Non-dom status abolished: what changed and what to do now
Non-domiciled status and the remittance basis of taxation that came with it ceased to apply in the United Kingdom on 6 April 2025. In place of domicile, the tax system now looks at how long you have been a UK resident: new arrivals get four years with full relief on foreign income and gains, while those who have lived here for longer fall under the ordinary rules and rely on transitional mechanisms with firm deadlines. What follows is what actually changed, which windows are still open in the 2026/27 tax year, and the order in which decisions are best taken.
Key takeaways
- Domicile has been removed from income tax, capital gains tax and inheritance tax.
- A new arrival gets 4 relieved years, provided 10 consecutive years outside UK tax residence.
- Inheritance tax now follows a test of 10 years of residence out of the previous 20.
- After leaving the country, the inheritance tax perimeter persists for a further 3 to 10 years.
- The Temporary Repatriation Facility runs for three tax years: 2025/26, 2026/27 and 2027/28.
- The facility charge is 12% in the first two years and 15% in the last.
- Former remittance basis users may rebase foreign assets to their 5 April 2017 value.
What non-dom status was and why it was withdrawn
Domicile is a common law concept describing the country a person is most closely connected with and ultimately intends to return to. It matches neither nationality nor tax residence, and for decades it carried the British non-dom arrangement: a UK resident with a foreign domicile paid no UK tax on foreign income and gains for as long as those funds stayed outside the country. We covered the concept and the role it used to play in a separate article on tax optimisation through domicile.
The difficulty was that domicile resisted verification. It rested on a person’s intentions, and intentions had to be evidenced through letters, wills, the purchase of a burial plot back home and similar indirect signals. The government took the route many jurisdictions have already taken and replaced a subjective criterion with an arithmetical one: the number of years of tax residence. The outcome is set out in the government’s paper on reforming the taxation of non-UK domiciled individuals and was implemented by the Finance Act 2025.
What changed on 6 April 2025
The reform touched three taxes at once and works as a single package: you cannot settle income tax and leave inheritance tax for later, because both now count the same years of your presence in the country. Here is the summary in its shortest form.
| Area | Before 6 April 2025 | From 6 April 2025 |
|---|---|---|
| Governing criterion | Domicile: origins, intentions, connections with a country | Length of UK tax residence |
| Foreign income and gains | Remittance basis: tax only when funds were brought into the UK | Four-year FIG regime for new residents, then tax as income arises |
| Cost of the regime | Remittance basis charge of £30,000 or £60,000 a year | No charge, but the personal allowance and the CGT annual exempt amount are lost |
| Inheritance tax | Deemed domicile: 15 years of residence out of the previous 20 | Long-term resident: 10 years of residence out of the previous 20 |
| Offshore trusts | Protection for income and gains in settlements made before deemed domicile | Protection withdrawn for anyone outside the FIG regime |
| Accumulated capital | Remittances taxed at full rates | Temporary Repatriation Facility: 12% or 15% across three years |
Note the row on the cost of the regime. On paper the expense of maintaining the status has gone, which looks like a simplification. In practice the overall burden has risen for many families: foreign income now enters the UK base in full rather than on remittance, and the shape of a wealthy resident’s UK tax position is calculated on a different footing than before.
The 4-year FIG regime: who can use it
The foreign income and gains regime gives 100% relief from UK tax on foreign income and gains for the first four tax years of UK residence. There is a single condition, and it is a demanding one: for at least ten consecutive tax years before those four you must not have been a UK tax resident. Neither nationality, nor domicile, nor any past entitlement to the remittance basis affects eligibility — a point made explicitly in the GOV.UK guidance on the regime.
Three points about how it works in practice. First, the four years run from your first year of residence rather than from the year you first make a claim: unused years cannot be carried forward. Second, the claim is made in the Self Assessment return and may be selective — you can claim relief on some sources of income and not on others. Third, relief comes at the price of the income tax personal allowance and the capital gains annual exempt amount, along with the married couple’s, marriage and blind person’s allowances. Where foreign income is modest that trade is a poor one, so the position has to be worked out year by year.
One point often missed: people who arrived before April 2025 may also qualify. If you became a UK resident in the 2022/23 tax year or later, and were non-resident for the ten consecutive years before that, part of your four-year window may still be running.
