Remittance Basis and Non-Dom Planning

The non-domicile (non-dom) tax regime has been the most debated area of UK tax law in recent years, and the most consequential for internationally mobile high-net-worth individuals. The 2025 reforms — which took effect from 6 April 2025 — represented the most fundamental change to the regime in a generation. Understanding the new landscape is essential for anyone currently in the UK on a non-dom basis, and for those considering relocating to the UK.

Domicile: a brief recap

Domicile is a legal concept distinct from tax residence. In simplified terms, your domicile is the country you consider your permanent home and to which you intend to return. Most UK nationals have a UK domicile of origin. Non-UK nationals who come to the UK typically retain their domicile of origin (their country of birth or permanent home prior to arrival) unless they form a genuine, settled intention to remain in the UK indefinitely.

Domicile has historically been the gateway to the remittance basis: only individuals who are UK resident but not UK domiciled could access it.

The remittance basis: how it worked (pre-2025)

Under the pre-reform regime, a non-domiciled UK resident could elect for the remittance basis, which meant:

• Foreign income and gains kept outside the UK were not subject to UK income tax or CGT
• Only foreign income and gains actually remitted (brought) to the UK were taxed
• UK income and gains were always taxable on the arising basis (no special treatment for UK-sourced income)
• After seven years of UK residence, accessing the remittance basis required paying a Remittance Basis Charge (RBC): £30,000/year once UK resident in at least 7 of the previous 9 tax years, rising to £60,000/year once UK resident in at least 12 of the previous 14 tax years
• Once UK resident in at least 15 of the previous 20 tax years, deemed domicile applied, ending access to the remittance basis entirely

The remittance basis was a powerful planning tool but required very careful account management. Foreign income and gains that "touched" the UK — even indirectly — could constitute a taxable remittance.

The 2025 non-dom reform: the new framework

The Labour government's 2025 Budget legislated fundamental changes to the non-dom regime, effective from 6 April 2025. The headline change was the abolition of the domicile-based remittance basis and its replacement with a residency-based system known as the Foreign Income and Gains (FIG) regime.

The FIG regime

Under the FIG regime:

• Individuals who become newly UK resident from 6 April 2025 can access a four-year exemption on foreign income and gains
• During the four-year exemption period, foreign income and gains (wherever remitted) are exempt from UK tax
• After four years of UK residence, the individual moves to the arising basis — all worldwide income and gains are taxable in the UK, regardless of remittance
• The four-year period resets only if the individual has been non-UK resident for at least 10 consecutive years before the new arrival

The key practical change: there is no longer a permanent remittance basis available to long-term UK residents. Those who have been in the UK for more than four years (and are not within transitional protections) are fully taxed on arising worldwide income and gains.

Transitional arrangements for existing non-doms

Individuals who were accessing the remittance basis before 6 April 2025 received certain transitional protections:

• Overseas Workday Relief is available for the first four tax years of UK residence (extended from three years and restructured under the new regime, subject to an annual cap)
• A temporary repatriation facility was introduced (TRF) allowing offshore income and gains accumulated under the old remittance basis to be brought to the UK (or simply designated) at a reduced tax rate of 12% in the 2025/26 and 2026/27 tax years, and 15% in 2027/28, after which the facility closes
• Qualifying former remittance basis users may benefit from rebasing personally held foreign assets to their 5 April 2017 market value for CGT purposes on disposals made on or after 6 April 2025, where the relevant conditions are met

These transitional provisions are complex and subject to specific conditions. A comprehensive review by a UK tax specialist is essential for any individual who was using the remittance basis before April 2025.

What constitutes a remittance

Although the general remittance basis has been abolished, the concept of remittance remains relevant for transitional provisions, existing offshore structures, and for understanding the TRF.

A remittance broadly occurs when foreign income or gains are:

• Brought to the UK directly — funds transferred to a UK bank account
• Used for UK services or goods — paying a UK bill from an offshore account
• Used to fund UK property — using offshore funds to purchase UK real estate
• Indirectly used in the UK through loans or other arrangements that economically bring the funds into the UK

The remittance rules are notoriously detailed, with anti-avoidance provisions that catch many transactions that appear to keep funds outside the UK.

Clean capital accounts

The clean capital concept was central to managing remittance basis exposure under the old regime and remains relevant for managing offshore funds. Clean capital refers to pre-UK-arrival capital, funds on which UK tax has been paid, or funds that are not foreign income or gains. These can generally be remitted to the UK without triggering a tax charge.

The discipline of maintaining separate accounts for:

1. Pre-UK arrival capital (clean capital)
2. Post-UK arrival foreign income and gains (taxable if remitted under the old regime)
3. UK income and gains (always taxable in the UK)

...was — and to some extent remains — important for those with offshore funds. Mixing clean capital with foreign income in the same account contaminates the clean capital with a tax charge on the whole.

Practical planning post-2025 reform

For individuals affected by the 2025 reforms, the key actions are:

New arrivals: the FIG regime provides a four-year window of complete exemption on foreign income and gains — a clean, simple benefit that does not require the complex account management of the old regime. New arrivals should be aware of the cliff edge at year four.

Existing non-doms with more than four years UK residence: the arising basis now applies. Review offshore structures to understand current tax exposure. Consider whether the TRF is advantageous for bringing accumulated offshore funds to the UK at 12%.

All non-doms: review offshore investment bonds and trusts that were structured for the remittance basis. The interaction between these structures and the new rules may need reassessment.

Considering departing the UK: leaving the UK to "reset" the FIG clock (10 years of non-UK residence required) is a legitimate — but significant — personal decision. Tax advice should be sought before making such a move.

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This article is for general information only and does not constitute tax or legal advice. The 2025 non-dom reforms are complex and the specific rules continue to be subject to HMRC guidance. Your position depends on your individual circumstances. Always seek advice from a qualified UK tax specialist with expertise in non-domicile matters.

How Global Investments can help

Global Investments works alongside specialist UK tax advisers to help non-domiciled clients understand and manage their position under the new framework. We can assist with reviewing offshore investment structures, managing the transition from the old regime, and ensuring your financial plan reflects the post-2025 rules accurately. Contact our team or read our guide on tax planning for UK expats for the wider context.