The UK government is made significant changes to its tax system on the 6 April 2025, abolishing the remittance basis of taxation and shifting to a residency-based system. This means that SA expats in the UK who previously benefited from the non-domiciled (non-dom) tax regime will now be taxed on their worldwide income and gains once they have been UK tax residents for more than four years.

For clients in the UK — or clients planning to relocate there — these changes introduce new complexities. Understanding how these shifts affect income tax, capital gains and inheritance tax is crucial. More importantly, clients and their advisers must work closely with Fiduciary Specialists to help clients navigate these changes, minimise tax exposure and structure their affairs efficiently.

A Move to Residency-Based Taxation

Previously, non-domiciled individuals in the UK were only taxed on their UK income and any foreign income they brought into the UK. This system allowed many SA expats to keep offshore investments largely tax-free. However, from April 2025, individuals who have been UK tax residents for more than four years will be taxed on their global income and gains, regardless of their domicile.

For those new to the UK, there is some relief. Expats who have been non-UK residents for the past 10 years can apply for a four-year exemption from UK tax on foreign income and gains. While this provides a temporary buffer, it requires careful planning to ensure long-term tax efficiency.

Higher CGT and Changes to Trust Taxation

The UK is also increasing capital gains tax (CGT) rates, which will now be:

• 18% for basic rate taxpayers (up from 10%)
• 24% for higher-rate taxpayers (up from 20%)

Trusts will also face stricter taxation. Previously, non-dom individuals with settlor-interested trusts could avoid UK tax on foreign income and gains within the trust. From April 2025, this protection will be removed, and foreign income and gains generated within these trusts will be taxed similarly to UK residents. This change will impact SA expats who have trust structures holding offshore investments.

Expanded Inheritance Tax Liability

Another major shift is in inheritance tax. Previously, this was based on domicile status, meaning many SA expats only paid inheritance tax on UK-based assets. From April 2025, individuals who have been UK tax residents for 10 or more of the last 20 years will now be subject to inheritance tax on their worldwide assets.

This means that long-term UK-based South Africans may now have exposure to 40% UK inheritance tax on their entire global estate. Those who do not meet this residency threshold will still be liable for inheritance tax on UK-situated assets, but not worldwide holdings.

Transitional Relief for Non-Doms

To help non-dom individuals adjust, the UK is offering two transitional reliefs:

1. Capital Gains Rebase – Non-doms can rebase foreign assets to their 5 April 2013 value for CGT purposes, reducing the taxable gain on future disposals.

2. Reduced Tax on Previously Unremitted Income – Non-doms who have unremitted foreign income and gains can bring this into the UK at a reduced rate of 12% for two years and 15% in the final year.

Navigating These Changes with a Fiduciary Specialist

For financial advisers, these changes mean that clients with financial interests in both SA and the UK must rethink their tax planning strategies. Expats must understand how these new rules impact:

• SA assets and tax obligations, particularly where double taxation relief applies.
• UK tax residency status and whether they can terminate their UK tax residency without triggering significant tax consequences.
• Financial structures, including trusts and offshore investments, that may now be exposed to UK tax.

For advisers working with South Africans moving to the UK, structuring assets before they become tax residents is critical. For those advising clients returning to SA, understanding the tax implications of exiting the UK system is equally important.

As more South Africans emigrate to the UK — or have family already there —understanding these tax shifts is critical. By proactively working with Fiduciary Specialists, advisers can ensure that their clients remain tax-efficient and protect their global wealth amid these regulatory changes.