The remittance basis — the cornerstone of the UK’s non-domiciled (non-dom) tax regime for over two centuries — was abolished from 6 April 2025 and replaced by a residence-based system. Where you were born and where your father lived no longer matter for UK tax purposes. What matters now is how long you have lived in the UK.
If you were a remittance-basis user, your tax position has already changed. If you are arriving in the UK now or recently arrived, the rules are entirely different from what your predecessors navigated. And if you hold non-UK assets with significant accumulated untaxed income and gains from the pre-2025 era, you have a limited window to bring those funds to the UK at a discounted rate.
What Changed: Old vs New Regime
| Feature | Old Regime (pre-April 2025) | New Regime (from April 2025) |
|---|---|---|
| Basis of taxation | Domicile (complex, fact-based, lifetime status) | Residence (objective, based on days present) |
| Foreign income/gains | Remittance basis — taxed only if brought to UK; RBC of £30k/£60k after 7/12 years | 4-year FIG regime — 100% relief for first 4 tax years, then taxed on arising basis |
| After 4 years | Remittance basis charge or switch to arising basis | Taxed on worldwide income and gains (arising basis), same as any UK-domiciled resident |
| IHT (Inheritance Tax) | Domicile-based — non-UK situs assets outside scope for non-doms | Residence-based — worldwide assets in scope once UK-resident for 10 of the last 20 tax years |
| Transition mechanism | N/A | Temporary Repatriation Facility (TRF): 12% flat rate (rising to 15% from 2027-28) on pre-6-April-2025 FIG brought to UK |
| Overseas Workday Relief | Available for first 3 tax years | Available during the 4-year FIG window, claimed through employer payroll |
The 4-Year FIG Regime: How It Works
For individuals who become UK tax resident from 6 April 2025 onward, foreign income and gains (FIG) are fully exempt from UK tax for the first four tax years — with no remittance restriction. You can bring the money to the UK, spend it, invest it, gift it — there is no UK tax charge during the 4-year window.
Eligibility
You must not have been UK tax resident in any of the 10 consecutive tax years immediately before the year of arrival. This is a strict, sequential test:
Pass: You last lived in the UK from 2008 to 2012. You moved to Australia for 2013–2024 (12 years). You return to the UK in 2025-26. More than 10 years have passed since your last UK residence — you qualify for the 4-year FIG regime.
Fail: You left the UK in April 2018 and returned in April 2025. Only 7 tax years of non-residence (2018-19 through 2024-25) separate your UK stints. You do NOT qualify for the FIG regime and are taxable on worldwide income from day one.
Borderline: You left in April 2016 and return in May 2025. That’s 9 tax years of non-residence (2016-17 through 2024-25). This fails the 10-year test. You must wait until 2026-27 to arrive with FIG eligibility — or accept worldwide taxation from arrival.
What FIG Covers
During the 4-year window, the following are exempt:
- Foreign employment income (salary from a non-UK employer for non-UK workdays)
- Foreign investment income (dividends, interest, rental income from non-UK property)
- Foreign capital gains (gains on non-UK shares, funds, real property, crypto)
- Foreign pension income (subject to treaty provisions — UK pension income is still UK-source)
What FIG Does NOT Cover
- UK-source income or gains — these are taxable as normal regardless of FIG status
- Income from a UK employer — even if the work is performed abroad, UK-source employment income rules apply (but Overseas Workday Relief may be available separately)
- UK property income — renting out a UK buy-to-let while living in the UK produces UK-source income, not foreign income
- After the 4-year window closes, all worldwide income and gains become taxable on the arising basis, same as any other UK resident
Overseas Workday Relief (OWR) During the FIG Window
For the first three tax years of UK residence (within the 4-year FIG period), OWR provides relief for employment income earned on non-UK workdays. Under the new system, OWR is claimed through employer payroll reporting — the employer applies the relief at source, reducing the PAYE withholding. After the FIG period ends, OWR ends. There is no extension regardless of employer or role.
Who Loses Out Under the New System
Long-Term Remittance-Basis Users
If you have been UK-resident for more than four years and previously relied on the remittance basis to keep foreign income outside UK tax, that option is gone. From 6 April 2025, you are taxed on worldwide income and gains as they arise — whether or not you bring the money to the UK.
For someone who has been UK-resident for 15 years and has been paying the £60,000 remittance basis charge annually, the new system is both simpler (no RBC, no election) and potentially more expensive (all foreign income and gains are taxable at marginal rates — up to 45% — regardless of whether you remit).
IHT: From Domicile to Residence
The second major change is the IHT basis. Previously, non-UK-domiciled individuals were outside the scope of UK IHT on non-UK situs assets — a non-dom could hold a portfolio of US shares, a French property, and an offshore trust, and none of it would be subject to UK IHT at 40%.
From 6 April 2025, IHT liability is based on residence, not domicile. If you have been UK-resident for 10 of the last 20 tax years, your worldwide assets are within the scope of UK IHT. This includes:
- Non-UK real property (houses, apartments, land abroad)
- Non-UK shares, bonds, and investment accounts
- Offshore trusts (subject to the new trust provisions)
- Foreign bank accounts
- Foreign life insurance policies and pension plans (with specific provisions for pensions from 2027 — see below)
The standard IHT allowances — £325,000 nil-rate band, £175,000 residence nil-rate band (tapered above £2M), spouse exemption, charity exemption — still apply. What has changed is the asset base to which they apply: for a long-term UK resident, it is now worldwide.
