Non-Dom Tax UK: What Wealthy Residents Need to Know in 2025

After more than two centuries, the United Kingdom's non-domiciled (non-dom) tax regime has been abolished. As of 6 April 2025, the preferential treatment that allowed UK residents with foreign domicile to defer tax on overseas income and gains has been replaced by a residence-based system known as the Foreign Income and Gains (FIG) regime. For internationally mobile wealth holders considering or already holding UK residency, understanding these changes is critical—not least because the new rules fundamentally alter how foreign assets, income, and estates are taxed.

This guide sets out the facts behind the abolition, explains how the new FIG regime works, and clarifies the transition arrangements for those who previously claimed non-dom status under the remittance basis.

What Was the Non-Dom Regime?

For over 200 years, UK tax law distinguished between an individual's residence (where they live) and their domicile (their permanent home under common law). A person resident in the UK but domiciled abroad could elect to be taxed on the remittance basis: UK-source income and gains were fully taxable, but foreign income and gains were taxed only if—and when—they were brought (remitted) into the UK. This allowed substantial tax deferral and offshore wealth structuring.

While domicile is a complex legal concept rooted in family lineage and long-term intentions, in practice it enabled high-net-worth individuals born outside the UK to claim preferential treatment even after many years of UK residence. However, those who had been UK tax resident for 15 of the previous 20 tax years became "deemed domiciled" and lost access to the remittance basis—a rule that remains relevant for inheritance tax on legacy trusts and pre-2025 structures.

Internationally mobile professionals often compared the UK's non-dom regime with other schemes such as Dubai tax residency, Monaco tax residency, and Italy's flat tax regime, weighing the benefits of territorial or lump-sum taxation against the UK's global reach.

Timeline of Abolition

The shift from domicile to residence was announced in two stages:

• 6 March 2024: Conservative Chancellor Jeremy Hunt unveiled plans to abolish the non-dom regime in the Spring Budget, proposing a four-year residence-based relief window for new arrivals.
• 30 October 2024: The incoming Labour government confirmed the abolition in the Autumn Budget, publishing a detailed technical note that set out the new FIG regime and transition arrangements.
• 6 April 2025: The new rules took legal effect. The last tax year under the remittance basis was 2024/25. From this date, domicile has been removed as a determining factor for income tax and capital gains tax, and inheritance tax is moving to a residence-based test.

The New Foreign Income and Gains (FIG) Regime

Eligibility and Core Relief

The FIG regime is elective and open to individuals who become UK tax resident after at least 10 consecutive tax years of non-UK residence. Eligible taxpayers receive 100% relief on foreign income and gains for their first four tax years of UK residence, and may remit those funds to the UK tax-free during the relief period.

According to GOV.UK guidance, the four-year clock begins in the first tax year of UK residence, provided the individual has not been UK tax resident in any of the 10 consecutive years immediately before arrival.

Key points:

• Relief is all-or-nothing: 100% relief on all foreign income and gains, or none at all.
• Claiming FIG relief results in the loss of UK personal allowances (currently £12,570 for income tax).
• The regime is not tiered or tapered; there is no pro-rata relief in years five onward.
• Day-count thresholds remain unchanged: an individual who spends 183 days or more in the UK during a tax year is automatically UK tax resident under the Statutory Residence Test.

Unlike citizenship-by-investment schemes such as the UAE Golden Visa or Portugal Golden Visa, the FIG regime confers no immigration status; it is purely a tax election available to those who already satisfy UK residence tests.

Overseas Workday Relief (OWR)

The government extended Overseas Workday Relief from two to three years. Under OWR, eligible employees may exclude foreign employment income attributable to duties performed outside the UK, provided the income is not remitted to the UK. The relief is available during the first three tax years of UK residence, again subject to the 10-year absence test.

OWR is targeted at internationally mobile executives and professionals whose roles involve substantial overseas travel and multi-jurisdictional responsibilities.

