The 2025 Non-Dom Reform: A Complete Guide for Internationally Mobile Individuals

Overview

The Labour government's April 2025 reforms to the non-domicile tax regime represent the most fundamental change to the UK's international tax rules in more than a generation. For the majority of internationally mobile high-net-worth individuals who had previously relied on the remittance basis to shelter foreign income and gains from UK tax, the landscape has changed substantially.

This guide sets out the key changes, explains how the new rules operate in practice, and identifies the planning actions that should be considered. It is a general overview only: the reforms are technically complex, transitional arrangements interact with individual circumstances in ways that vary considerably from person to person, and professional advice from a qualified tax adviser is essential before taking any action.

This guide is for general information only. Tax rules change and individual circumstances vary. Nothing here constitutes personal tax advice. Always consult a qualified adviser before making financial decisions.

What Changed on 6 April 2025

Abolition of the Remittance Basis

The remittance basis — which had allowed non-domiciled UK residents to pay UK tax only on income and gains brought into (remitted to) the UK — was abolished with effect from 6 April 2025. No new claims to the remittance basis can be made for 2025/26 or later tax years.

This means that individuals who are UK tax resident from 2025/26 onwards are, in principle, taxable in the UK on their worldwide income and gains as they arise — regardless of whether those income or gains are ever brought to the UK.

The Four-Year Foreign Income and Gains (FIG) Regime

To maintain the UK's attractiveness to newly arriving internationally mobile individuals, the government introduced the four-year Foreign Income and Gains regime. Under the FIG regime:

• An eligible individual pays no UK tax on foreign income and gains arising in their first four tax years of UK residence.
• The regime is available to individuals who have not been UK tax resident in any of the 10 tax years immediately preceding the first year of their new UK residence.
• There is no monetary limit on the amount of foreign income or gains that can benefit from the exemption.
• During the FIG period, the individual is taxed normally on UK-source income and UK gains.

In effect, the FIG regime replaces the remittance basis for new arrivals. Whereas the remittance basis could (subject to the annual remittance basis charge for long-term residents) protect foreign income indefinitely provided it was not remitted to the UK, the FIG regime provides a time-limited but unconditional exemption regardless of where funds are kept.

For individuals arriving in the UK for the first time or after a sufficiently long absence, the FIG regime may be more generous in some respects than the old remittance basis — particularly for those whose foreign income and gains did not need to be remitted to the UK during the exemption period.

Who Does Not Qualify for FIG?

The eligibility test — no UK residence in any of the 10 preceding tax years — means that many existing UK residents who previously claimed the remittance basis do not qualify for FIG. If you have been UK resident in recent years and relied on the remittance basis, you are likely outside the FIG window and immediately subject to the arising basis on worldwide income from 6 April 2025.

This group faces the most significant immediate impact and requires urgent attention to their financial and tax structures.

The Temporary Repatriation Facility (TRF)

One of the most practically important transitional measures is the Temporary Repatriation Facility.

What the TRF Allows

Former remittance basis users have typically accumulated foreign income and gains that were never remitted to the UK — and therefore never taxed in the UK. Under the old rules, bringing such funds to the UK in the future would have triggered a UK tax charge. The TRF allows individuals to designate pre-6 April 2025 foreign income and gains and bring them to the UK at a substantially reduced tax rate.

TRF Rates

• 2025/26 and 2026/27: 12% on designated amounts
• 2027/28: 15% on designated amounts (one further year)
• After 2027/28: the TRF closes. Future remittances of pre-April 2025 foreign income and gains will be subject to normal tax rates.

The 12–15% rate compares favourably with the income tax rate of up to 45% or CGT rate of up to 24% that would otherwise apply. For individuals who have substantial unremitted foreign income and gains, using the TRF may represent a significant tax saving.

TRF Mechanics and Mixed-Fund Rules

Designation under the TRF and the interaction with the mixed-fund ordering rules (which determine which layer of funds is treated as remitted first) are technically complex. In particular:

• Individuals must actively elect to use the TRF — it is not automatic.
• The ordering of designations requires careful planning, particularly where accounts contain a mixture of pre- and post-April 2025 income, gains, and capital.
• Funds designated under the TRF can be remitted to the UK or used overseas (the TRF rate applies to the designation, not to the physical movement of funds).

Given the complexity, most individuals with material unremitted foreign income and gains should seek specialist advice promptly to model whether the TRF is beneficial and to ensure designations are made correctly within the relevant tax years.

Inheritance Tax: The Shift to Residence-Based Exposure

The Old Domicile-Based Rules

Under the rules that applied before the 2025 reforms, IHT exposure on non-UK assets depended on domicile status. An individual who was not domiciled in the UK (and had not become "deemed domiciled" through long-term residence) was only subject to UK IHT on UK-sited assets. Non-UK sited assets — wherever held — fell outside the UK IHT net.

