Non-Dom Reform 2025: What Changed and What It Means for You

The April 2025 non-domicile reforms were the most significant change to the taxation of internationally mobile individuals in a generation. The remittance basis — the long-standing arrangement under which non-UK domiciled UK residents paid UK tax only on income and gains remitted to the UK — has been abolished. In its place is a new framework centred on residence, not domicile.

If you are an expat with UK ties, a foreign national living in the UK, or a long-term UK resident with overseas assets, these changes are likely to affect you materially. Here is what changed, who it affects and what to do.

What was the remittance basis?

Under the old system, individuals who were resident in the UK but not domiciled there could elect to be taxed only on:

• UK-source income and gains on the arising basis (taxable as they arose), plus
• Foreign income and gains — but only when brought ("remitted") to the UK

This meant a non-dom living in the UK could hold substantial overseas assets that generated income or gains without those amounts being subject to UK tax, provided they were kept outside the UK. For the first seven years of UK residence, the election was free. After seven years, a Remittance Basis Charge of £30,000 applied; after twelve years, £60,000.

The remittance basis attracted considerable use among wealthy foreign nationals living in the UK and has been the subject of political controversy for many years. The Labour government committed to reforming it as part of its manifesto, and the reform was legislated in the Finance Act 2025.

The new framework: the four-year FIG regime

The remittance basis was abolished with effect from 6 April 2025. In its place, the government introduced the Foreign Income and Gains (FIG) regime — a time-limited exemption for genuinely new arrivals to the UK.

Under the FIG regime:

• New UK residents (those who have not been UK-resident in any of the preceding ten years) can elect to exclude foreign income and gains from UK tax for the first four tax years of UK residence
• The exemption is available without any minimum tax charge or annual fee
• Foreign income and gains during the four-year period can be brought to the UK freely, without triggering UK tax
• After four years, the individual is taxed on worldwide income and gains on the arising basis — the same as any other UK resident

This is a significant narrowing of the relief. Under the old system, a non-dom could shelter overseas income for their entire UK residence (subject to the remittance basis charges after year seven). Under the new system, the exemption lasts only four years.

Who is affected?

Immediately affected — existing non-doms

Individuals who were claiming the remittance basis before April 2025 and who have been UK-resident for more than four years are no longer eligible for any special treatment. From 6 April 2025, they are taxed on worldwide income and gains as they arise.

For many this represents a substantial increase in tax liability — particularly those with large offshore investment portfolios, overseas rental income or foreign business interests.

New arrivals (post-April 2025)

Those moving to the UK for the first time, or returning after ten or more years of non-residence, qualify for the four-year FIG regime. This provides a meaningful — if time-limited — window to establish UK financial life while keeping overseas affairs off the UK tax return.

Long-term UK residents — IHT exposure

Separately from the income and gains changes, the reforms also extended UK IHT liability to "long-term residents" — those who have been UK-resident for 10 or more of the preceding 20 years. These individuals are now subject to UK IHT on their worldwide assets, regardless of domicile. A tail period of up to ten years applies after departure.

The Temporary Repatriation Facility (TRF)

One of the most practically useful elements of the reform for existing non-doms is the Temporary Repatriation Facility (TRF).

The TRF allows individuals who previously claimed the remittance basis to bring pre-April 2025 foreign income and gains to the UK — and pay a reduced rate of UK tax rather than the standard income tax or CGT rates:

• 12% for funds remitted in 2025/26 and 2026/27
• 15% for funds remitted in 2027/28

The TRF applies only to "clean capital" funds that were accumulated while the remittance basis was being claimed. It does not reduce tax on UK-source income or on income and gains arising after April 2025.

For those with substantial offshore funds accumulated over years of non-dom status, the TRF represents a meaningful opportunity to normalise their UK financial position at a reduced cost. The window closes after 2027/28.

Planning strategies that remain

For new arrivals in their FIG period:

• Structure overseas investments to maximise returns during the four-year window before worldwide taxation applies
• Plan the timing of large disposals (property sales, business exits) to fall within the four-year period where possible
• Consider whether to consolidate or restructure offshore assets before the four-year window expires

For those post-FIG or long-term residents:

• Offshore bonds (life assurance wrappers) remain useful — growth rolls up free of UK tax during the policy term, and encashment can be timed for lower-income years
• Pension contributions in early UK residence years can build a tax-efficient UK retirement pot
• Trust planning should be reviewed — offshore trusts settled before becoming a long-term resident may retain excluded property status, but legal advice is essential

IHT planning:

