What was the remittance basis and who used it?

The remittance basis was a long-standing feature of UK tax law that allowed non-domiciled UK residents to choose to be taxed only on foreign income and gains that they 'remitted' (brought) to the UK. Income and gains kept offshore were not taxed in the UK. It was widely used by internationally mobile high-net-worth individuals who had foreign investment portfolios, foreign business income, or foreign property — and who managed their cash flows to avoid bringing those earnings to the UK.

Who wins and who loses under the new system?

New arrivals who have been outside the UK for at least 10 years are clear winners: the FIG regime gives them 4 years of unconditional exemption on foreign income and gains, which is simpler and in some respects more generous than the old remittance basis (no annual charge, no remittance restriction). Long-term non-dom UK residents who had been paying the £30,000 or £60,000 remittance basis charge are the primary losers — they are now subject to UK tax on worldwide income and gains from the arising basis with no equivalent shelter. Non-doms with substantial unremitted pre-2025 offshore funds have a genuine opportunity via the TRF — but the window is limited.

What is the Temporary Repatriation Facility and should I use it?

The TRF allows former remittance basis users to designate pre-6 April 2025 offshore income and gains and bring them to the UK (or simply designate them) at a reduced tax rate of 12% in 2025/26 and 2026/27, and 15% in 2027/28. After that, the facility closes. The question of whether to use the TRF depends on how much unremitted offshore income and gains you have, what tax you would otherwise pay on those funds, and whether you actually need or want the funds in the UK. For most former remittance basis users with material offshore funds, using the TRF — particularly at the 12% rate — is likely to be beneficial. But it requires specialist modelling and careful designation.

What happens to offshore income and gains I don't bring to the UK after April 2025?

Under the new arising basis, UK tax residents are taxed on worldwide income and gains as they arise — regardless of whether the money comes to the UK or stays offshore. Post-April 2025 foreign income is taxable in the UK in the year it arises, even if it remains in an offshore account. There is no longer any benefit in keeping income and gains offshore once you are taxable on the arising basis. This is a fundamental change in the planning logic for those who were previously using the remittance basis.

Does the IHT reform apply to everyone or only long-term residents?

The residence-based IHT test — under which 10 years of UK residence in the past 20 makes a person a 'long-term resident' subject to IHT on worldwide assets — applies to all UK residents who reach the 10-year threshold. For people who have been UK resident for many years, even as non-doms, this is now the operative test. The old domicile-based IHT exposure (which triggered deemed domicile at 15 of 20 years) has been replaced. If you have been UK resident for 10 or more of the past 20 years, review your IHT position urgently.

Remittance Basis Abolished April 2025: Planning Guide | Global Investments

Overview

The abolition of the remittance basis from 6 April 2025 is the most significant change to the UK's international tax rules in a generation. For the large number of non-domiciled UK residents who had used the remittance basis — some for decades — the tax planning landscape has changed fundamentally.

This guide explains what the remittance basis was, why it has been abolished, how the new system works, and what actions people affected should be taking. It is written as a companion to our more detailed guide on the 2025 non-dom reforms, focusing specifically on what former remittance basis users should do now.

This guide is for general information only. Tax rules change and individual circumstances vary. Nothing here constitutes personal tax advice. Always consult a qualified specialist tax adviser before taking any action.

What the Remittance Basis Was

The remittance basis allowed non-domiciled UK residents to elect to be taxed in the UK only on income and gains that they remitted — brought — to the UK. Foreign income and gains that remained offshore were simply not subject to UK income tax or CGT, regardless of how large they were.

For an individual with a large foreign investment portfolio generating, say, £500,000 a year in dividends and capital gains, the remittance basis meant that if none of those proceeds were brought to the UK, no UK tax was payable on them. Only the funds actually remitted — used to pay UK bills, purchase UK property, or fund UK lifestyle expenditure — were taxed.

The annual cost of the remittance basis for long-term UK residents was:

£30,000 per year once UK resident for 7 of the past 9 years (the remittance basis charge, or RBC).
£60,000 per year once UK resident for 12 of the past 14 years.
Free (no charge) for those with less than 7 years of UK residence, or those with less than £2,000 of remittance basis income per year.

Long-term non-dom UK residents — particularly those with substantial offshore income — could therefore protect their foreign income at a relatively modest annual cost. This made the UK an attractive location for wealthy internationally mobile individuals who could structure their affairs to minimise remittances.

Why It Was Abolished

The remittance basis was politically controversial for years. Critics argued that it created an unequal tax system in which very wealthy foreign nationals living in the UK paid substantially less tax on their overseas income than UK-domiciled residents earning equivalent amounts. The Labour government's decision to abolish it reflected both fiscal motivation (HMRC estimated meaningful additional tax revenue) and political considerations.

The replacement — the FIG regime for new arrivals — was designed to preserve the UK's appeal as a destination for internationally mobile wealth while removing the indefinitely extendable shelter that the remittance basis had provided for long-term residents.

The New System: Who Is Affected and How

New Arrivals: The Four-Year FIG Regime

Individuals arriving in the UK for the first time (or after at least 10 years of non-UK residence) benefit from the new Foreign Income and Gains regime. For the first four tax years of UK residence:

Foreign income and gains are entirely exempt from UK tax.
There is no monetary cap.
There is no remittance restriction — funds can be brought to the UK freely during the FIG period.
The regime must be claimed (it is not automatic, but the process is administrative rather than burdensome).

