The Spring Budget 2024 introduced the most significant reform to the UK’s non-dom tax system in decades.
From April 2025, the long-standing remittance basis of taxation will be abolished and replaced with a new system known as the Foreign Income and Gains (FIG) regime.
While the political debate has been loud, this guide focuses on what actually matters:
- Who is affected
- How the new FIG regime works
- What transitional reliefs are available
- What non-doms should be doing now
What Is Domicile (and Why It Matters)?
Domicile is different from tax residence.
- Tax residence can change year to year based on days, work, and UK ties (via the Statutory Residence Test).
- Domicile is more permanent and is based on:
- Where you were born
- Your parents’ domicile
- Where you’ve lived long-term
- Where you consider your permanent home
Historically, domicile status determined whether a UK resident could:
- Be taxed on worldwide income, or
- Use the remittance basis, paying UK tax only on:
- UK income and gains, and
- Foreign income brought into the UK
How the Remittance Basis Worked (Pre-April 2025)
Under the remittance basis:
- UK income and gains were always taxable
- Foreign income and gains were only taxed if remitted to the UK
- Income kept overseas was outside the UK tax net
Example (Old Rules)
Mick is:
- UK tax resident
- Non-domiciled
- Originally from Spain
Income:
- £70,000 UK salary
- £120,000 investment income from Spain
Under the remittance basis:
- UK tax applies to £70,000
- Spanish income is not taxed in the UK unless brought into the UK
Foreign tax credits could usually be claimed where overseas tax had already been paid (subject to the relevant double taxation agreement).
What’s Changing? The New FIG Regime (From April 2025)
From 6 April 2025, the remittance basis will be replaced by the Foreign Income and Gains (FIG) regime.
Key Change:
Domicile will no longer determine how foreign income is taxed.
Instead, taxation will be based on length of UK tax residence.
The New 4-Year FIG Rule (New & Recent Arrivals)
If you:
- Become UK tax resident after at least 10 consecutive years of non-UK residence, and
- Are within your first 4 UK tax years
You may qualify for the FIG regime.
Under FIG:
- Foreign income and gains are fully exempt from UK tax
- This applies even if the money is remitted to the UK
- No remittance tracking required
- No remittance basis charge
- No complex mixed-fund rules
After 4 tax years:
- You are taxed on worldwide income and gains, like any other UK resident
Example (FIG Regime)
Mick moves to the UK in the 2024/25 tax year after living abroad for 10+ years.
- 2024/25: Uses remittance basis (old rules still apply)
- 2025/26 to 2027/28: Qualifies for FIG regime
- 2028/29 onwards: Taxed on worldwide income
This gives Mick up to four years of clean, simple exemption on foreign income and gains.
Who Else Can Benefit?
The FIG regime is not just for brand-new arrivals.
If you:
- Moved to the UK in 2022/23 or later
- And your first four UK tax years extend into 2025/26
You may still qualify.
This creates planning opportunities for:
- Returning British expats
- International professionals
- Entrepreneurs relocating to the UK
What If You Moved to the UK Before 2022/23?
The government has announced transitional reliefs to soften the impact.
1. 50% Foreign Income Relief (2025/26 Only)
For individuals who:
- Were non-doms under the old system
- Are not yet deemed domiciled
In 2025/26:
- Only 50% of foreign income will be taxed
- Foreign gains will still be taxed in full
2. Capital Gains Rebasing (April 2019)
Foreign assets:
- Held personally
- Previously outside UK CGT due to remittance basis
May be rebased to April 2019 market value, provided:
- You were not deemed domiciled
- You previously claimed the remittance basis
This can significantly reduce future CGT exposure.
Temporary Repatriation Facility (TRF) – 12% Tax Rate
This is one of the most valuable planning opportunities in the reforms.
What Is It?
Between:
- 6 April 2025 and 5 April 2027
Individuals who previously claimed the remittance basis can:
- Bring historic foreign income and gains into the UK
- Pay a flat 12% tax
Instead of:
- Up to 45% income tax
- Or 28% CGT
Example
Mick:
- Has lived in the UK for 15 years
- Is now deemed domiciled
- Has £2 million of historic offshore income and gains
Without TRF:
- Tax could be ~£900,000 (45%)
With TRF:
- Tax = £240,000 (12%)
Tax saving: £660,000
From April 2027 onwards, normal tax rates apply again.
Why This Matters
These reforms:
- End domicile-based taxation
- Simplify the system for new arrivals
- Create time-limited planning windows for existing non-doms
- Align the UK with regimes seen in Italy, Portugal, and elsewhere
But they also:
- Increase long-term tax exposure for established non-doms
- Make early planning essential
Our View
For new arrivals, the FIG regime is:
- Simpler
- Clearer
- Less risky than the remittance basis
For long-term UK residents:
- Transitional reliefs and the 12% TRF are critical
- Decisions made between now and April 2027 could save hundreds of thousands of pounds
This is not an area for guesswork.