• Individuals approaching the ten-year long-term resident threshold should review their position urgently
• Offshore assets held directly will fall within the IHT estate once the threshold is crossed
• Permanent departure from the UK removes IHT exposure after the tail period, but the tail runs for up to ten years

What to do now

If you were previously claiming the remittance basis and have not already done so, you should:

1. Review your 2024/25 and 2025/26 UK tax position with a qualified tax adviser
2. Assess whether the TRF applies to your offshore funds and quantify the potential saving
3. Review any offshore trusts and their tax status under the new rules
4. Consider your IHT position if you have been UK-resident for ten or more years
5. Ensure your investment structure is optimised for the new worldwide arising basis

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The impact on UK higher education and investment

The non-dom reform has had visible behavioural effects. HMRC data and practitioner reports as of early 2026 indicate that a material number of high-net-worth non-doms who were long-term UK residents have either relocated or are in the process of doing so. The primary destination markets appear to be the UAE, Switzerland, Italy (which operates its own lump-sum tax regime — the flat-tax was €100,000 per year until August 2024, raised to €200,000 for new joiners from that date, and raised again to €300,000 from 1 January 2026), Monaco, and the Channel Islands.

This has implications for UK revenue — the practical trade-off between taxing remaining long-term non-doms at the arising basis versus losing them to lower-tax jurisdictions entirely is a live policy debate. The government's position is that the reform is fairer and that the revenue from those who remain will exceed the loss from those who leave; this remains to be validated in practice.

For investors who are staying in the UK, the reform also affects the planning landscape for new arrivals. The UK's four-year FIG regime is now comparable to other jurisdictions that offer time-limited exemptions for new residents — Italy's seven-year regime, Switzerland's lump-sum taxation, Portugal's former NHR (now replaced). The UK remains competitive for a four-year window; the challenge is the step-change to full arising-basis taxation after year four.

Common planning errors to avoid

Several mistakes are appearing repeatedly among non-doms attempting to adapt to the new regime:

Assuming offshore trusts remain automatically protected. Offshore trusts settled before a long-term resident threshold are protected in many circumstances, but this protection is not automatic and has conditions. The trust must genuinely be structured as a discretionary trust with independent trustees; if HMRC can show the settlor retains control, the protection is lost.

Remitting funds without TRF analysis. Bringing historic offshore income or gains to the UK without checking whether the TRF applies is a wasted opportunity. The TRF rates of 12–15% are substantially lower than the marginal rates that would otherwise apply. This window closes after 2027/28.

Failing to establish genuine non-residency on departure. Leaving the UK does not automatically break UK tax residency. The Statutory Residence Test has specific conditions for establishing non-residence, including limits on days spent in the UK and a requirement to have "sufficient ties" severed. Non-doms who leave but continue spending significant time in the UK may find they remain within the UK tax net.

Overlooking the interaction with capital gains. The arising basis for long-term residents applies to capital gains as well as income. Investors who have unrealised gains on overseas assets and have recently become subject to the arising basis need to consider whether to crystallise and pay CGT at current rates, or hold and pay on future disposals. The answer depends on the asset, the current gain, and the anticipated future trajectory.

Frequently asked questions

I claimed the remittance basis for ten years. Can I use the TRF? Yes, provided you claimed the remittance basis while UK-resident and have "relevant foreign income or gains" that you remitted (or intend to remit) to the UK after 6 April 2025. The TRF applies to pre-April 2025 offshore funds that were accumulated during remittance basis years. The rate is 12% in 2025/26 and 2026/27, rising to 15% in 2027/28. After 2027/28 the TRF closes.

Does the FIG regime apply if I return to the UK after living abroad for six years (not ten)? No. The FIG regime requires that you have not been UK-resident in any of the ten tax years immediately preceding your first qualifying year of UK residence. Six years of non-residence is insufficient — your UK residence from before you left would fall within the ten-year lookback window, and you would not meet the condition. You must have at least ten consecutive years of non-UK residence before the year of arrival to qualify for the FIG regime.

My income is entirely foreign — do I still need to file a UK return? If you have become subject to the arising basis (are UK-resident and outside the four-year FIG window), yes — you must report and pay tax on worldwide income and gains regardless of whether any funds are remitted to the UK. Failure to report is non-compliance. Those in the FIG period must elect into the regime each year and report qualifying foreign income on their return (even if exempt).

How Global Investments can help

We advise internationally mobile clients on the intersection of UK tax, offshore investment structures and estate planning. Our team works with specialist UK tax counsel to provide coordinated advice.

Contact us to discuss how the non-dom reforms affect your situation.

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This article reflects UK tax law as enacted or announced as of June 2026. Tax rules change and individual circumstances vary significantly. This does not constitute personal tax advice.