Imagine you’ve been living in the UK for a few years, enjoying its vibrant cities, rich culture, and opportunities. You may have roots elsewhere, but the UK has become your home for now. You’re aware that, as a non-domiciled resident, the UK taxman only takes a portion of your income – specifically, what you earn within the UK and any foreign money you bring into the country. This has worked well, allowing you to keep much of your global wealth untouched for up to 15 years. But change is in the air and Mauritius can be your next tax destination.

The UK government is preparing to overhaul its tax system, and these changes could significantly alter the landscape for non-doms like you. Let’s break it down.

Right now, if you’re living in the UK but your permanent home (domicile) is elsewhere, you can enjoy “non-domiciled” status. This means that for up to 15 years, you only pay taxes on your UK income and any foreign earnings you bring into the country. Your offshore income and capital gains? Completely untaxed – unless you transfer it to the UK.

However, with the new tax proposals, this 15-year window is about to shrink drastically. In the near future, non-doms will only have 4 years to enjoy this preferential tax treatment. After those 4 years, everything changes. The UK will start taxing your worldwide income and capital gains – no matter where you earn them. 

And that’s not all. After a decade of living in the UK, your global assets, which used to be safe from inheritance tax, will become part of your UK estate. This could mean up to 40% of your wealth being handed over to the tax authorities when it’s passed on to your heirs. For high-net-worth individuals with significant global assets, this is no small change.

But even if you decide to leave the UK, the tax tail could follow you for up to 10 years. This means that your worldwide wealth could still be subject to UK taxes even after you’ve left the country, creating a complex situation to navigate. In this context, it could be interesting to consider Mauritius as your new tax destination.

For years, offshore trusts were one of the key strategies used by non-doms to shelter income and capital gains from UK taxes. Under the current rules, if you set up a trust, the income and gains it generated would be separate from your personal wealth, keeping it safely out of the UK tax net.

However, the proposed changes put an end to this practice. Soon, the income and capital gains from these trusts could be attributed directly to you, the settlor, meaning that even these structures may no longer offer the protection they once did. While offshore trusts may still be part of a tax strategy, it’s crucial to speak to a financial expert who understands the new rules and can help you navigate this shift.

With these sweeping changes on the horizon, many high-net-worth individuals are starting to look elsewhere for a more favourable tax environment. One place that caught their eye was the beautiful island nation of Mauritius.

Mauritius offers a mix of sunshine, luxury, and crucially, tax benefits that rival anything the UK has to offer. Here’s why:

1. Residency Made Simple: To become a tax resident in Mauritius, you only need to live there for 183 days a year. No complicated rules or long waiting periods – just spend half your time on this paradise island, and you qualify.
2. Tax-Friendly Policies: The tax system in Mauritius is designed with wealth in mind. First, there’s a sliding tax rate on remitted income, ranging from 0% to a maximum of 20%. But it gets even better. Unlike the UK, Mauritius has:
   • No capital gains tax
   • No taxes on dividends
   • No inheritance tax 

Smart Wealth Management: By setting up simple structures like a trust or holding company, you can improve your tax efficiency even further. In Mauritius, these structures can be used to shield your income and assets from tax, ensuring that more of your wealth stays in your hands.

Of course, tax benefits aren’t the only reason people are drawn to Mauritius. Beyond the numbers, the island offers an incredibly high quality of life. The cost of living is much lower than in the UK, while still offering world-class education, healthcare, and infrastructure. The tropical climate, stunning beaches, and welcoming culture make Mauritius not only a smart tax destination, but also a dream island for those looking to relocate.

As the UK tightens its tax rules, Mauritius presents a compelling alternative – one that combines financial freedom with a beautiful, laid-back lifestyle. For many high-net-worth individuals, this shift could be the perfect excuse to trade grey skies for turquoise waters and protect their wealth for generations to come.

The UK’s proposed tax changes are poised to shake up the lives of many non-domiciled residents. That’s why speaking to financial experts is more important than ever. Firms like FFG Global specialise in helping high-net-worth individuals understand the complex tax rules and find solutions, whether through offshore trusts or relocating to more favourable jurisdictions like Mauritius.

Also, if you want to find out more about property acquisition and residency in Mauritius, contact our team at Mauritius Sotheby’s International Realty – info@sir.mu or visit our website – www.sir.mu