Benefits of seeking professional support with the 4-year FIG regime
- Assessment of eligibility under the 10-year non-residence test
- Confirmation of the year from which the four relieved years run
- Calculation of the cost of losing personal and investment allowances
- Selection of income sources where a claim is genuinely worthwhile
- Preparation and filing of the Self Assessment return with the claim
- Coordination with advisers in the country of former residence
- Support with HMRC correspondence on the years claimed
Overseas Workday Relief: what survives
Relief for employees who spend part of their working time outside the United Kingdom has survived, but it has been rebuilt on the same logic. Overseas Workday Relief is now tied to qualifying new resident status: the same ten years of non-residence before arrival and the same four-year period. The substantive simplification is that the requirement to keep the money offshore has gone — under the GOV.UK guidance on the relief it applies whether the salary is paid into a UK or an overseas account.
In exchange there is now a cap: relief is limited to the lower of 30% of qualifying employment income for the year or £300,000. For an employee on around a million pounds that means the ceiling is a fixed sum rather than a proportion. The requirement to keep careful records of working days by country has not gone anywhere — the calendar remains the primary evidence when HMRC asks.
Inheritance tax and the long-term residence test
This is the change that bites hardest for families with capital outside the United Kingdom. Foreign assets previously entered the inheritance tax base after fifteen years of residence out of the previous twenty. The threshold has come down: you are a long-term resident if you have been a UK tax resident for ten consecutive years, or for a total of ten years or more out of the previous twenty. From that point the tax applies to transfers of foreign assets you own outright, including on death. The wording of the test is set out in the GOV.UK guidance for long-term UK residents.
The second half of the test is the so-called tail. Leaving the country does not take you out of the perimeter at once: the status persists for several years, and how many depends on how long you lived in the UK.
| Years of UK residence | How long the status persists after departure |
|---|---|
| 10 to 13 | 3 years |
| 14 | 4 years |
| 15 | 5 years |
| 16 and above | rising to a maximum of 10 years |
There is one transitional concession. For anyone who held deemed domicile status on 30 October 2024 and became non-resident from 6 April 2025, the tail is limited to three years regardless of how long they lived here. That is one of the few points where an early departure genuinely changed the picture, which is precisely why decisions about leaving cannot be taken retrospectively.
Trusts: what happened to excluded property settlements
Before the reform, a trust created by a foreign domiciliary before they acquired deemed domicile protected both foreign income and gains and foreign property from inheritance tax. Both protections have been rebuilt. Income and gains inside settlor-interested trusts are no longer protected for anyone outside the four-year FIG regime: they are taxed as they arise. Whether foreign property in a trust is excluded property for inheritance tax now depends not on the settlor’s domicile but on whether the settlor is a long-term resident.
Transitional provisions do exist, and they hang on a single date: 30 October 2024. Property that was already excluded property at that moment and situated outside the United Kingdom gets its own treatment — the gift with reservation of benefit rules do not apply to it, and periodic and exit charges on it are capped at five million pounds for each ten-year cycle. The terms of that cap are described in the GOV.UK publication on capping trust charges, and it has retrospective effect from 6 April 2025. Property added to a trust after 30 October 2024, and trusts created after that date, get no transitional protection.
The Temporary Repatriation Facility
This is the central transitional mechanism of the reform and the only window that closes by the calendar rather than by your circumstances. The facility allows anyone who previously used the remittance basis to designate foreign income and gains that arose before 6 April 2025, pay a reduced charge on them, and then bring the corresponding sums into the United Kingdom with no further tax. Designated amounts are treated as capital.
The facility runs for three tax years, and the rate differs between them.
| Tax year | Charge | Position in September 2026 |
|---|---|---|
| 2025/26 | 12% | closed |
| 2026/27 | 12% | running, ends 5 April 2027 |
| 2027/28 | 15% | final year of the facility |
The rates are set out in HMRC’s internal guidance on the facility charge. The practical conclusion for the current year is straightforward: the gap between 12% and 15% is a quarter of the charge, and it turns on nothing more than whether the designation lands in the 2026/27 return or the 2027/28 one. Two further details change the arithmetic. You do not have to move the money into the UK while the facility is open — designating the sums is enough, and the transfer can follow later. And no credit for foreign tax is given against the charge, so for funds already taxed abroad the benefit has to be calculated separately.
