As of 6 April 2025, the United Kingdom has abolished the domicile-based tax system and replaced it with a residence-based regime. As a result, all UK residents are now subject to tax on their worldwide income and gains as they arise. This marks the end of the remittance basis and represents a significant shift in the UK’s tax landscape for internationally mobile individuals.
To ease the transition, a four-year Foreign Income and Gains (FIG) regime has been introduced. This provides an exemption from UK tax on foreign income and gains for new UK arrivals who have not been UK tax residents in the past ten years. The relief must be claimed through Self Assessment and expires after four years, after which worldwide taxation will apply.
For individuals who previously used the remittance basis, a Capital Gains Tax (CGT) rebasing election is available. This allows foreign assets to be rebased to their market value as of 5 April 2017, so that only gains arising after that date are subject to UK tax. The election applies to individuals who claimed the remittance basis between 2017/18 and 2024/25 and were not deemed domiciled before 2025.
A Temporary Repatriation Facility (TRF) has also been introduced. This allows pre-2025 untaxed foreign income and gains to be brought into the UK at a reduced tax rate of 12% in 2025/26 and 2026/27, increasing to 15% in 2027/28. From April 2028 onwards, such remittances will be taxed at standard rates.
With the removal of protections for offshore trusts, foreign income and gains arising within settlor-interested offshore trusts will be taxed on UK-resident settlors from April 2025. Beneficiaries will also be taxed on trust distributions unless covered by the four-year FIG regime.
The Overseas Workday Relief (OWR) has been extended to four years and no longer requires earnings to remain offshore. However, the relief is capped at either GBP 300,000 or 30% of qualifying employment income, whichever is lower.
Business Investment Relief (BIR), which allowed untaxed offshore funds to be invested in UK businesses, will no longer be available for new claims after April 2028. Existing BIR investments remain valid, and unremitted BIR funds may still be brought to the UK under the TRF.
From 6 April 2025, all UK residents are taxed on worldwide income and gains. Foreign income earned before 2025 and subsequently remitted to the UK is now fully taxable, unless covered by the TRF. The UK has also adopted a residence-based Inheritance Tax (IHT) system: individuals who have been UK resident for at least 10 of the past 20 years are now subject to IHT on their worldwide assets. Upon leaving the UK, IHT liability phases out over a period of three to seven years. Offshore trusts no longer offer IHT protection unless the settlor is not considered a long-term UK resident.
The abolition of the non-dom regime represents a fundamental shift in UK taxation. While transitional measures such as the four-year FIG exemption and the TRF offer temporary relief, affected individuals must act quickly to review their tax planning, restructure trusts and investments, and consider the long-term implications of UK residency. With global taxation now the standard, proactive planning is essential.
