The Non-Domicile Regime: What Expats Need to Know About UK Domicile and Tax

The UK's non-domicile (non-dom) tax regime has undergone the most radical reform in a generation. From April 2025, the remittance basis of taxation — which allowed non-domiciled UK residents to pay UK tax only on income and gains brought into (remitted to) the UK — has been abolished and replaced with a residence-based system. Understanding what has changed, and how the transitional provisions work, is essential for anyone who has previously relied on the non-dom regime and for internationally mobile individuals planning their UK tax position going forward.

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What Is Domicile?

In UK law, domicile is a legal concept that is distinct from residence, nationality or habitual abode. It refers, broadly, to the country you consider your permanent home — the place where you intend to remain indefinitely or to which you intend to return.

Types of domicile

Domicile of origin: Acquired at birth — generally the domicile of your father (for those born in wedlock). Your domicile of origin follows you through life unless you actively acquire a new one.

Domicile of dependence: Applicable to children, whose domicile follows their domiciling parent until age 16.

Domicile of choice: Acquired when you settle permanently in a new country and abandon any intention to return to your country of origin. Acquiring a domicile of choice requires both physical presence in the new country and a fixed and settled intention to remain there permanently.

Domicile is notoriously difficult to change deliberately, and HMRC can be sceptical of claims that a domicile of choice has been acquired. Courts have historically taken a high threshold approach: sporadic declarations of intent to remain abroad, without genuine abandonment of ties to the UK, are insufficient.

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The Old Non-Dom Regime (Pre-April 2025)

Under the old system, UK-resident but non-UK-domiciled individuals could elect to use the remittance basis of taxation. Under this election:

• UK-source income and gains: Always taxed in the UK (this has not changed)
• Foreign income and gains: Taxed in the UK only if and when remitted (brought into) the UK

This meant that a non-dom UK resident with significant offshore wealth could accumulate foreign income and gains in offshore accounts without incurring UK tax, as long as those funds were not brought to the UK. The regime was particularly valuable for high earners with substantial foreign income.

The annual remittance basis charge applied to non-doms who had been UK-resident for a certain number of years:

• £30,000 per year after 7 years of UK residence
• £60,000 per year after 12 years

In practice, this charge made the regime less attractive for those with more modest offshore income.

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The New Regime: From April 2025

The April 2025 reform abolished the remittance basis entirely and introduced a residence-based system. The key features are:

The four-year foreign income and gains (FIG) exemption

New arrivals to the UK who have not been UK-resident in any of the previous 10 years are entitled to a four-year exemption on foreign income and gains. During this four-year period:

• Foreign income and gains are exempt from UK tax
• There is no charge for claiming the exemption
• Funds can be freely remitted to the UK without triggering UK tax

This replaces the old remittance basis for new arrivals and is considerably simpler — there is no need to keep offshore accounts segregated or to track "clean capital" versus post-arrival income.

After the four-year FIG exemption

Once the four-year period expires, all income and gains (worldwide) are subject to UK tax in the normal way. There is no ongoing basis on which foreign income can be sheltered simply by keeping it offshore. The old concept of non-dom status as an ongoing shelter for offshore wealth no longer applies.

The Temporary Repatriation Facility (TRF)

For individuals who had already accumulated offshore income and gains under the old remittance basis, a Temporary Repatriation Facility (TRF) applies for the tax years 2025/26 and 2026/27 (extended to 2027/28 for some purposes). This allows:

• Previously unremitted foreign income and gains to be brought to the UK and charged at a reduced rate (12% for 2025/26 and 2026/27, rising to 15% for 2027/28)
• Rather than the standard higher or additional rate of income tax or CGT

For those with substantial foreign accumulations, the TRF presents a one-time opportunity to regularise their position at a reduced rate. The window is limited and individuals should have sought advice well before the 2026/27 deadline.

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Inheritance Tax: The New Residence-Based Framework

The old IHT rules for non-doms were linked to domicile: non-UK-domiciled individuals were only subject to UK IHT on UK-situs assets, regardless of how long they had lived in the UK.

