The UK's non-domicile regime — a 200-year-old feature of the British tax system — was fundamentally overhauled in April 2025. For the internationally mobile individuals and expatriates who relied on it, the changes are significant. If you have not yet reviewed your position, now is the time.
What changed in April 2025
The remittance basis of taxation — which allowed non-domiciled individuals to pay UK tax only on income and gains brought into the UK — was abolished for most purposes from 6 April 2025.
In its place, the government introduced a residence-based regime. The key features are:
- New arrivals get a four-year exemption. Individuals who have not been UK tax resident in the ten years before arrival can elect to pay no UK tax on foreign income and gains for their first four years of UK residence. This is broadly similar to the old remittance basis for new arrivals, but with a strict four-year cap.
- After four years, foreign income and gains are fully taxable. Once the four-year window closes, worldwide income and gains become subject to UK tax in the normal way, regardless of whether they are remitted to the UK.
- The £30,000 and £60,000 remittance basis charges are abolished. These no longer apply, as the remittance basis itself no longer exists.
- Transitional provisions apply for existing non-doms. Those who were already claiming the remittance basis before April 2025 may benefit from certain transitional arrangements, including a Temporary Repatriation Facility (TRF) allowing overseas funds to be brought to the UK at a reduced tax rate.
Who is most affected
The reform hits hardest in three groups:
Long-term UK residents with offshore wealth. Individuals who have lived in the UK for more than four years and have been claiming the remittance basis face the biggest adjustment. From April 2025, their overseas income and gains are taxable in the UK — whether or not they bring the money here.
Returning UK nationals. UK domiciliaries who lived abroad and returned to the UK are no longer protected by the remittance basis at all. If they have been non-resident for ten or more consecutive years before returning, the new four-year FIG exemption may apply, but this needs careful analysis.
Long-term resident IHT exposure. The old concept of "deemed domicile" for IHT purposes has been replaced entirely. Under the new rules effective from 6 April 2025, individuals who have been UK-resident for 10 or more of the previous 20 tax years are "long-term residents" and are subject to UK IHT on their worldwide assets — regardless of domicile. The old 15-year deemed domicile threshold no longer applies to IHT (see our IHT article for the new long-term resident rules).
What about the Temporary Repatriation Facility?
The TRF was introduced as a transitional measure. It allows individuals who accumulated unremitted overseas income and gains under the old regime to bring those funds to the UK at a reduced rate — 12% in the 2025–26 and 2026–27 tax years, rising to 15% in 2027–28.
The TRF closes after April 2028. This is a genuine window of opportunity for those sitting on substantial offshore funds — but it requires careful planning to ensure the right funds are designated and the election is made correctly.
The inheritance tax dimension
The non-dom reform did not only change income tax and CGT. The same reform process changed how the UK's inheritance tax net applies to long-term UK residents.
Under the old rules, a non-domiciled individual became "deemed domiciled" for IHT purposes after 15 years of UK residence, at which point their worldwide assets became subject to UK IHT. From 6 April 2025, the domicile-based test has been abolished entirely and replaced with a residence-based "long-term resident" (LTR) test: an individual becomes an LTR — and subject to UK IHT on worldwide assets — once they have been UK-resident for 10 or more of the preceding 20 tax years. This means that a non-UK domiciliary who has lived in the UK for a decade is exposed to UK IHT on their worldwide assets — not just UK-situs assets.
Equally significantly, new "long-term resident" rules mean that individuals who leave the UK after a period of residence can remain within the IHT net for up to 10 years after departure. This extended tail has important implications for anyone considering leaving the UK: the exit from the IHT regime is not immediate, and planning must account for the tail period.
For those considering whether to restructure offshore assets, establish trusts, or make gifts before exposure crystallises, the timing relative to both the 10-year entry threshold and the 10-year exit tail is crucial.
Offshore portfolio bonds: still relevant under the new regime
One structure that retains significant relevance under the new residence-based regime is the offshore portfolio bond — a tax wrapper typically established by internationally mobile individuals in jurisdictions such as the Isle of Man, Ireland, or Luxembourg.
