The UK Non-Dom Regime: History, Abolition, and What Comes Next

The UK non-domicile regime was, for more than a century, one of the most attractive features of the UK tax system for internationally mobile wealthy individuals. It allowed long-term UK residents to pay UK tax only on income and gains brought into the UK — leaving offshore income and gains untouched, potentially indefinitely.

That regime ended on 6 April 2025. Understanding its history, its replacement, and the transitional provisions is essential for any HNW individual with a connection to the UK.

The Historical Non-Dom Rules

The concept of domicile — distinct from nationality and residence — has roots in 19th century English law. Domicile is essentially your permanent legal home: the country you intend to return to ultimately. An individual born to a British father acquired a UK domicile of origin; someone born to a non-UK national typically acquired a domicile of origin in their father's country.

The tax significance was substantial. A UK resident who was not UK-domiciled could elect to pay UK income tax and capital gains tax only on foreign income and gains that were "remitted" — physically brought into or used in — the UK. Income kept offshore and never brought to the UK was not subject to UK tax at all.

This "remittance basis" came with conditions:

• The personal allowance was lost. Electing the remittance basis for income tax meant forfeiting the personal allowance (currently £12,570) and the CGT annual exempt amount.
• The remittance basis charge. Long-term UK residents paid a fixed annual charge to access the remittance basis: £30,000 for those who had been UK resident for at least 7 of the preceding 9 tax years; £60,000 for 12 of the preceding 14 years.
• The deemed domicile rule. After 15 of any 20 tax years as a UK resident (from 6 April 2017 onwards), individuals became "deemed UK domiciled" for income tax, CGT, and IHT purposes, and lost access to the remittance basis entirely. (Before April 2017, the IHT threshold had been 17 of 20 years; the Finance (No. 2) Act 2017 aligned all three taxes at 15 of 20 years.)

At peak, approximately 75,000 individuals claimed the remittance basis in the UK. The policy debate about the regime centred on whether it served as an incentive for wealth creators and international business people to base themselves in London — or whether it was an inequitable privilege for the globally mobile rich.

The April 2025 Abolition

The Finance Act 2025, passed under the Labour government elected in July 2024, abolished the remittance basis with effect from 6 April 2025. The changes were first announced in the March 2024 Budget by the then-Conservative Chancellor and retained with modifications by the incoming government.

From 6 April 2025, UK tax resident individuals are taxed on their worldwide income and gains, regardless of domicile status.

The Foreign Income and Gains (FIG) Regime

To ease the transition and preserve the UK's attractiveness to new arrivals, the government introduced the Foreign Income and Gains (FIG) regime as a replacement:

Who qualifies: Individuals who have not been UK tax resident in any of the 10 tax years immediately preceding their arrival in the UK.

What the FIG regime provides: During the first four tax years of UK residency, eligible individuals can elect on their self-assessment return to not pay UK tax on foreign income and gains. The foreign income and gains are not taxed in the UK at all — not merely taxed on remittance — for those four years.

The election is annual. An individual can elect for the FIG regime in some years but not others during their first four years. There is no obligation to use it consistently.

No remittance basis charge. Unlike the old regime, the FIG regime does not impose an annual charge. This is potentially more generous for high-income individuals in their early years in the UK.

The trade-off: Once four years are up, worldwide income and gains are fully taxable in the UK. There is no long-term deferral mechanism as there was under the old regime for those below the deemed domicile threshold.

The Inheritance Tax Change

Alongside the income tax and CGT reforms, the IHT treatment of non-doms changed fundamentally. From April 2025, UK IHT liability is determined by long-term residence rather than domicile:

• An individual who has been UK resident for 10 of the last 20 tax years becomes a "long-term resident" and is subject to UK IHT on worldwide assets.
• Individuals below the long-term resident threshold are subject to UK IHT only on UK-sited assets.
• The tail period after leaving the UK: once you have been a long-term resident, you remain within scope of UK IHT for a period of up to 10 years after leaving UK tax residency (depending on how long you were a long-term resident).

