RIYADH: Arab investors will face significant changes to their UK tax affairs after the British government announced reforms to rules for non-UK domiciled individuals.

Effective from April 6, 2025, these changes will alter the tax efficiency strategies that many Arab investors have relied upon for UK property and investments. 

So-called “non-dom” status is a tax classification that allows UK residents whose permanent domicile is in a different country to limit their tax liability on foreign earnings. 

They have traditionally only been required to pay UK taxes on income generated within Britain, creating considerable tax savings for those who designate a lower-tax country as their domicile. 

Starting in 2025, non-dom status will be abolished and replaced with a residency-based tax regime.

In an interview with Arab News, Vijay Valecha, chief investment officer at Century Financial said: “The disadvantages of the tax measures announced is that if an Arab buyer is planning to buy additional properties in the UK, they have to pay an increased surcharge of 5 percent.” 

Moreover, if a buyer intends to dispose of a non-residential property, they have to pay increased capital gains tax 18 percent — 24 percent, he explained. 

Arabs living in the UK who earn income abroad will also suffer from the abolishment of the non-UK domiciled tax status as their tax burden will increase, according to Valecha.

The CIO did reveal some positive news for investors, saying: “Non-resident Arab buyers can still purchase residential property in the UK at a 2 percent surcharge, a potential benefit.” 

He added: “Newly arrived investors will enjoy a four-year grace period where foreign income and gains remain untaxed, offering short-term planning flexibility.” 

Key changes 

Under the current system, non-dom status can be obtained if an individual was born outside the UK or if their father’s permanent residence was in another country; or by becoming a domicile of choice, which is a classification available to individuals over 16 who decide to live indefinitely in another country. 

From April 2025, newly arrived UK residents who have not been living in the country in the prior 10 years will receive a 100 percent tax relief on foreign income and gains for their first four years. 

For capital gains tax, lower-rate taxpayers earning under £50,270 ($54,760) will now be taxed at 18 percent, up from 10 percent, while higher-rate taxpayers will see their rates increase to 24 percent from 20 percent. 

Additionally, non-UK assets will be subject to UK inheritance tax if the individual has been a resident for at least 10 of the last 20 years. 

Effective Oct. 31, 2024, the stamp duty surcharge on second homes increased from 3 percent to 5 percent. 

Long-term strategies 

Valecha anticipated that these changes may negatively impact the long-term investment strategies of Arab buyers, “due to higher surcharges on additional homes, capital gains taxes on disposal of secondary homes, and abolishment of the non-dom status.” 

“In order to optimize their portfolio, Arab buyers can consider diversifying their portfolio to other asset classes and geographical regions that offer favorable tax regimes,” he said. 

The UAE, for instance, could see increased interest due to its tax-free environment, and “Arab buyers looking to diversify can now consider investing their wealth in their own country.” This, he added, could improve capital flows in the UAE and boost the country’s real estate sector. 

The UK government projects that these reforms could generate up to £12.7 billion in additional revenue over five years, underscoring the significant contribution expected from foreign investors. 

With strategic planning, Valecha suggested that Arab investors can still leverage competitive opportunities in the UK market, even within this redefined landscape.

JEDDAH: Saudi budget airline flynas will add two new African destinations to its network starting in January 2025, aligning with its broader expansion strategy across the continent. 

Beginning Jan. 8, the airline will operate three weekly flights from Riyadh to Entebbe, Uganda, and the same number from Jeddah to Djibouti, according to the airline’s statement. 

The expansion is part of the airline’s “We Connect the World to the Kingdom” initiative and supports Saudi Arabia’s National Civil Aviation Strategy, which aims to expand connectivity to 250 international destinations and reach 330 million passengers. 

The routes to Entebbe and Djibouti also align with Saudi Arabia’s goal of welcoming 150 million tourists annually by 2030 and advancing the Pilgrims Experience Program, which seeks to streamline travel access to the holy cities of Makkah and Madinah. 

The airline’s new routes to Uganda and Djibouti mark additional steps in its effort to grow its international network, offering more accessible travel for passengers across the region. 

This announcement follows flynas’s recent increase in domestic seat capacity by over 480,000 on routes to Taif, Abha, and Al-Baha during the summer, marking a 21 percent rise from the previous year. 

The airline has also expanded its fleet with the arrival of its 53rd A320neo in July as part of its ongoing order of 120 Airbus aircraft. 

The new model airplane arrived at King Khalid International Airport in Riyadh, reinforcing flynas’s position as a prominent low-cost airline in the Middle East and ranking among the top four globally. 

During the UK’s Farnborough International Airshow in July, flynas signed a deal to double its fleet, with plans to purchase 160 additional Airbus planes, including 30 wide-body A330neos and 130 A320s. 

CEO and Managing Director Bander Al-Mohanna described the agreement as a key step toward establishing flynas as a leading global low-cost carrier. 

Since its inception in 2007, flynas has grown to serve over 70 domestic and international destinations, with 1,500 weekly flights and more than 80 million passengers flown to date.