Abolition of the UK non-dom regime from April 2025: What you need to know

The UK’s long-standing non-domiciled (“non-dom”) tax regime will be abolished from 6 April 2025, marking a fundamental shift in the taxation of international individuals living in the UK. The changes, introduced by the Finance Act 2025, will have far-reaching consequences for current non-doms, new arrivals, and those with offshore trusts and assets. Below, we outline the key changes, transitional reliefs, and planning points.

1. End of the remittance basis

From the 2025/26 tax year, the remittance basis on current foreign income and gains will no longer be available. Historically, non-doms could elect to be taxed only on UK-source income and gains, and on foreign income and gains only if remitted to the UK. This regime ends with the 2024/25 tax year. From 6 April 2025, all UK residents—regardless of domicile and with very limited exceptions — will be taxed on their worldwide income and gains as they arise.

Key points:

• The last year to claim the remittance basis is 2024/25.
• From 2025/26, all UK residents are taxed on the arising basis except very limited circumstances.
• Remittance rules continue to apply to pre-2025/26 income and gains.

2. New relief for “Qualifying New Residents”

To maintain the UK’s attractiveness for internationally mobile talent, a new relief is introduced for individuals who become UK resident after at least 10 consecutive years of non-residence. These “qualifying new residents” can claim relief from UK tax on foreign income and gains for up to four consecutive tax years. There is also no requirement to be non-UK domiciled to apply for this relief, so this will be of interest to returning UK ex-pats.

Key points:

• Relief is available for up to four UK tax years.
• Only available if you have not been UK resident in any of the previous 10 UK tax years.
• Claimants are not entitled to UK personal allowances or certain other reliefs during the relief period.

3. Temporary repatriation facility (TRF)

A special facility is available for those who previously used the remittance basis. The TRF allows individuals to bring previously unremitted foreign income and gains into the UK at a reduced tax rate.

Key points:

Available for the 2025/26, 2026/27, and 2027/28 tax years.

• Taxed at 12% (2025/26 and 2026/27) or 15% (2027/28) on qualifying amounts. The “old” rules on the categorisation of funds will still be of importance, so pre-arrival capital will still not be taxed in the UK if remitted,
• Once the TRF charge is paid, the remitted amounts are exempt from further UK tax.
• Only available to those who claimed the remittance basis before 2025/26.
• Careful attention is required where non-UK tax is paid on the foreign income and gains being remitted to the UK under the TRF.
• Still possible to remit funds to the UK tax-free where used for certain business investments in the UK.

4. Rebasing of foreign assets

Individuals who were not UK domiciled before 2025/26 and who claimed the remittance basis for at least one year between 2017/18 and 2024/25 benefit from a rebasing of foreign assets for capital gains tax purposes.

Key points:

• For disposals on or after 6 April 2025, foreign assets held on 5 April 2017 are rebased to their market value at that date.
• Applies automatically unless the individual elects otherwise.

5. Offshore trusts and settlements – Income and Gains

Up to 5 April 2025, there were special protections for certain foreign income and gains realised by the Trustees of a non-UK resident trust settled by a UK resident, who was not domiciled in the UK when the Trust was created. From 6 April 2025, this protection has been removed so UK resident settlors of non-UK resident trusts will be taxed on worldwide trust income and gains as if it were their own. Beneficiaries of foreign trusts created by settlors not caught by the settlor-interested rules will still be taxed on the income and gains distributed or deemed to have been distributed to them.

Key points:

• Trust protections for non-doms end from 2025/26.
• Transitional rules apply to pre-2025/26 income and gains.

6. Inheritance Tax: Domicile replaced by long-term residence

From 6 April 2025, the concept of “domicile” is replaced by a “long-term UK resident” test for UK inheritance tax (IHT) purposes. An individual will now be within the scope of UK IHT if they have been UK resident for at least 10 of the previous 20 tax years.

Key points:

• Excluded property status for non-UK assets is now based on long-term residence, not domicile.
• The 10/20 year test determines IHT exposure.
• It is important to note that this treatment does not apply to all formerly non-UK domiciled individuals as there is separate protection under the terms of certain Gift and Estate Tax treaties that the UK has with specific countries, including principally the US.
• BY moving to a residence-based system and ignoring domicile for UK domestic tax purposes, there is greater certainty for individuals who were UK domiciled to create trusts after a sufficiently long enough period of absence.

7. Transitional and anti-forestalling provisions

A range of transitional rules and anti-avoidance measures apply to ensure a smooth transition and to prevent pre-emptive planning designed to sidestep the new rules.

Summary table 

What should you do now?

The abolition of the non-dom regime is a seismic change for internationally mobile individuals and families. If you are affected, it is essential to review your tax position, consider the transitional reliefs, and plan ahead. Key actions may include:

• Reviewing offshore structures and trusts.
• Considering use of the TRF to repatriate foreign income/gains at a reduced rate.
• Assessing eligibility for asset rebasing.
• Planning for the new IHT long-term residence test.

For tailored advice on how these changes affect you, please contact our specialist team.