The excluded property trust change: Under the old rules, assets held in an offshore trust established before the settler became deemed UK domiciled retained "excluded property" status for IHT purposes, sheltering the trust's assets from UK IHT even after the settler became deemed domiciled. The Finance Act 2025 changed this: from April 2025, an excluded property trust loses its protected status once the settlor becomes a long-term UK resident (under the new 10-of-20 years test). The trust assets can then fall within the UK IHT net.

The Impact on Existing Non-Doms

For individuals who were already claiming the remittance basis in the tax years before April 2025, the transition involved several planning considerations:

The CGT rebasing election. Individuals who were within scope of the old non-dom rules (i.e., had not already become deemed domiciled before April 2025) were offered a transitional CGT rebasing. They could elect to treat the base cost of their foreign assets as the market value on 5 April 2017. This increased the base cost for CGT, reducing the eventual gain on disposal. (Note: the separate 5 April 2019 rebasing date applies in the context of non-resident CGT on UK non-residential property — it is a different provision and not part of the non-dom transitional relief.)

The overseas workdays relief. A partial continuation of some benefits exists for those eligible for a limited period.

The Temporary Repatriation Facility (TRF). For those with stockpiled offshore income and gains accumulated under the remittance basis, a Temporary Repatriation Facility was available in 2025/26, 2026/27, and 2027/28 (extended by one year from the original two-year window), allowing the repatriation of pre-April 2025 offshore funds at a flat 12% tax rate in 2025/26 and 2026/27, rising to 15% in 2027/28, rather than the full marginal rate. For HNW individuals with substantial offshore accumulations, this was a significant planning opportunity.

Who Left Before April 2025?

A significant number of high-net-worth non-doms departed the UK before April 2025 to avoid the new regime. The popular destinations included:

• UAE (Dubai/Abu Dhabi): No personal income tax; UAE residency visas readily obtainable; Golden Visa programme for property purchasers and high-net-worth individuals
• Cyprus: 60-day non-dom regime; no IHT; 0% tax on dividends and interest for non-doms; pleasant Mediterranean lifestyle
• Monaco: No personal income tax (for non-French nationals); visa and residency available; strong banking infrastructure
• Italy: The "flat tax" lump-sum regime for new residents (€200,000/year flat tax on foreign income — attractive for those with very large offshore income)

The departures represented a significant loss of tax revenue, the scale of which will take several years to measure fully.

The New Landscape for UK Arrivals

For internationally mobile HNW individuals considering a move to the UK in 2026 and beyond, the picture is materially different from pre-2025:

• The FIG regime provides four years of protection on foreign income and gains — generous for someone arriving to set up a business or take a senior role
• After four years, worldwide income and gains are fully taxable — ongoing offshore wealth is no longer sheltered
• The IHT exposure after 10 years is substantial — those expecting to be in the UK long-term must plan their estate accordingly

The UK retains strong attractions: world-class financial markets, legal system, professional services, education (for children), and the English language. For many, a four-year tax break is sufficient to establish the UK base they want whilst managing their foreign income. The key is to structure affairs before arriving — not after.

Compliance Caveats

Tax law in this area is complex and changed materially in 2025. Individual circumstances differ significantly. Nothing in this article constitutes tax advice. Any individual considering a move to or from the UK, or with existing non-dom positions, should seek advice from a qualified UK tax adviser before taking any action. Penalties for errors on the remittance basis and FIG regime are significant.

How Global Investments Can Help

Global Investments advises internationally mobile HNW individuals navigating the post-non-dom UK tax landscape. Whether you are a new arrival seeking to use the FIG regime effectively, an existing UK resident reassessing your position following the April 2025 changes, or considering departure from the UK to a more tax-efficient jurisdiction, our team can connect you with specialist advisers and help you build an integrated financial plan. Contact us to begin the conversation.