Rebasing foreign assets to 5 April 2017
The second transitional mechanism concerns capital gains tax. Anyone who uses or has used the remittance basis may, on disposing of a foreign asset, take its base cost as the value at 5 April 2017 rather than the price actually paid. For assets bought long ago and much appreciated since, that removes everything accrued before 2017 from the taxable gain.
The mechanism sounds simple but runs on documents: you need to evidence the market value of an asset on a specific date almost a decade back. For quoted securities that is a matter of a statement; for shares in private companies, property and works of art it is a matter of valuation, and valuations are better prepared in advance than at the moment of sale. We set out how calculations of this kind look in practice in our collection of tips on paying UK taxes.
What is worth reviewing before the 2026/27 tax year ends
- Assessment of residence under the statutory test for each of the last 20 years
- Count of UK resident years for the long-term residence test
- Inventory of foreign income and gains arising before 6 April 2025
- Calculation of the benefit of designating capital at 12% rather than 15%
- Check of eligibility to rebase foreign assets to 5 April 2017
- Review of trust structures and their status at 30 October 2024
- Revision of wills against the new inheritance tax perimeter
Cost and timing: what to plan for
The reform itself carries no government fees — the cost consists of tax and professional support. The facility charge is calculated on the capital designated, valuations and document preparation are billed separately, and filing follows the ordinary Self Assessment calendar. The table below gives indicative timings rather than fees: the actual cost depends on the number of jurisdictions, the number of accounts and the presence of trusts.
| Stage | Typical timeframe | What drives the duration |
|---|---|---|
| Gathering residence and asset data | 1–2 weeks | Number of jurisdictions, accounts and years to reconstruct |
| Establishing tax status | 2–4 weeks | Contested years under the residence test, travel patterns |
| Modelling options and choosing mechanisms | 3–6 weeks | Presence of trusts, valuation of assets as at 2017 |
| Preparing and filing the return | 4–8 weeks | Completeness of records, requests to overseas banks |
There is one date that governs the calendar: the Self Assessment return for a tax year is filed online by 31 January of the following calendar year. That return is where both the FIG claim and the designation of capital are made, so the modelling has to be finished well ahead — a valuation of overseas property cannot be obtained a week before the deadline. We describe the preparation and filing process in detail on our page about the UK self-assessment tax return.
Common mistakes in planning
Eighteen months into the new rules a consistent list has emerged of situations in which people lose money not because of the rate of tax but because of the order in which they act. Most of these mistakes have one thing in common: the decision is made from memory of the old regime.
- Assuming the reform only affects new income. The largest sums relate to capital accumulated before April 2025, and the window for dealing with it closes on 5 April 2028.
- Leaving the designation of capital to the final year. The gap between 12% and 15% is a quarter of the charge, and it is lost with nothing given in return.
- Claiming the FIG regime automatically. Where foreign income is moderate, losing the personal allowance and the annual exempt amount can outweigh the relief.
- Mixing funds in one account. Moving income from different periods into a single account makes tracing sources expensive and sometimes impossible.
- Forgetting the inheritance tax tail. Departure does not take foreign assets out of the perimeter at once — the status runs on for three to ten years.
- Treating a trust as a settled question. The structure’s status at 30 October 2024 decides whether transitional protection is available to it.
- Commissioning valuations in the last month. Market value at 5 April 2017 needs documents that take weeks to assemble.
A word on sources. The reform has attracted a great deal of commentary from advisory firms, useful for worked examples, but any figure, rate or date is worth checking against the primary source: amendments continue after launch, and technical corrections to the regime were published as recently as March 2026.
Tax status after the non-dom abolition
Let us work through your position by dates, not general rules
Tax status assessment
Residence checks and a count of years for the long-term residence test
Planning under the FIG regime
Eligibility for the relieved years and the order of claims by source
Work with accumulated capital
The benefit of designating funds and of rebasing assets to 2017
HMRC reporting
Preparing and filing Self Assessment and handling HMRC enquiries
A step-by-step order of work
Sequence matters more than speed. Until the years of residence have been counted, any decision about capital is taken blind: the same transaction can be advantageous for someone in their third year in the country and costly for someone in their twelfth. The order below is how the work is done in practice.
