Non-dom (non-domicile) tax status was a UK tax classification that allowed individuals resident in the United Kingdom—but whose permanent home, or "domicile," lay elsewhere—to claim favourable tax treatment on foreign income and gains. The regime, which existed for over two centuries as part of the UK tax system, was fundamentally reformed and effectively abolished from 6 April 2025 under legislative changes announced in the March 2024 Budget and confirmed by the subsequent Labour government.
Under the historical rules, non-doms could elect for the "remittance basis" of taxation, meaning they paid UK tax only on foreign income and gains that were brought into (remitted to) the UK. This stood in contrast to the "arising basis" applied to UK-domiciled residents, who paid tax on their worldwide income and gains as they arose, regardless of where the money was held or whether it entered the UK. Chancellor Jeremy Hunt announced the abolition of the non-dom regime on 6 March 2024; the Labour Party confirmed it would proceed with the plans after taking office in July 2024. The regime formally ended on 6 April 2025 and was replaced by a residence-based Foreign Income and Gains (FIG) scheme.
For individuals seeking preferential tax treatment based on residence rather than domicile, the UK's changes mirror trends seen in jurisdictions such as Dubai tax residency schemes and the UAE Golden Visa 2025 programme, both of which offer zero-tax environments for new residents who meet minimum stay requirements.
What Was Non-Dom Tax Status?
Non-dom tax status was a classification that hinged on the legal concept of domicile, which differs from residence. An individual could be resident in the UK for tax purposes—typically by spending 183 days or more in the UK tax year (6 April to 5 April)—while retaining a domicile of origin or choice in another country. Domicile is a more permanent concept than residence and usually refers to the country a person considers their permanent home or intends to return to.
UK residents who were not domiciled in the UK (non-doms) had the option to elect for the remittance basis of taxation. Under the remittance basis, foreign income and gains were taxed in the UK only if and when they were brought into (remitted to) the UK. This allowed non-doms to hold foreign earnings offshore and defer or avoid UK tax on those sums, provided the funds remained outside the UK. By contrast, UK-domiciled residents paid UK tax on all their worldwide income and gains as soon as those amounts arose, whether or not the money ever entered the UK, as explained in HMRC guidance on foreign income.
Remittance Basis and Annual Charges
Using the remittance basis came with certain trade-offs. Non-doms who claimed it typically gave up their personal income tax allowance (£12,570 for 2024/25) and their Capital Gains Tax (CGT) annual exempt amount (£3,000 for 2024/25). For non-doms who had been UK resident for longer periods, an annual remittance basis charge (RBC) also applied:
| UK Tax Residence Duration | Annual Remittance Basis Charge (RBC) |
|---|---|
| Fewer than 7 of the last 9 tax years | £0 |
| At least 7 of the last 9 tax years | £30,000 |
| At least 12 of the last 14 tax years | £60,000 |
These annual charges were paid to HMRC in return for sheltering unremitted foreign income and gains from UK tax. The remittance basis election could be claimed each year or not, depending on an individual's circumstances and whether the benefits outweighed the cost of the RBC and the loss of allowances.
Deemed Domicile Rules (Pre-2025)
Before the 2025 reforms, long-term UK residents eventually became "deemed domiciled" for tax purposes and lost access to the remittance basis altogether. The deemed domicile rules applied if an individual had been UK resident for at least 15 of the previous 20 tax years, or if they were born in the UK with a UK domicile of origin and later became UK resident again. Once deemed domiciled, individuals were taxed on the arising basis for income tax, CGT, and—crucially—inheritance tax (IHT), meaning their worldwide estate became subject to IHT at up to 40%.
The 6 April 2025 Abolition
From 6 April 2025, the remittance basis of taxation and the concept of deemed domicile were abolished for income tax and CGT purposes. All UK residents—regardless of domicile—are now taxed on the arising basis for worldwide income and gains, unless they qualify for the new four-year Foreign Income and Gains (FIG) regime. The changes were enacted through the Finance Act 2025 following consultation throughout 2024, as detailed in the HMRC technical note on the reforms.
The abolition aims to simplify the UK tax code, increase revenue, and address concerns that the non-dom regime was outdated and unfair. The government estimates the changes will raise revenue in the medium term, although transitional reliefs and emigration by high-net-worth individuals may dampen the immediate fiscal impact.
The New Foreign Income and Gains (FIG) Regime
The replacement system, formally called the Foreign Income and Gains (FIG) regime, is purely residence-based. It offers new arrivals to the UK 100% relief on foreign income and gains for the first four tax years of UK tax residence, provided they meet strict eligibility criteria.
