What high-net-worth Africans need to know

By Julie Howard, Private Client & Tax Partner, and Annabella King, Associate, Boodle Hatfield.

Key Points

• From April 2025, the UK will replace its “non-dom” tax regime, making residence status key in determining tax exposure for high-net-worth individuals.
• African Parents visiting children studying in the UK may trigger tax residency if they exceed specific stay limits under the UK’s Statutory Residence Test.
• High-net-worth Africans with UK ties should track their days in the UK and seek expert advice to avoid unintended tax liabilities.

For years, the UK has offered a favorable tax regime for “non-doms”—individuals who consider their permanent home to be outside the UK. However, major changes are coming. Starting April 6, 2025, the concept of domicile will no longer apply for UK tax purposes. Instead, an individual’s residence status will be even more important in determining the extent of their UK tax exposure.

This shift is particularly important for high-net-worth (HNW) Africans with “ties” to the UK. Many own properties, conduct business, or have children studying in the country. The more of these “ties” that an individual has to the UK, the more careful they must be about how much time they spend in the UK without triggering UK tax residence under the UK’s Statutory Residence Test (SRT).

Why residence status matters

The new tax rules replace the existing “non-dom” system and eliminate the remittance basis of taxation. This means that foreign income and gains will no longer be exempt from UK tax simply because they are kept outside the country.

However, there is a transitional benefit, African parents moving to the UK who have not been a UK tax resident in the previous 10 years may benefit from a favorable tax regime for their first four years of UK residence, with no exposure to UK tax on foreign income and gains realized during that four year period.

Inheritance tax rules are also changing. After 10 years of UK residence, individuals will be subject to UK inheritance tax on their worldwide assets. This makes it even more important to understand one’s residency status under the new framework.

How UK tax residency is determined

Understanding whether or not you are a UK resident is therefore crucial under the new rules. An individual’s tax residence is determined under the SRT. This test is made up of three parts: the automatic non-residence test, the automatic UK residence test and the sufficient ties test.

While the SRT provides a clear framework for determining residency, some definitions, such as “work” and “home,” are specific to the legislation, and there are nuances that can lead to unexpected outcomes, particularly for parents visiting children who study in the UK.

Understanding “ties” under the SRT

One important aspect of the SRT is the concept of “ties,” which are connections an individual has to the UK. If you do not qualify automatically as a UK resident or non-resident, the number of ties you have and the number of days you spend in the UK will determine your residency status. There are five possible ties to be aware of, which you can apply in the following ways:

• Family tie – If your spouse, civil partner, or minor child is a UK resident.
• Work tie – If you work in the UK for at least 40 days in a tax year, for more than three hours per day.
• Accommodation tie – If you have a home in the UK that is available for at least 91 days in the tax year, and you spend at least one night there.
• 90-day tie – If you spent more than 90 days in the UK in either of the previous two tax years.
• Country tie – If you spent more days in the UK than in any other country.

The family tie: A key concern for African parents

For African parents with children studying in the UK, a “family tie” may apply, potentially restricting the amount of time they can spend in the UK without becoming a tax resident. This will be the case if you have a child under 18 who is enrolled in full-time education in the UK and your child spends 21 days or more in the UK outside term time, i.e., during the Christmas, Easter, or summer holidays, and you visit your child for 61 or more days in the UK, for any part of the day, during the tax year.

It is therefore very important to keep track of the number of days you are both seeing your child in the UK and the length of time they are spending in the UK during the main school holidays. If you acquire a family tie in this manner and you have other UK ties, such as available accommodation or a work tie, you may need to restrict the number of days you spend in the UK to avoid becoming a UK tax resident.

Seek professional advice to avoid unintended tax consequences

If you have financial or personal connections to the UK, it’s important to get professional advice on how many days you can spend in the country without triggering tax residency. The new rules mean that what was once a simple visit could now lead to unexpected tax bills. Proper planning and expert guidance can help you navigate these changes and avoid unnecessary tax burdens.