The New Residence-Based Test

The 2025 reforms move IHT exposure towards a residence-based test. 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 their worldwide assets.

This is a very significant change. It means that:

• Individuals who have lived in the UK for extended periods — even if they retained a non-UK domicile — will become exposed to worldwide IHT once they reach the 10-year threshold.
• Conversely, individuals who have fewer than 10 years of UK residence maintain a degree of IHT protection on non-UK assets (subject to the rules on sited assets).

The IHT "Tail" After Leaving the UK

A further important feature of the new residence-based IHT rules is the tail period. An individual who was a long-term UK resident (10+ years in the last 20) and then leaves the UK does not immediately escape worldwide IHT exposure. A tail period applies — the length of which depends on how long they were UK resident — during which they remain subject to IHT on worldwide assets even after departure.

This has profound implications for individuals considering leaving the UK as a response to the reforms. The IHT tail cannot be escaped quickly.

Transitional Arrangements

Pre-April 2025 Trusts

Offshore trusts set up by non-domiciled individuals before April 2025 were previously protected from UK tax on foreign income and gains within the trust (under the "protected settlement" rules). The 2025 reforms have altered these protections. The position of existing offshore trusts under the new rules requires careful individual analysis, as the changes interact with when the trust was established, the domicile history of the settlor, and the nature of the assets within the trust.

Rebasing of Foreign Assets

Certain individuals who were previously eligible to claim the remittance basis may be entitled to rebase the cost of their directly held foreign assets to their market value as at 5 April 2017 (subject to conditions). This rebasing concession reduces the taxable gain on disposal — an important transitional relief that should be confirmed with your adviser.

Overseas Workday Relief

A reformed version of Overseas Workday Relief is available within the FIG period, allowing employees in the UK for the first three tax years to exempt from UK tax the portion of their employment income relating to duties performed outside the UK. Specific conditions apply.

Who Is Most Affected?

Existing Long-Term Non-Dom UK Residents

Individuals who have been UK resident for an extended period but previously claimed the remittance basis — and have not yet become deemed domiciled — face the most significant immediate disruption. From 6 April 2025, they are taxed on worldwide income and gains as they arise. The TRF offers a window to address unremitted funds, but the window is time-limited.

Newly Arriving High-Net-Worth Individuals

Those arriving in the UK for the first time (or after a 10-year absence) benefit from the FIG regime for four years. Planning during the FIG window — including how to structure investments and whether to hold foreign assets personally or within structures — is important.

Business Owners and Entrepreneurs

The shift to the arising basis accelerates tax on foreign dividends, foreign rental income, and foreign business profits. Corporate structures, including offshore holding companies, may need to be reviewed to ensure they remain appropriate and compliant.

Spouses and Civil Partners

Where one spouse is affected by the reforms and the other is not (for example, where one partner is newly arrived and in the FIG window), intra-family planning may be possible. Specialist advice is needed to avoid unintended consequences.

Planning Points and Actions

1. TRF planning: Model whether designating pre-April 2025 unremitted income and gains under the TRF at 12–15% is beneficial given your likely future tax rates. The window is limited.

2. Review offshore structures: Offshore trusts, companies, and partnerships that were structured under the old remittance basis rules may need to be reviewed. Some structures may be less tax-efficient or more complex to maintain under the new regime.

3. IHT review: If you are approaching (or have already passed) the 10-year long-term residence threshold, an IHT review is urgent. Consider whether insurance, trusts, or other IHT mitigation strategies are appropriate.

4. Domicile evidence: Even under the new residence-based framework, domicile still has some relevance (particularly in the first years of UK residence). Documenting your domicile position remains important.

5. Departure planning: If leaving the UK is under consideration, understand the IHT tail and the minimum period of non-residence required to escape ongoing IHT exposure before making any decisions.

6. Pension planning: The interaction of the reforms with UK pension contributions and benefits, particularly for those leaving the UK or in the FIG window, requires review.

How Global Investments Can Help

Global Investments has worked with internationally mobile high-net-worth individuals for over 32 years. Our advisers understand the complexity that arises from multi-jurisdictional financial lives — offshore assets, international business interests, foreign pensions, and cross-border family structures.

We work closely with specialist tax counsel to help clients navigate the 2025 non-dom reforms. Whether you need to model the TRF, review an existing offshore trust, reassess your IHT position, or structure your arrival in the UK under the FIG regime, our team can coordinate the advice you need. As an independent international advisory firm with a long history of serving internationally mobile HNW individuals, we are well placed to help you plan effectively across multiple countries.

Contact us to arrange an initial conversation with one of our advisers.