Eligibility for the FIG Regime
To qualify for the four-year FIG relief, an individual must:
- Be UK tax resident in the relevant tax year (determined by the statutory residence test).
- Not have been UK tax resident in any of the 10 consecutive tax years immediately before becoming UK resident again.
A single year of UK tax residence during the 10-year look-back period disqualifies the individual from the FIG regime. If eligible, the relief applies automatically for the first four tax years of UK residence. After those four years, all worldwide income and gains are taxed on the arising basis, with no option to extend the FIG relief or claim the old remittance basis, as clarified in the HMRC international manual on the 6 April 2025 reforms.
Scope of Relief
During the four qualifying years, foreign income and gains are wholly exempt from UK tax, whether or not they are remitted to the UK. UK-source income (such as UK employment income, UK rental income, or UK dividends) and UK capital gains remain taxable in the normal way, at the standard UK income tax rates (20%, 40%, 45%) and CGT rates (10%, 18%, 20%, or 24%, depending on the asset). Individuals using the FIG regime retain their full personal allowance (£12,570 for 2024/25) and CGT annual exempt amount (£3,000 for 2024/25)—a significant difference from the old remittance basis, where these allowances were often surrendered.
The FIG regime is simpler than the historical remittance basis: there are no annual charges, no need to track remittances or mixed-fund accounts, and no deemed domicile clock. However, it is available only once in a lifetime; an individual who uses the four-year relief and later leaves the UK must again satisfy the 10-year non-residence requirement before qualifying for FIG relief on a future return.
Overseas Workday Relief (OWR)
Alongside the FIG regime, the government has retained and simplified Overseas Workday Relief (OWR) for new arrivals in employment. From 6 April 2025, OWR is available for the first three tax years of UK residence and allows employees to exclude from UK tax the portion of their earnings attributable to duties performed outside the UK, provided the foreign earnings are not remitted to the UK. Eligibility for OWR is linked to the FIG regime: an employee must elect to use the FIG regime and meet the same 10-year non-residence test, as confirmed in the technical amendments to the residence-based tax regime.
OWR can be particularly valuable for internationally mobile executives and is unaffected by the domicile concept. The relief lasts three years regardless of FIG status, but the two regimes are designed to work together for new arrivals.
Transitional Rules for Existing Non-Doms
Recognising that many current non-doms had structured their affairs around the remittance basis, the government introduced a package of transitional reliefs for the 2025/26 and 2026/27 tax years, detailed in the technical note on the reforms.
Temporary Repatriation Facility (TRF)
A Temporary Repatriation Facility (TRF) allows former users of the remittance basis to bring previously untaxed foreign income and gains into the UK at reduced tax rates during a two-year window:
- 2025/26 tax year: 12% rate on remitted foreign income and gains.
- 2026/27 tax year: Rates return to normal (up to 45% for income, up to 24% for gains).
The TRF applies only to income and gains that arose before 6 April 2025 and were not previously remitted or taxed in the UK. The 12% rate is a significant discount on standard income tax and CGT rates and is intended to encourage individuals to repatriate offshore wealth rather than emigrate or keep funds permanently outside the UK.
Transitional Relief for New FIG Users
Individuals who were already UK resident on 6 April 2025 but qualify for the FIG regime (because they had been UK resident for fewer than four years and met the 10-year non-residence test) can use the FIG relief for any remaining years of the four-year period. For example, someone who became UK resident in 2023/24 and had not been resident in the prior 10 years would be eligible for FIG relief for 2025/26, 2026/27, and 2027/28 (the second, third, and fourth years of their UK residence), as outlined in the policy summary.
This transitional rule prevents a cliff-edge for recent arrivals who had planned around the old non-dom regime but would now benefit from the simpler FIG system.
Inheritance Tax (IHT) and the New 10-Year Residence Test
The 6 April 2025 reforms also changed the IHT rules for non-UK domiciles. Historically, non-doms were subject to IHT only on their UK-situs assets (such as UK property and UK bank accounts), while their foreign assets remained outside the UK IHT net. The deemed-domicile rule brought long-term residents into the IHT charge on worldwide assets after 15 of 20 years of UK residence.
