Owning Property as a Non-Domiciled Individual: A Strategic Guide to the 2025 UK Tax Changes

Owning Property as a Non-Domiciled Individual: A Strategic Guide to the 2025 UK Tax Changes

For nearly four decades, Aston Chase has represented some of the most prestigious addresses in Prime Central London, offering discreet, tailored advice to high-net-worth individuals across the globe. The landscape for owning property as a non-domiciled individual has fundamentally evolved, with sweeping tax reforms introduced in April 2025 that redefine how overseas buyers and residents engage with the UK property market.

Despite these changes, London remains a peerless destination to live, invest, and enjoy a world-class lifestyle. With foresight and expert structuring, non-domiciled individuals can continue to benefit from the capital’s enduring appeal while navigating the new tax framework with confidence.

The Revised Tax Landscape: What Has Changed?

As of 6 April 2025, the UK abolished the remittance basis of taxation—a long-standing regime that allowed non-domiciled residents to avoid UK tax on their foreign income and gains by keeping them offshore. In its place, the government has introduced a four-year tax exemption regime for new arrivals:

• New UK Residents: Individuals who have not been UK resident for the past ten tax years may benefit from a four-year period during which foreign income and gains (FIGs) are exempt from UK taxation—even when remitted.

• Beyond Four Years: After this period, full UK tax is applied to global income and gains, aligning non-doms with UK-domiciled taxpayers.

This restructuring transforms the incentives around owning property as a non-domiciled individual, with long-term strategies now essential for mitigating tax exposure.

Inheritance Tax: A Shift from Domicile to Residency

Inheritance Tax (IHT) is now based on residency status rather than domicile:

• UK Residency Beyond 10 Years: Non-doms are now liable for IHT on their global assets once they have been UK resident for a decade.

• The 10-Year Tail Rule: Even after leaving the UK, an individual’s worldwide assets remain exposed to IHT for a further ten years.

Furthermore, UK residential property is always within the scope of IHT, regardless of ownership structure or residency, making careful planning vital for high-value property portfolios.

Acquisition & Ownership: SDLT, CGT and ATED Explained

Stamp Duty Land Tax (SDLT)

Non-residents acquiring residential property face additional charges:

• 2% Non-UK Resident Surcharge

• 3% Surcharge on Additional Properties

• 15% Flat Rate for Corporate Buyers (on properties over £500,000)

These layers can bring the top SDLT rate for some purchasers to as high as 17%, particularly relevant when owning property as a non-domiciled individual through corporate vehicles.

Capital Gains Tax (CGT)

Non-doms selling UK property are fully liable for CGT:

• Up to 24% for higher-rate taxpayers

• 25% Corporation Tax for gains within company structures

• Private Residence Relief applies only in limited, qualifying scenarios

Annual Tax on Enveloped Dwellings (ATED)

Residential properties held via companies are subject to annual ATED charges ranging from £4,450 to £292,350 (indexed annually). Reliefs may apply, particularly where the property is commercially let, but corporate ownership continues to entail transparency obligations and high costs.

Planning Opportunities: Capitalising on Transitional Reliefs

The 2025 reforms also introduced two key transitional opportunities for existing non-domiciled residents:

1. Temporary Repatriation Facility (TRF)

Until 5 April 2027, qualifying individuals can bring pre-2025 foreign income and gains into the UK at a flat 12% tax rate, allowing funds to be reinvested in UK property or assets tax-efficiently.

2. Capital Gains Tax Rebasing

Foreign assets held personally can be “rebased” to their market value as at 5 April 2025, allowing future tax liabilities to apply only to gains arising after this date—a significant advantage for those restructuring holdings.

Strategic Solutions in the New Era

As the emphasis shifts from avoidance to efficiency, many non-domiciled individuals are re-evaluating their strategies:

• De-enveloping Property to reduce ATED and simplify affairs (with caution to potential SDLT and CGT implications).

• Interest-Only Financing as a tool to reduce IHT-exposed estate value.

• Life Insurance in Trust to meet future IHT liabilities without sacrificing assets.

• Structured Gifting and Family Planning to make use of exemptions and allowances.

Conclusion

The era of light-touch taxation for non-domiciled individuals is over, but the opportunity to enjoy and invest in Prime Central London remains strong. Owning property as a non-domiciled individual now requires a structured, forward-looking approach, backed by expert legal, tax, and property advice.

At Aston Chase, we work seamlessly with clients and their advisors to navigate these changes with precision and discretion. Whether purchasing, selling, or restructuring, we ensure your property decisions are aligned with the evolving tax and legal landscape.

To explore tailored opportunities in Prime Central London, contact our expert sales team on 0207 724 4724 or visit astonchase.com.