Non-Dom Tax Changes April 2025: What the Abolition Means for Overseas Income

From 6 April 2025, the UK's long-standing non-domicile (non-dom) tax regime was abolished. For decades, individuals who were resident in the UK but not domiciled here could elect to use the remittance basis — paying UK tax only on UK-source income, and only on foreign income if they brought it into the UK. That option no longer exists for income and gains arising from April 2025 onwards. In its place, a new Foreign Income and Gains (FIG) regime has been introduced for those who are genuinely new to UK tax residency.

The old remittance basis: why it was abolished

Under the remittance basis, a non-dom could accumulate foreign income and gains outside the UK indefinitely without UK tax liability — as long as the money was never brought into the country. Critics argued this gave wealthy international individuals a structural advantage over UK-domiciled taxpayers who had no choice but to declare worldwide income. The October 2024 Budget confirmed the abolition, with effect from April 2025.

The new Foreign Income and Gains (FIG) regime

The FIG regime is a time-limited relief designed to attract internationally mobile individuals to the UK without permanently exempting them from UK tax. Key features:

• Available to individuals who have not been UK tax resident in any of the 10 tax years immediately preceding the year of their arrival.
• Relief applies for up to 4 years of UK tax residency.
• During those 4 years, qualifying foreign income and gains are not subject to UK tax — regardless of whether they are remitted to the UK.
• The individual must make a claim on their Self Assessment return each year they want the relief.
• The 4-year clock starts in the first year of UK residency and cannot be paused or reset.
• After 4 years, all worldwide income and gains become fully taxable in the UK on the arising basis.

The FIG regime is available once in a lifetime. If you previously used it, you cannot use it again on a subsequent UK residency period.

Who is affected by the abolition?

The abolition primarily affects:

• Long-term UK residents with non-dom status who had accumulated foreign income and gains offshore over many years.
• New arrivals who would previously have claimed remittance basis — they now use the FIG regime instead (which is arguably more generous for the first 4 years, since there is no annual charge).
• High-net-worth individuals and international executives who have structured their affairs around the remittance basis.

The Temporary Repatriation Facility (TRF)

To ease the transition, HMRC introduced a Temporary Repatriation Facility running from 6 April 2025 to 5 April 2028. This allows individuals who had pre-April 2025 foreign income or gains that were previously sheltered under the remittance basis to bring that money into the UK at a reduced flat tax rate:

After 5 April 2028, pre-April 2025 remittance basis income remitted to the UK will be taxed at the full applicable income tax or CGT rate for that year. The TRF is a significant planning opportunity for those with large offshore funds.

Overseas Workday Relief (OWR) under the new regime

Overseas Workday Relief continues under the FIG framework for new arrivals. Employees who work for part of a tax year outside the UK can claim relief on employment income attributable to overseas workdays. Previously, OWR required using the remittance basis — now it is available as a standalone relief for those in their first 4 years of UK residency, without any annual charge.

Inheritance tax implications

The reform also made significant changes to the interaction between domicile and inheritance tax (IHT). Previously, non-doms were only subject to UK IHT on UK-sited assets. Under the new rules, the IHT exposure of foreign assets is linked to length of UK residence rather than domicile status. Full details of the IHT transitional provisions are complex and require specialist advice.

Practical planning considerations

• New arrivals: Ensure you qualify for FIG (10-year non-residency test) and claim it on your first UK return. Keep clear records of foreign income sources.
• TRF window: Assess whether remitting pre-2025 offshore income at 12% in 2025-26 is preferable to deferring. The window closes in 2028.
• Pension planning: UK pension contributions can still reduce income effectively. Foreign pension arrangements may have complex interactions.
• Leaving the UK: Those considering leaving should take advice on whether their departure is before or after the 4-year FIG window would expire.

Frequently asked questions

I have been in the UK for 3 years as a non-dom. Can I still use the remittance basis for past years?

The remittance basis still applies to income and gains that arose before 6 April 2025. If that income has not yet been remitted to the UK and you wish to bring it in, you should consider the Temporary Repatriation Facility. Income and gains arising from 6 April 2025 onwards are subject to the arising basis — the remittance basis is gone for new income.

Does this mean I will now pay 45% tax on all my overseas investments?

Not necessarily. If you qualify for the FIG regime (new to UK residency, within your 4-year window), foreign income and gains remain exempt. If you do not qualify, they are taxed at the usual rates — but double taxation treaties may reduce the effective rate, and the annual exempt amount for CGT still applies. The position depends heavily on your individual circumstances.

Is the FIG regime better or worse than the old remittance basis?

For new arrivals in their first 4 years, FIG is arguably better: there is no annual charge (the old remittance basis charge was up to £60,000 per year for long-term residents), and the exemption applies whether or not the income is remitted. For long-term residents who previously used the remittance basis to shelter decades of offshore accumulation, the change is significantly adverse.