The 10-out-of-20-years test is a rolling window. If you leave the UK and become non-resident, it takes up to 10 years of non-residence before your worldwide assets fall back outside UK IHT scope. During that tail period, the deemed-UK-domicile rules under the old regime have been replaced by the new residence-based test.
The Temporary Repatriation Facility (TRF)
A critical transitional measure: foreign income and gains that arose before 6 April 2025 can be brought to the UK at a flat rate of 12% under the TRF. The facility runs for three tax years:
| Tax Year | TRF Rate |
|---|---|
| 2025-26 | 12% |
| 2026-27 | 12% |
| 2027-28 | 15% |
How the TRF Works
- You designate the specific amounts of pre-2025 FIG you wish to remit to the UK under the TRF.
- You report the designation on your Self Assessment tax return.
- You pay 12% (or 15% from 2027-28) on the designated amount — flat rate, no interaction with your marginal income tax rate, no impact on your personal allowance or other tax positions.
- Once designated and taxed under the TRF, the funds are clean — they can be used, invested, or spent in the UK without further tax consequence.
The TRF is an elective regime. You choose whether and when to use it. You can make multiple designations across the three years.
When the TRF Makes Sense
- You have a large pool of pre-2025 untaxed FIG and you need to bring it to the UK — for a property purchase, business investment, family support, or simply living expenses
- Your marginal income tax rate would be 40% or 45% on that income if it were taxable on the arising basis — 12% is a steep discount (a 70–73% reduction versus the top rate)
- You have been deferring remittances for years under the old remittance basis and now need to access the trapped funds
- You want certainty — paying 12% now cleans the capital permanently, avoiding future UK tax risk if you remain resident
When the TRF Does Not Make Sense
- The funds can stay offshore indefinitely without causing hardship — if you do not need the money in the UK, there is no UK tax charge on funds that remain abroad (though local tax in the country where the funds are held may apply)
- You expect to leave the UK and become non-resident before needing the funds — once non-resident, you can access the funds without UK tax (subject to the temporary non-residence rules — if you return within 5 years, certain rules can bring gains back into UK tax)
- You can spend or invest the funds offshore without ever remitting to the UK — if you travel to the country where the funds are located and spend there, or reinvest the funds outside the UK, the remittance event has not occurred
- The pool is small relative to the compliance cost of making a TRF designation — if the pool is £10,000, the tax at 12% is £1,200; for some, it is simpler to leave the funds abroad than to engage professional advice to structure the designation
Offshore Trusts Under the New Regime
Trusts are the most complex part of the transition. Key changes include:
- Settlor-interested trusts: For trusts settled by a UK-resident settlor, the settlor remains taxable on trust income and gains as they arise — the remittance basis no longer shields trust income from current-year taxation.
- Protected trusts: Certain pre-existing trusts settled by non-UK-domiciled individuals who subsequently became UK-resident may qualify for protected status, but the protections are narrower than under the old rules.
- Onward gift rules: Anti-avoidance provisions prevent a beneficiary receiving tax-free trust distributions and then gifting the proceeds to a UK-resident settlor.
Trust structures set up under the old non-dom regime should be reviewed by a STEP-qualified practitioner or chartered tax adviser. The grandfathering provisions are limited; many trusts that were tax-efficient under the domicile-based system now produce UK tax charges at settlor or beneficiary level.
Pension IHT from 2027 — A Separate but Related Change
From 6 April 2027, unused defined-contribution pension funds are brought into the IHT estate (they were previously outside for most people). For former non-doms who may have substantial UK pension pots — often accumulated during UK employment while using the remittance basis on non-UK income — the combination of:
- Worldwide IHT exposure (from 2025, under the residence test)
- Pension IHT inclusion (from 2027)
means that a formerly non-dom individual with, say, £800,000 in a UK SIPP and £2M in non-UK assets could face IHT on a significantly larger estate than under the old rules. This makes the TRF — paying 12% to bring money to the UK — a more attractive proposition for those who intend to remain UK-resident and want to simplify their affairs.
Practical Checklist
If you are a new UK arrival (2025-26 or later):
- Confirm your 4-year FIG eligibility (10-year non-residence test)
- Keep records of all foreign income and gains during the FIG window — you may need to prove the source of funds if HMRC queries large UK inflows
- Plan for day one of Year 5 — when worldwide taxation begins, restructuring offshore portfolios (e.g., realising gains while still in the FIG window) can crystallise tax-free gains before worldwide taxation kicks in
- If you hold non-UK employment income, coordinate OWR claims with your employer’s payroll team
If you were a remittance-basis user pre-2025:
- Quantify your unremitted FIG pool — broken down by income category (trading income, investment income, capital gains) and year of arising — you need this for any TRF election
- Decide on your TRF strategy: use it in 2025-26 or 2026-27 at 12%, or wait until 2027-28 at 15% (only worth it if you expect to exit the UK before needing the funds)
- Review your IHT position: assets previously outside the UK estate may now be in scope under the 10-out-of-20-years test
- Consider residence planning: if leaving the UK and resetting the residence clock is feasible and desirable, model the tax impact of departure versus the TRF cost of staying
- Review trust structures: many pre-2025 non-dom trusts now produce UK tax charges
If you hold offshore trusts:
- Obtain a trust review from a STEP or CIOT-qualified adviser
- Assess whether protected-trust status applies and whether it is worth maintaining
- Understand the settlor-attribution and onward-gift rules before making distributions
Use our Income Tax Calculator to model your UK tax position on the arising basis, the Capital Gains Tax Calculator to estimate tax on foreign gains, and the Inheritance Tax Calculator to assess your IHT exposure under the new residence-based rules.