In a move that marks one of the most transformative overhauls of the UK’s personal tax system in recent memory, HMRC has confirmed that the longstanding rules for non-UK domiciled individuals—often referred to as “non-doms”—will undergo significant reform from 6 April 2025.
These changes aim to simplify the system by shifting from a domicile-based approach to one grounded purely in UK tax residence.
For decades, the concept of domicile has been a central pillar of UK tax planning for internationally mobile individuals. Under the current rules, non-doms have enjoyed the ability to shelter their foreign income and gains from UK tax—either permanently or for several years—by claiming the remittance basis.
This has allowed them to pay UK tax only on foreign income and gains that are brought into the UK—often resulting in significant tax efficiencies. But from April 2025, this system will be swept away.
The End of the Remittance Basis: A Shift to Residence-Based Taxation
Perhaps the most significant change is the abolition of the remittance basis of taxation. Under the new framework, an individual’s domicile status will no longer be relevant in determining their UK tax obligations. Instead, UK tax residence will become the sole determining factor.
From 6 April 2025 onwards, anyone who is resident in the UK for tax purposes will be subject to UK tax on their worldwide income and gains, regardless of whether those assets are held in the UK or overseas, and regardless of whether the income or gains are brought into the UK.
This reform is intended to simplify the rules and bring greater alignment between the UK and other major jurisdictions. However, it also significantly narrows the scope for international individuals to reduce their UK tax exposure using traditional remittance planning techniques.
A New Transitional Regime: The Four-Year Foreign Income and Gains (FIG) Exemption
In recognition of the impact this reform will have on individuals arriving in the UK, the government is introducing a new relief for recent or returning residents. This is known as the Four-Year Foreign Income and Gains (FIG) regime.
Under this regime, individuals who become UK tax residents after a period of at least ten consecutive years of non-residence will benefit from highly favourable treatment of their foreign income and gains. Specifically, they will be able to exclude such income and gains from UK taxation for up to four tax years following their arrival.
Crucially, these individuals will also be able to freely bring foreign income and gains into the UK without triggering additional tax charges during that four-year window. This is a significant improvement on the remittance basis, which imposed UK tax liabilities when such funds were brought into the country.
However, the relief must be actively claimed each year—it is not granted automatically. Once the four-year period has elapsed, full worldwide taxation will apply from the fifth year of residence onwards.
Transitional Measures for Existing Non-Doms
For those who have already established residence in the UK and are currently relying on the remittance basis, the government has proposed several transitional measures to ease the impact of the reforms.
Firstly, in the 2025–26 tax year only, individuals who have previously claimed the remittance basis—but who are not eligible for the new four-year FIG regime—will be allowed to exclude 50% of their foreign income from UK taxation.
This transitional rule is intended to provide a softer landing for long-standing UK residents who will now be subject to worldwide taxation for the first time. However, it is worth noting that this relief applies only to foreign income, and not to foreign gains, which will be fully taxable.
Secondly, a rebasing of foreign capital assets will be permitted for certain individuals. Specifically, those who have claimed the remittance basis in the past and who are neither UK domiciled nor deemed domiciled as of 5 April 2025 will be able to rebase the value of their foreign assets to their market value as at 5 April 2019. This could provide significant tax savings on disposals after April 2025.
Perhaps most attractively, a new Temporary Repatriation Facility (TRF) will be introduced, covering the 2025–26 and 2026–27 tax years. This facility allows individuals to bring historic foreign income and gains into the UK at a flat 12% tax rate, provided those assets are held personally and not within trusts. The TRF offers a window of opportunity to clean up offshore funds and repatriate wealth to the UK in a relatively tax-efficient manner before the new rules fully take effect.
