The UK tax changes in April 2025 will bring a significant shift for US expats living in the UK, particularly those who have relied on the non-dom remittance basis and the furnished holiday let (FHL) regime. These reforms will impact taxation on foreign income, capital gains, and rental properties, requiring high-net-worth individuals to reassess their financial structures.
With less than a week until the changes take effect, now is the time to prepare. Here’s what you need to know and how to take action before these new rules come into force.
The end of the non-dom remittance basis
One of the most impactful UK tax changes in April 2025 is the abolition of the non-dom remittance basis. For years, US expats classified as non-domiciled in the UK could avoid UK tax on foreign income unless they brought those funds into the country. That will no longer be the case.
What’s changing?
- From April 6, 2025, US expats living in the UK will be taxed on their worldwide income and gains, even if the funds remain offshore.
- Individuals who have claimed non-dom status will lose their ability to shield overseas assets from UK taxation.
- Relief in 2025-26 for a limited period will allow eligible individuals to claim a full exemption or a reduced rate of UK tax on their foreign income before full taxation takes effect.
- Capital gains tax re-basing means assets acquired before April 2019 can be valued at their worth on April 5, 2019, reducing taxable gains when sold.
How this affects US expats
- Higher tax burdens – Foreign income and gains, including US-based investments, will now be taxed in both the UK and the US.
- Increased compliance risks – Expats will need to meet stricter UK reporting requirements alongside their US tax filings.
- Potential restructuring needed – Those with international trusts or offshore assets must consider adjustments to avoid significant tax liabilities.
The removal of the furnished holiday let regime
Another key UK tax change in April 2025 is the elimination of Furnished Holiday Let (FHL) tax advantages. This change will impact US expats who own UK rental properties, particularly short-term holiday lets.
What’s changing?
- From April 2025, the FHL tax regime will be abolished, and rental income from holiday lets will be taxed the same as long-term residential properties.
- The ability to claim capital allowances for improvements will be removed.
- FHL properties will no longer qualify for capital gains tax reliefs, such as Business Asset Disposal Relief.
Impact on US expats
- Higher taxation on rental income – Previously, FHL activity received more beneficial tax treatment, but after April 2025, it will be treated the same as residential rental income.
- Reduced reliefs when selling properties – Capital gains tax reliefs unique to FHL properties will no longer apply.
- Reassessment of property investments – Those with UK rental properties must decide whether to convert properties to long-term rentals, sell, or explore alternative investment strategies.
How to prepare for the UK tax changes in April 2025
With the UK tax changes in April 2025 fast approaching, now is the time to take action. For example, US expats, in particular, should review their financial structures, investment strategies, and compliance obligations to avoid unnecessary tax liabilities.
Here are four things you can do now:
1. Assess residency and tax exposure
For those currently classified as non-doms, it’s essential to review UK residency plans and explore options to minimize worldwide tax exposure. Some individuals may consider relocation to jurisdictions with more favorable tax regimes.
2. Restructure offshore investments
The loss of the remittance basis means US expats must reassess offshore holdings and international trusts. The transitional tax reliefs from 2025-26 may provide a limited window to repatriate funds at a lower tax rate.
3. Reevaluate UK property strategies
With FHL tax reliefs disappearing, property owners must review their rental strategies. Some may benefit from selling before April 2025, while others may find long-term rental conversions more tax-efficient.
4. Prepare for enhanced reporting requirements
With full UK taxation on worldwide income, more complex tax filings will be required. Expats should work with cross-border tax advisors to ensure full compliance in both the UK and the US.
Protect your wealth
The UK tax changes in April 2025 mark a turning point for US expats living in the UK. The end of the non-dom remittance basis and the removal of FHL tax benefits mean that many high-net-worth individuals will need to rethink their financial planning.
At S.E. Tax Professionals, we specialise in helping US expats and international businesses navigate complex tax changes. Whether you need to restructure investments, assess your residency status, or ensure compliance, we’re here to help.
Get in touch today to discuss how these changes will affect you and explore strategies to protect your wealth.