Transition Arrangements for Existing Non-Doms

Individuals who were UK resident and claiming remittance basis treatment on 5 April 2025 face a phased transition:

2025/26 Tax Year: 50% Exemption on Foreign Income

For the 2025/26 tax year only, transitioning taxpayers receive a 50% exemption on foreign income (excluding savings income). This relief does not extend to capital gains; all foreign gains arising in 2025/26 are fully taxable.

Rebasing Relief for Capital Assets

Former remittance-basis users may elect to rebase their non-UK capital assets to their value as at 5 April 2019. This one-off uplift can reduce future capital gains tax liabilities, particularly on long-held overseas property or unlisted equity. The rebasing election must be made in accordance with HMRC guidance and applies on a claim basis.

Four-Year FIG Clock for Recent Arrivals

If an individual became UK resident within the four years before 6 April 2025 and meets the 10-year absence test, they may claim the FIG regime for the remaining balance of their four-year window. For example, someone who arrived in tax year 2023/24 would have two years of FIG relief remaining (2025/26 and 2026/27), provided they were not UK resident in the preceding 10 years.

Temporary Repatriation Facility (TRF)

To encourage repatriation of offshore wealth built up under the remittance basis, HMRC has introduced a Temporary Repatriation Facility for former remittance-basis users. The TRF allows designated foreign income and gains (FIG) accumulated before 6 April 2025 to be remitted to the UK at preferential flat rates, as outlined in the October 2024 technical note:

The TRF is elective and applies per remittance; taxpayers may choose which foreign income or gains to designate under the facility. Amounts brought in outside the TRF (or after 5 April 2028) are taxed at prevailing marginal rates.

Inheritance Tax: From Domicile to Residence

One of the most significant changes is the shift of inheritance tax (IHT) from a domicile-based to a residence-based test. Under the new rules, UK IHT exposure depends on how long an individual has been UK tax resident:

• Non-UK assets of UK residents now fall within the UK IHT net once an individual has been UK resident for a specified period (the exact threshold and transition rules for IHT are detailed in HMRC's technical guidance).
• During the four-year FIG relief period, non-UK assets of newly arriving residents remain outside UK IHT scope, preserving a degree of estate-planning flexibility.
• Trusts established by former non-doms before 6 April 2025 continue to be governed by domicile-based IHT rules for legacy purposes, as confirmed in HMRC internal manuals.

The residence-based IHT test represents a marked expansion of UK taxing rights over worldwide estates, particularly for long-term residents with substantial offshore wealth.

Practical Implications for Wealthy Residents

Who Benefits from the New Regime?

The FIG regime is most attractive to:

• First-time UK residents who have been non-UK resident for at least 10 years and plan a medium-term (4–10 year) stay.
• Senior executives and entrepreneurs with substantial offshore income streams (dividends, interest, royalties) or unrealised foreign capital gains.
• Internationally mobile professionals who can structure remittances during the relief window.

Who Loses Out?

• Long-standing non-doms who previously enjoyed open-ended remittance-basis treatment (up to 15 years) now face a hard four-year cap.
• Serial returnees: individuals who were UK resident within the previous 10 years are ineligible, closing a prior planning route.
• Estate planners: the residence-based IHT test significantly broadens UK exposure, particularly for those holding non-UK real estate, portfolios, or family trusts.

Administrative and Compliance Considerations

• The FIG election is made annually on the self-assessment tax return and must be claimed within the statutory time limit.
• Loss of personal allowances means the effective tax saving depends on the size and source mix of foreign income and gains.
• Rebasing elections require contemporaneous valuations; obtaining arm's-length appraisals of foreign assets as at 5 April 2019 may involve cost and professional judgement.
• HMRC has published a dedicated FIG regime manual to guide advisers and taxpayers through the technical detail.

