What does non-dom mean and how are the rules changing?

Before July’s general election, Labour pledged to toughen existing Tory plans to abolish non-dom tax status.

In March 2024, the-then Conservative chancellor Jeremy Hunt had announced that the non-dom tax regime would be phased out.

Under Mr Hunt’s plans, people who moved to the UK from April 2025 would not have to pay tax on money they earned overseas for the first four years.

After that period, if they continued to live in the UK, they would pay the same tax as everyone else.

People who currently have nom-dom status would be allowed a two-year transition period, during which they would be encouraged to bring their foreign wealth into the UK system.

The former chancellor said getting rid of the non-dom rules would raise £2.7bn a year by 2028-29.

Labour said it would go further, and the Budget confirmed the government will abolish the non-dom status from April 2025, replacing it with a residence-based regime.

It will also bring foreign earnings into the inheritance tax system, but will extend the transition period for people to bring money onshore from two years to three.

Rachel Reeves said the package of measures would raise £12.7bn over the next five years.