This is a meaningful improvement for new arrivals compared with the old remittance basis — simpler, more transparent, and with no annual charge for the first four years.

Existing Non-Dom UK Residents: The Main Losers

The most significantly affected group are individuals who were already UK resident when the reforms took effect — particularly those who had used the remittance basis for years and who did not qualify for FIG (because they had been UK resident within the preceding 10 years).

For these individuals, from 6 April 2025:

They are on the arising basis: UK tax on worldwide income and gains as they arise.
There is no mechanism to shelter new foreign income from UK tax (other than legitimate tax planning through allowable reliefs and structures).
Offshore income that previously accumulated untaxed now starts generating a UK tax liability from the year it arises.

For a high-income individual who had previously managed to pay only the £60,000 RBC while generating several hundred thousand pounds of offshore income annually, the change is very significant.

What About Existing Offshore Funds?

Here the Temporary Repatriation Facility (TRF) is critical.

The Temporary Repatriation Facility

What It Does

Former remittance basis users typically have accumulated pools of pre-6 April 2025 foreign income and gains that were never remitted to the UK — and therefore never taxed. Under the old rules, remitting these funds in the future would trigger a UK tax charge at the taxpayer's marginal rate (up to 45% for income, up to 24% for CGT).

The TRF provides a time-limited window to bring these funds into the UK — or simply designate them — at a substantially reduced rate:

2025/26 and 2026/27: 12% on designated amounts.
2027/28: 15% on designated amounts.
After 2027/28: the TRF closes. Subsequent remittances will be at normal rates.

The Mechanics

The TRF does not require the funds to physically move to the UK — designation is sufficient to crystallise the reduced rate. This is an important point: you do not need to bring the money to a UK bank account to use the TRF. You designate the pre-April 2025 offshore income and gains on your tax return, pay the 12–15% charge, and those funds are then "clean" for UK purposes.

The process of identifying which funds constitute remittance basis income and gains — particularly where accounts have been mixed over many years — is complex. The mixed-fund ordering rules determine which layer of funds (income, gains, or capital) is treated as remitted first, and this determines both the quantum eligible for the TRF and the tax treatment of subsequent remittances.

Most former remittance basis users with material offshore funds should be working with a specialist adviser to model their pre-April 2025 fund position and make TRF designations in a planned and controlled way.

Is It Worth Using?

For most former remittance basis users with substantial unremitted offshore income and gains, the TRF is likely to be beneficial, because:

12% is far lower than the marginal rate those funds would otherwise face (up to 45%).
After the TRF closes, the funds remain "tainted" — future remittances would be at full marginal rates.
Cleaning up the offshore fund position provides planning certainty and simplicity going forward.

The decision not to use the TRF should be based on a considered analysis — not inertia or a hope that the rules will change again.

The IHT Dimension: The Shift from Domicile to Residence

The April 2025 reforms also changed the IHT framework for non-doms. Under the old rules, an individual became "deemed domiciled" for IHT purposes after 15 of the preceding 20 tax years of UK residence. Before that point, only UK-sited assets were subject to IHT.

The new test is residence-based: an individual who has been UK resident for 10 of the past 20 tax years becomes a "long-term resident" and is subject to IHT on worldwide assets. This is a more aggressive test — it catches non-doms five years earlier than the old 15-of-20 rule.

Additionally, there is an IHT "tail" after leaving the UK: a long-term resident who departs does not immediately escape worldwide IHT exposure. The tail period depends on the length of UK residence and can extend for several years after departure.

Planning Actions for Former Remittance Basis Users

Model your pre-April 2025 unremitted offshore funds: Identify the quantum of funds eligible for the TRF. This may require analysis of years of bank and investment account statements.
Act on the TRF in 2025/26 or 2026/27: The 12% rate applies for the first two years. Designating as much as possible in those years saves 3% over waiting until 2027/28.
Review your offshore structures: Offshore trusts, companies, and other structures set up under the old regime need to be assessed under the new rules. Some may be less appropriate; some may need to be wound down or restructured.
Assess your IHT position: If you are approaching or have passed 10 years of UK residence, your worldwide assets may now be within the UK IHT net. Consider appropriate IHT planning.
Review your investment structure: Under the arising basis, the location of income-producing assets matters differently than it did under the remittance basis. Holding income-producing assets in an offshore bond or other tax-deferred wrapper may be more important now.
Consider your long-term residence strategy: If remaining in the UK long-term, the IHT tail and the arising basis are permanent features of your position. If you are considering leaving, understand the tail period and what "genuine" non-residence requires.

How Global Investments Can Help

The April 2025 reforms have created an urgent planning agenda for a significant number of former remittance basis users. Global Investments works alongside specialist UK tax counsel to help clients understand their position under the new rules, model the TRF opportunity, and reassess their offshore structures and IHT exposure.

With over 32 years of experience advising internationally mobile HNW individuals, we understand the complexity of multi-jurisdictional financial lives — and the importance of acting within the limited windows that transitional arrangements provide. Contact us promptly to arrange a review.

This guide is for general information only and does not constitute financial advice or a personal recommendation. The value of investments can fall as well as rise and you may get back less than you invest. Tax rules, pension legislation, and investment regulations change — always verify current rules and seek advice from a qualified independent financial adviser before making any financial decisions.

The Remittance Basis Is Abolished: What Happens Now?