to those affected remains:

• Some clients stand to lose out from the changes, others stand to gain
• All of those impacted should be considering their position now and working out their options as time (and advisers) will be in short supply later in the year