Gathering residence and foreign asset data
Establishing tax status for the current year
Choosing transitional mechanisms and modelling options
Preparing and filing claims with HMRC
Annual review and maintenance of the plan
Practical scenarios
Abstract rules become clearer against concrete situations. Below are three typical configurations people arrive with after the abolition of non-dom status. The figures are illustrative, but the logic of the calculation is exactly this in each case.
Scenario one: arrived in 2024. An entrepreneur moved to the United Kingdom in the 2024/25 tax year, having lived outside the country for the previous twelve. He falls within the four-year regime, and his window closes after 2027/28. Foreign dividends and gains on the sale of shareholdings stay outside the UK base during that period, but the personal allowance and the annual exempt amount are lost — with substantial foreign income that is a trade worth making. The main task is not to miss the end of the window and to decide in advance what happens to the foreign assets in year five.
Scenario two: twelve years in the country. A family moved in 2014 and used the remittance basis for years, leaving foreign income offshore. The four-year regime is unavailable, the long-term residence test is already met, and the foreign assets sit inside the inheritance tax perimeter. Work here runs along two lines: designating accumulated capital at 12% before 5 April 2027, and rebasing assets bought before 2017 to cut the historic gain out of future disposals.
Scenario three: planning to leave. A client has lived here sixteen years and plans to move to another jurisdiction. Departure does not lift inheritance tax from foreign assets straight away — the status runs on for several years, and how many depends on the total length of residence. Decisions about trusts, wills and insurance are taken with that tail in view rather than by the date of the flight.
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One client who came to us specifically to bring down his tax burden after relocating explained his thinking this way.
As an experienced businessman, I believe that if there is an opportunity to optimise your expenses, you should take it! When I moved to the UK, I immediately became interested in legal ways to reduce my tax burden, but I decided to entrust the solution to this issue to professionals, so I turned to Imperial & Legal again. The specialists of the company did everything at the highest level!
When to bring in an adviser
Not every situation calls for professional support. If you arrived recently, your foreign income is modest and it comes from one or two straightforward sources, the return can be handled on your own. A conversation with an adviser pays for itself where jurisdictions overlap, where structures are involved, or where there is substantial accumulated capital: those are the points at which the cost of a mistake is measured not in a late-filing penalty but in the difference in tax across several years.
A practical sign that the moment has come: you cannot answer within ten minutes how many tax years you have been a UK resident and which of those years are contestable. A second sign is holding assets bought before 2017, or a trust structure created before 30 October 2024. Both dates act as switches between regimes, and they are better checked before a transaction than after one. Where estate planning is concerned, our page on wills and inheritance covers the groundwork.
Benefits of seeking professional support with inheritance tax
- Count of resident years for the long-term residence test
- Determination of how long the status survives your departure
- Check of trust structures and their status at 30 October 2024
- Assessment of the foreign assets falling within the tax perimeter
- Calculation of ten-year and exit charges on property in trust
- Preparation of trust reporting and liaison with HMRC
- Alignment of wills with the revised succession rules
What to do over the next few tax years
The abolition of non-dom status has not closed the United Kingdom to wealthy residents — it has made the rules arithmetical. The person who comes out ahead is not the one who found an exception but the one who counted their years in time and did not miss the dates. Three of those are worth keeping in view: 5 April 2027, the last day of the 12% rate under the repatriation facility; 5 April 2028, when that window closes altogether; and 31 January each year, the filing deadline by which every decision is given legal effect.
If you arrived recently, the task for the coming years is to use the relieved window deliberately and to prepare for the move into the ordinary regime. If you have lived here for a long time, the priority runs the other way: deal with accumulated capital and trust structures while the transitional mechanisms are still open. In both cases the starting point is not tax optimisation but an accurate count of years — without it, any strategy rests on assumptions. This article is for information only and is not individual tax or legal advice: decisions on a particular situation follow a review of your documents.