Comparison with Other Regimes

The abolition of the UK non-dom regime has intensified competition among jurisdictions for high-net-worth mobile residents. Key alternatives include:

• Italy's flat tax regime: a €200,000 annual substitute tax on foreign income (no time limit, subject to annual renewal).
• Portugal: formerly offered a non-habitual resident (NHR) regime; the golden visa pathway shifted to fund investment routes in 2023.
• UAE and Monaco: zero personal income tax on most sources, with residence-by-investment or employment-visa routes.

Each has distinct immigration, substance, and compliance requirements. The UK's four-year FIG window is shorter than Italy's open-ended substitute tax but retains the UK's legal framework, currency stability, and access to double-tax treaties.

Common Questions

Can I still claim non-dom status?
No. As of 6 April 2025, the concept of domicile no longer determines income tax or capital gains tax treatment. The FIG regime is the successor framework.

What if I was already UK resident on 6 April 2025?
You may claim the FIG regime for the remaining portion of your four-year window (if you meet the 10-year absence test). Otherwise, you fall under standard UK taxation with the 50% foreign income exemption for 2025/26 only.

Do I need to rebase my assets?
Rebasing to 5 April 2019 values is optional and applies only to non-UK assets held by former remittance-basis users. It can materially reduce future CGT on disposal, but requires robust valuation evidence.

Is the TRF mandatory?
No. The Temporary Repatriation Facility is an election. You may choose to remit pre-2025 foreign income and gains at the 12% or 15% rate during the prescribed windows, or defer remittance and pay standard rates later.

How does the 10-year absence test work?
You must have been non-UK resident for 10 consecutive tax years immediately before the tax year in which you first claim FIG relief. A single year of UK residence in that 10-year period disqualifies you.

Strategic Planning Points

1. Timing of arrival and departure: The four-year FIG clock starts in the year of arrival. Structuring the move to maximise the relief window—and planning an exit before year five—can preserve wealth.
2. Remittance planning: Foreign income and gains realised during the FIG period may be remitted tax-free. Defer UK remittances of pre-2025 amounts until the TRF window (or beyond, if the flat rates are unattractive).
3. Asset disposal and rebasing: Consider disposing of appreciated non-UK assets during the FIG window to crystallise gains tax-free. Alternatively, elect rebasing to reduce future liabilities.
4. Trust and estate structuring: The shift to residence-based IHT demands a comprehensive review of worldwide estate exposure. Existing trusts may still benefit from grandfathering under domicile rules; new structures should reflect the residence test.
5. Compliance and record-keeping: Maintain contemporaneous documentation of foreign income, gains, valuations, and remittances. HMRC's powers to enquire extend to offshore matters, and penalties for non-compliance have increased.

Looking Ahead

The abolition of the UK non-dom regime marks a clear policy pivot: the UK is moving from a domicile-based concession rooted in empire-era common law to a modern residence-based system designed to compete with EU and Gulf tax regimes. The four-year FIG window offers meaningful relief for genuine new arrivals, but the hard cap and loss of personal allowances mean the UK is now a medium-term rather than indefinite tax haven for foreign wealth.

For those already resident, the transition year (2025/26) and TRF windows offer a final opportunity to regularise offshore positions on favourable terms. For those considering a move, the calculus now depends on the size of foreign income streams, the mobility horizon, and the willingness to trade personal allowances for FIG relief.

The UK remains a major financial centre with robust legal institutions, double-tax treaty coverage, and deep capital markets. But after April 2025, it competes on residence-based terms—and wealthy international residents now have a clear four-year clock.

Last verified: 2025-04-06

Sources

• Tax on foreign income: 'Non-domiciled' residents – GOV.UK
• Check if you can claim the 4-year foreign income and gains regime – GOV.UK
• Changes to the taxation of non-UK domiciled individuals – GOV.UK
• Reforming the taxation of non-UK domiciled individuals – HM Treasury Technical Note (October 2024)
• Residence, domicile and the remittance basis: RDR1 – GOV.UK
• HMRC Inheritance Tax Manual: IHTM13025 – Change of Domicile
• HMRC Residence and FIG Regime Manual
• Rates of Stamp Duty Land Tax for non-UK residents – GOV.UK