How will the abolition of the ‘non-dom’ tax regime affect individuals?
- TBA
- May 23
- 4 min read
Updated: May 29
From April onwards, various UK tax changes, along with rising household bills, have created new challenges and opportunities in personal and business financial planning.
Of particular concern for foreign nationals residing in the UK is the new policy which took effect on 6 April – the Foreign Income and Gains (FIG) regime.
This policy marks a fundamental shift in how non-domiciled individuals are taxed, including the abolition of the remittance basis and the introduction of worldwide taxation on any income or gains earned outside the UK.
So, how will the abolition of the ‘non-dom’ tax regime affect individuals?
How the Non-Domicile Tax Regime is Changing
Before 6 April 2025
For migrants who have lived in the UK for at least 183 days in a tax year and are considered UK tax residents, but whose permanent home (or ‘domicile’) remains abroad, they are classed as Non-Domiciled (‘non-dom’).
Under these current rules, they can enjoy tax exemptions on foreign income and gains for up to 15 years.
They could also choose between:
Arising basis: Pay UK tax on worldwide income and capital gains
Remittance basis: Only pay UK tax on foreign income and gains brought into the UK, with untaxed amounts remaining offshore
After 6 April 2025
The non-dom regime was abolished in favour of a residence-based system for Foreign Income and Gains (FIG).
Under the new FIG regime, those who:
Become UK tax residents on or after 6 April 2025, and
Have been non-UK tax residents for the previous 10 consecutive tax years can benefit from a 4-year tax exemption on their foreign income and gains.
During this 4-year period:
Foreign income and gains are 100% exempt from UK tax, regardless of whether the funds are brought into the UK
This also includes distributions from non-resident trusts
UK-source income and gains remain taxable
After the 4-year window, all global income and gains will be subject to UK taxation, including any remitted amounts.
If a person temporarily leaves the UK during this time, they may still apply FIG for any remaining eligible tax years upon their return.
Note: Time spent as a UK resident before 6 April 2025 also counts towards the 4-year limit. So, individuals who moved to the UK before the 2021/22 tax year may not qualify for FIG.
Other Key Tax Changes for Non-Doms
Inheritance Tax (IHT) Based on Residency
A new residency-based IHT regime will be introduced from 6 April 2025.
Trust Asset Taxation
Trusts will be assessed for IHT based on the long-term residency of the settlor at the time of the taxable event – not just the date of trust creation.
Transitional Provisions
For current non-doms or individuals using the remittance basis:
1. Temporary Repatriation Facility
Foreign income/gains earned before 6 April 2025 can be brought into the UK at a reduced tax rate of 12% during 2025/26 and 2026/27.From 2027/28 onwards, normal tax rates will apply.
2. Capital Gains Base Revaluation
Assets held on 5 April 2017 may use that date's value as the cost basis for calculating capital gains if disposed of after 6 April 2025.
3. Long-Term Residency and IHT
Anyone who has been UK resident for at least 10 out of the past 20 tax years will be considered deemed domiciled and subject to IHT on worldwide assets, even for 3–10 years after leaving the UK. Trust transfers made during deemed domicile status may also be liable for IHT.
Determining Your Domicile Status
Under UK tax law, your domicile status (not just tax residency) determines your eligibility for special rules.
What is Domicile?
Domicile refers to the place where a person has their permanent home or intends to reside indefinitely. There are three types:
Domicile of Origin – Usually based on the father’s domicile at birth
Domicile of Dependency – Applies during legal dependency on parents
Domicile of Choice – Acquired by moving permanently to a new country
Self-Assessment: Are You a Non-Dom?
Was your domicile of origin in the UK?
Yes → You are likely UK domiciled
No → You may be a non-dom
Have you acquired a domicile of choice in the UK?
E.g. long-term UK residency, British citizenship, owning UK property, and intention to remain
Do you meet the 15-Year Rule?
If you’ve been a UK resident for 15 of the past 20 tax years, you’re automatically deemed domiciled
→ All worldwide income/assets are taxable in the UK
Overseas Workday Relief (OWR)
For individuals who:
Are non-domiciled, and
Have not been UK tax residents in the previous 3 years
They may be eligible for Overseas Workday Relief (OWR).
Under the FIG Regime:
OWR will also apply for 4 years, aligning with the FIG rules. Foreign employment income not brought into the UK during this time is not taxable, and any withheld taxes abroad can potentially be reclaimed.
Some Advice from TB Accountants
If you become globally taxable from 6 April, it's crucial to review your investment strategy and financial planning. You may wish to:
Shift towards assets with more favourable tax treatment (e.g. CGT over income tax)
Evaluate compliance obligations, especially for FIG-eligible individuals who must declare tax-relieved amounts in their returns
Ensure correct completion of tax returns to maximise allowances and avoid errors
If you’re unsure whether these new tax rules apply to you, or if you're a UK resident or business seeking professional guidance, get in touch with our team for a free one-to-one consultation.
For individuals and businesses looking for UK taxation services, use our contact form to get in touch for more information.
Get in touch with us at info@tbgroupuk.com or for a free one-to-one consultation.