From 6 April 2025, IHT exposure is determined by a new 10-year residence test. An individual becomes subject to IHT on worldwide assets if they have been UK tax resident for at least 10 of the previous 20 tax years at the time of death or gift. This is a lower threshold than the old 15-year deemed-domicile rule, meaning more individuals will fall within the UK IHT regime sooner. Once the 10-year test is met, an individual remains within the IHT charge for a further period even after leaving the UK, depending on how long they were UK resident (up to 10 years of continued exposure, known as the "tail").
The new IHT test is separate from the FIG regime and applies regardless of whether an individual used the old remittance basis or the new FIG relief. Trusts settled by non-UK domiciles before 6 April 2025 will be subject to new "grandfathering" rules that limit the IHT advantages previously available, as explained in the HMRC technical note.
Stamp Duty Land Tax (SDLT) Surcharge for Non-Residents
Although distinct from income tax and IHT, the SDLT surcharge for non-UK residents remains relevant for high-net-worth individuals considering UK property. Non-UK residents purchasing residential property in England and Northern Ireland pay an additional 2% surcharge on top of the standard SDLT rates, introduced in April 2021. For SDLT purposes, an individual is treated as non-UK resident if they are not present in the UK for at least 183 days during the 12 months before their purchase.
The SDLT residency test is separate from the tax-residence test for income tax and CGT. Even individuals eligible for the FIG regime or previously claiming the remittance basis may be liable for the 2% surcharge if they do not meet the 183-day SDLT test in the relevant period. This surcharge is not affected by the 6 April 2025 reforms and remains in force.
Comparing the New UK Regime to Other Jurisdictions
The abolition of the non-dom regime and introduction of the four-year FIG relief brings the UK closer to systems operated in other jurisdictions that offer temporary tax incentives for new residents, while moving away from the domicile-based distinction that was unique to the UK and a handful of Commonwealth countries.
High-net-worth individuals evaluating tax-efficient residence options may now compare the UK FIG regime to programmes such as the Portugal Golden Visa, the Italy flat tax regime (which charges a flat €100,000 annual substitute tax on foreign income for up to 15 years), or the Monaco tax residency pathway (which imposes no income tax but requires proof of accommodation and financial self-sufficiency). Each of these regimes has different minimum investment, stay, and renewal requirements, and none are directly comparable in structure to the new UK FIG relief, which is time-limited, non-renewable, and fully residence-based.
For individuals prioritising zero tax on foreign income beyond four years, jurisdictions such as the UAE—accessible via the UAE Golden Visa 2025—or Monaco may offer longer-term advantages, provided the individual is willing to relocate and meet those countries' residence and investment criteria.
Planning Implications and Next Steps
The abolition of the non-dom regime represents the most significant change to UK taxation of internationally mobile individuals in modern times. For existing non-doms, the transitional reliefs—particularly the 12% Temporary Repatriation Facility for 2025/26—offer a one-time opportunity to regularise offshore holdings at a reduced cost. Individuals should review the character and location of their foreign income and gains, the availability of foreign tax credits, and whether repatriation now or in future years is more tax-efficient.
New arrivals who meet the 10-year non-residence test should confirm their eligibility for the FIG regime and consider whether the four-year relief justifies relocating to the UK, given the full arising-basis charge that will apply from year five onwards. For those planning longer UK stays, succession and estate planning under the new 10-year IHT residence test is critical, particularly for individuals with significant worldwide assets and family outside the UK.
Professionals advising non-doms and internationally mobile clients should ensure compliance with the new rules, including the changes to transfer-of-assets legislation set out in HMRC's international manual on the income charge, which closes certain anti-avoidance loopholes from 6 April 2025. Trustees, family offices, and wealth managers should also review existing trust structures settled under the old regime to understand the impact of the new IHT grandfathering rules.
The UK government has indicated that further technical amendments and guidance will be published as the new regime beds in. Individuals affected by the changes should seek specialist tax and legal advice tailored to their specific circumstances, residence history, and long-term plans.
Last verified: 2025-01-19
Sources
- Changes to the taxation of non-UK domiciled individuals
- Tax on foreign income: residence
- Tax on foreign income: non-domiciled residents
- Reforming the taxation of non-UK domiciled individuals – Technical Note
- INTM603625 – Transfer of assets abroad: 6 April 2025 non-UK domicile reforms: Introduction
- INTM603655 – Transfer of assets abroad: 6 April 2025 non-UK domicile reforms: Changes to ITA07/S727 income charge
- Technical amendments to the residence-based tax regime
- Income Tax rates and Personal Allowances
- Capital Gains Tax allowances
- Rates of Stamp Duty Land Tax for non-UK residents