Under the old remittance basis, offshore bonds provided an efficient way to accumulate investment returns offshore without triggering a UK tax charge until remittance. Under the new regime, the logic shifts slightly, but offshore bonds remain useful:
- Gains within the bond can roll up without triggering annual tax charges (the "gross roll-up" benefit)
- Partial withdrawals of up to 5% per year of the original premium can be taken without immediate tax charge
- The bond provides a single, consolidated wrapper for a multi-asset portfolio, reducing administrative complexity
- For those leaving the UK in the future, the bond can be structured to pay out in the most tax-efficient residency
For individuals currently in their four-year exemption window, structuring investments appropriately now — before the window closes — is an important planning step.
Practical steps to take now
1. Establish your current position. Do you have four or more years of UK residence? Are you eligible for the new four-year exemption? What is your current domicile status for IHT purposes? These questions need formal tax advice — the answers drive everything else.
2. Review offshore income and gains. Identify what you hold offshore, when income and gains arose, and what has previously been protected by the remittance basis. The TRF makes it worth quantifying funds accumulated before April 2025.
3. Consider the TRF before April 2028. If you have substantial unremitted offshore funds, the Temporary Repatriation Facility may offer the most efficient route to bringing money to the UK. The window is not unlimited.
4. Review your domicile position. Domicile matters less for income tax now, but it remains central to UK IHT. If you are considering leaving the UK permanently, the new rules on when you cease to be within the UK IHT net have also changed.
5. Review offshore investments and portfolio structures. The appropriate structure for offshore investments may have changed. Offshore portfolio bonds, for example, remain relevant for internationally mobile individuals — but the analysis differs under the new regime.
The wider planning picture
The non-dom reform did not happen in isolation. The same Budget that abolished the remittance basis also confirmed that inherited pension pots will fall within the IHT estate from April 2027, changed the IHT treatment of long-term UK residents, and extended the freeze on the nil-rate band.
For internationally mobile individuals, the combined effect is a significant tightening of the UK's tax regime. Those who remain in the UK long-term need a comprehensive review. Those who are considering leaving — and Cyprus, Malta, UAE and other jurisdictions are all attracting UK-origin wealth — need to understand the exit tax implications and the new 10-year tail for IHT.
Frequently asked questions
I arrived in the UK two years ago. Am I eligible for the four-year exemption?
Potentially, if you were not UK tax resident in any of the ten years before your arrival. You would need to elect for the foreign income and gains (FIG) exemption — it is not automatic. A tax adviser should confirm your exact position, as the transitional rules are complex.
I have been UK tax resident for six years claiming the remittance basis. What happens to my unremitted overseas gains?
From April 2025, those gains are within scope of UK tax if you continue to be UK resident — regardless of remittance. However, gains that arose before April 2025 may be eligible for the Temporary Repatriation Facility, allowing them to be brought to the UK at 12% (2025–26 and 2026–27) or 15% (2027–28). This needs careful analysis to determine which funds qualify and how the election is structured.
Does the reform affect my ability to use an offshore trust?
Offshore trusts are significantly more complex under the new regime. Protections that applied to non-dom settlors under the old rules have been removed or significantly curtailed. If you have an existing offshore trust or are considering establishing one, specialist trust law advice is essential — the rules have changed materially.
I am thinking of leaving the UK for Cyprus or UAE. When does the UK stop taxing my overseas income?
Under the new residence-based regime, leaving the UK will end your liability to UK tax on overseas income and gains from the date your UK tax residency ceases — determined under the Statutory Residence Test. However, for IHT, the 10-year tail means worldwide assets remain within the UK IHT net for up to 10 years after departure. The two regimes are separate and require separate planning.
The tax rules described in this article are based on legislation and HMRC guidance as of June 2026. Tax law changes frequently. This article is for general information only and does not constitute personal tax advice. Please consult a qualified tax adviser before making any decisions. Global Investments can connect you with appropriate international tax specialists — contact us to discuss your situation.
This article is for general information only and does not constitute financial, legal or tax advice. Rules, prices and regulations change; verify current requirements with a qualified adviser before acting.