The new framework, introduced from April 2025, is based on long-term residence:

• An individual is a long-term resident (and therefore subject to UK IHT on worldwide assets) if they have been UK tax-resident for at least 10 of the past 20 tax years
• Once the long-term residence test is met, UK IHT applies to the worldwide estate
• A "tail" provision means that even after leaving the UK, long-term residents remain subject to worldwide IHT for a period (depending on how long they were resident, up to a maximum of 10 years after departure)

This is a fundamental change for individuals who had been UK-resident for many years but retained a non-UK domicile and relied on that for IHT protection of their non-UK assets.

Excluded property trusts

Historically, non-doms could establish offshore trusts to hold foreign assets outside the UK estate permanently — these were known as "excluded property trusts". Under the new rules, the excluded property status of trust assets is also linked to the long-term residence test of the settlor, significantly reducing the protection these structures offered.

Existing excluded property trusts need to be reviewed urgently in light of the new rules.

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Who Is Affected?

New arrivals to the UK

The four-year FIG exemption is genuinely generous for new arrivals with foreign income and wealth. If you are moving to the UK for the first time (or after a 10-year absence), you can structure your affairs to maximise the benefit during the exemption period — for example, disposing of foreign assets during the exempt period, or remitting income to the UK without UK tax.

Long-term UK residents who were non-doms

If you have been UK-resident for more than four years and relied on the remittance basis, you are now subject to UK tax on worldwide income and gains. The transition provisions (TRF) allowed for historic accumulations to be regularised at a reduced rate — this window is closing.

High net worth individuals considering UK residency

The abolition of the ongoing non-dom advantage makes the UK less attractive from a purely tax perspective for UHNW individuals considering where to base themselves. However, the UK's legal system, business environment, lifestyle, and infrastructure remain compelling — and the four-year FIG exemption is a meaningful benefit for new arrivals.

UK expats concerned about IHT

If you are a long-term UK expat who has been non-UK-resident for a significant period, the 10-year tail provision means you may remain exposed to worldwide IHT for some years after departure. Careful planning — including the timing of any significant asset disposals or gifts — is essential.

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Transitional Provisions and Planning Points

Rebasing of foreign assets

Individuals who used the remittance basis and were neither UK-domiciled nor deemed-domiciled before 6 April 2025 can, subject to conditions, rebase personally held foreign assets to their market value as of 5 April 2017 for UK capital gains purposes on disposals from 6 April 2025. This reduces the chargeable gain on future disposals to broadly the post-April-2017 appreciation.

Overseas workday relief (OWR)

A modified form of overseas workday relief continues under the new regime for eligible individuals in their first four years of UK residence. This allows part of employment income relating to work performed abroad to remain exempt from UK tax during the four-year FIG period.

Offshore trusts

The interaction of the new rules with existing offshore trust structures is complex. Trustees and settlors should review all offshore structures with specialist lawyers.

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Checklist: Non-Dom Reform — Are You Affected?

• Determine whether you are currently or soon to be UK-resident
• Count your years of UK tax residence to determine whether the long-term residence IHT test applies
• If you have historic unremitted foreign income and gains, consider whether the TRF was beneficial
• If you have an excluded property trust, obtain a legal review of its status under the new rules
• If you are a new arrival in the last 4 years, confirm your FIG exemption applies and review asset disposals
• Consider electing to rebase foreign assets to their 5 April 2017 values if eligible
• Review the IHT "tail" period if you have recently left or are planning to leave the UK after 10+ years of residence

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This guide provides general information only and does not constitute tax advice. The non-domicile reform represents a fundamental change to UK tax law and individual circumstances vary enormously. You must seek specific advice from a qualified UK tax adviser. The rules may have changed since this guide was written.

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How Global Investments Can Help

The non-domicile reform is one of the most significant changes to UK personal tax in decades, with real and immediate consequences for internationally mobile clients. At Global Investments, we work closely with UK tax specialists and cross-border advisers to help clients understand the impact of the new rules, review existing structures, and plan their affairs for the new regime. Whether you are a recent UK arrival, a long-term resident, or an expat planning to return, contact us for an assessment of how the reform affects you.