UK Tax Reforms 2025 – Why Cyprus is the Smartest Tax Move for HNWIs
On October 30, 2024, UK Chancellor Rachel Reeves announced the abolition of the non-domicile tax regime, effective April 6, 2025. This shift to a residence-based system will tax all UK residents on worldwide income, increasing tax liabilities for HNWIs.
In response, many are exploring tax-efficient alternatives like Cyprus, which offers a favorable non-dom scheme, easy residency options, and a secure EU-regulated environment to protect wealth.
Key UK Tax Changes Affecting HNWIs in 2025
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Abolition of Non-Dom Status
Non-doms will be taxed on worldwide income, ending remittance basis benefits.
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4-Year Foreign Income Relief
New arrivals to the UK (who haven’t been UK tax residents in the past 10 years) will enjoy 100% relief on eligible foreign income and gains during their first four years of residency.
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Trust Tax Changes
Trusts lose foreign income and gains tax protection unless beneficiaries qualify for the 4-year FIG regime.
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Temporary Repatriation Facility (TRF)
Pre-2025 untaxed FIG can be taxed at 12%-15% (2025–2028) and later remitted tax-free.
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Inheritance Tax (IHT) Reform
Applies to residents for 10 of the past 20 years; non-UK trust assets lose protection if settler is long-term resident.
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Higher Capital Gains Tax (CGT)
Rates rise to 18% (standard) and 24% (higher), increasing costs for global investments.
These changes signal a sharp increase in tax liabilities for HNWIs, prompting many to explore alternatives for wealth preservation and tax efficiency.
Why Cyprus is the Ideal Tax Solution for HNWIs
Key Benefits of Cyprus Non-Dom Tax Residency Scheme
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Exemptions on Worldwide Income
Cyprus non-doms are granted a 17-year tax exemption on worldwide dividends, interest, and rental income, with flexible 183-day or 60-day residency options.
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No Inheritance Tax
Unlike the UK, Cyprus imposes no inheritance tax, enabling efficient wealth transfer and estate planning.
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Capital Gains Tax Relief
There is no capital gains tax on securities such as stocks, bonds, and shares, which is especially beneficial for investors.
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Competitive Personal Income Tax Rates
Cyprus offers progressive tax rates with significant allowances, ensuring an efficient tax structure for HNWIs.
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Favorable Trust Tax Treatment
Contrary to the UK's new rules from April 2025, Cyprus offers tax exemptions to non-domiciled trust beneficiaries. Income received from trusts in the form of interest or dividends is entirely tax-free in Cyprus, further enhancing its appeal for wealth preservation.
Streamlined Residency Process
Becoming a Cyprus tax resident is straightforward, with two flexible options to qualify for the non-dom scheme:
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183-Day Rule: Spend at least 183 days in Cyprus during a calendar year.
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60-Day Rule: Spend a minimum of 60 days in Cyprus, maintain a residence, and have professional or business ties to the country.
This simplicity, combined with Cyprus' high quality of life, makes it an appealing destination for HNWIs.
Cyprus vs. Global Tax-Friendly Jurisdictions
While other jurisdictions such as Portugal, Malta, the UAE, the US, Singapore, Canada, and Australia offer tax and residency benefits, Cyprus stands out as the most balanced and efficient option:
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Portugal: Once highly competitive, Portugal’s Non-Habitual Residency (NHR) program now faces rising costs and stricter conditions, reducing its appeal.
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Malta: While offering non-dom benefits, Malta's higher living costs and stricter residency rules make Cyprus more attractive.
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UAE: Although tax-free, the UAE lacks double taxation treaties and inheritance tax protections essential for wealth planning.
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United States: The US imposes worldwide taxation on residents and citizens, making it less appealing for tax efficiency.
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Singapore: Despite favorable tax policies, Singapore’s high living costs and competitive housing market create challenges.
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Canada and Australia: Both enforce high taxes on worldwide income, limiting their attractiveness for HNWIs.
Cyprus uniquely combines financial efficiency, lifestyle benefits, and EU access, making it a standout choice for HNWIs seeking a tax-efficient base.
Conclusion: Preserve Your Wealth with Cyprus
Relocating as a HNWI can be complex without the right partner. Oneworld Ltd simplifies the process, offering expert guidance in tax planning, wealth structuring, and residency solutions.
With our tailored strategies, we ensure a seamless transition to Cyprus, helping you unlock the full benefits of its non-domicile scheme. Trust Oneworld Ltd to secure your wealth and future in a tax-friendly jurisdiction.