Non-Dom Tax Changes: The 2025 FIG Regime Explained

The UK's non-dom tax regime underwent its most significant reform in a generation in April 2025. The remittance basis — which allowed non-domiciled residents to avoid UK tax on foreign income and gains — was abolished and replaced with a residence-based system built around a new 4-year Foreign Income and Gains (FIG) regime.

This complete guide explains the new FIG regime, who qualifies, how it works, and what it means for international individuals living in or moving to the UK.

The End of the Non-Dom Regime

For over 200 years, the UK operated a domicile-based tax system. Non-UK domiciled individuals (non-doms) who were UK resident could choose to be taxed on the remittance basis — paying UK tax only on UK-source income and gains, and on foreign income and gains only to the extent they were remitted (brought) to the UK.

From 6 April 2025, the remittance basis was abolished. The new system is entirely residence-based:

• UK residents are taxed on their worldwide income and gains (as before)
• New arrivals can claim the FIG regime for their first 4 years of UK residence (if eligible)
• Existing non-doms who previously claimed the remittance basis are subject to transitional arrangements

The FIG Regime: 4-Year Relief for New Arrivals

The Foreign Income and Gains (FIG) regime provides relief on foreign income and gains for individuals who:

1. Are UK resident in the current tax year
2. Have not been UK resident in any of the 10 tax years immediately before the current tax year
3. Claim the FIG regime for the tax year

What Relief Is Available

Under the FIG regime, qualifying individuals can claim:

• 100% relief on foreign income: No UK tax on foreign income (employment income, dividend income, interest, rental income, etc.) arising in the tax year
• 100% relief on foreign gains: No UK tax on foreign capital gains arising in the tax year

The relief applies for a maximum of 4 consecutive tax years. After 4 years, the individual is taxed on their worldwide income and gains (the same as any other UK resident).

How to Claim

The FIG regime is claimed on the self-assessment tax return. The individual must:

1. Complete the FIG regime section of the tax return
2. Declare the foreign income and gains that qualify for relief
3. Retain records of the foreign income and gains (in case of HMRC enquiry)

The claim can be made for any of the first 4 years of UK residence, but the 4-year period is consecutive — if you don't claim in one year, you still use up one year of the 4-year period.

Transitional Arrangements for Existing Non-Doms

Existing non-doms who previously claimed the remittance basis are subject to transitional arrangements:

Years 1-3 After the Change (2025/26 – 2027/28)

Individuals who were UK resident in 2024/25 and had claimed the remittance basis in at least one of the 4 years before 2025/26 can claim a 50% relief on foreign income for 2025/26 only. This means:

• 50% of foreign income is exempt from UK tax
• 100% of foreign gains are subject to UK tax

From 2026/27 Onwards

From 2026/27, all existing non-doms are taxed on their worldwide income and gains (the same as any other UK resident). The remittance basis is no longer available.

Protection for Pre-2025 Trusts

Foreign income and gains arising in trusts established before 6 April 2025 may continue to benefit from protection. If the trust was established when the settlor was non-UK domiciled, the trust's income and gains are not taxed on the settlor or beneficiaries until they are distributed (remitted) to the UK. This protection applies for the settlor's lifetime.

Who Benefits from the FIG Regime?

The FIG regime is designed to attract internationally mobile individuals to the UK. It's particularly beneficial for:

High-Earning Expats

Individuals earning significant foreign income (e.g., employment income from a foreign employer, dividends from foreign companies) can benefit from 4 years of tax-free foreign income.

Investors with Foreign Portfolios

Individuals with foreign investment portfolios (dividend income, interest, capital gains) can benefit from 4 years of tax-free foreign investment returns.

Entrepreneurs with Foreign Business Interests

Entrepreneurs with business interests outside the UK can benefit from 4 years of tax-free foreign business income and gains.

Planning Opportunities Under the FIG Regime

Timing of Arrival

The 4-year FIG period starts from the first year of UK residence. Careful timing of your arrival can maximize the benefit:

• Arriving early in the tax year (e.g., April) gives you the full tax year of relief
• Arriving late in the tax year (e.g., March) still counts as a full year of the 4-year period

Pre-Arrival Planning

Before becoming UK resident, consider:

1. Realising foreign gains: If you have unrealized foreign gains, consider realizing them before becoming UK resident (they may be tax-free if you're not yet UK resident)

2. Restructuring foreign investments: Review your foreign investment portfolio to ensure that the income and gains qualify for FIG relief

3. Reviewing compensation structures: If you're relocating for work, review your compensation structure to ensure that foreign income qualifies for FIG relief

4. Trust planning: If you have or are considering establishing a trust, review the trust's UK tax implications before becoming UK resident

During the 4-Year Period

During the 4-year FIG period:

1. Maximise foreign income and gains: Foreign income and gains are tax-free, so consider maximising foreign income and gains during this period

2. Defer UK income: If possible, defer UK income to after the FIG period (when it will be taxed at UK rates)

3. Review pension contributions: Foreign pension income may qualify for FIG relief — review your pension arrangements

4. Plan for the end of the FIG period: After 4 years, all income and gains are taxed at UK rates. Plan ahead to minimize the tax impact when the FIG period ends

The Temporary Repatriation Facility (TRF)

The Temporary Repairation Facility (TRF) allows existing non-doms to bring previously unremitted foreign income and gains to the UK at a reduced tax rate:

• 2025/26 and 2026/27: 12% rate on remitted income and gains
• 2027/28: 15% rate on remitted income and gains

The TRF provides a window for existing non-doms to regularize their foreign income and gains without facing the full UK tax rate.

Interaction with Double Tax Treaties

The FIG regime interacts with double tax treaties. If you have foreign income that's taxed in the source country, and the UK has a double tax treaty with that country, the treaty may provide relief (credit or exemption) even after the FIG period ends. The FIG regime provides relief during the first 4 years, and the treaty may provide relief after that.

What This Means for US Expats

US citizens moving to the UK face a unique situation:

• The FIG regime provides relief from UK tax on foreign income and gains
• But US citizens remain subject to US taxation regardless of where they live
• The US-UK double tax treaty and the Foreign Tax Credit system prevent double taxation

For US expats, the FIG regime means:

• UK tax on foreign income: £0 (during the 4-year FIG period)
• US tax on the same income: May still be due (the US taxes worldwide income)
• Foreign Tax Credit: May be available for UK tax paid on UK-source income

US expats should seek specialist advice from both a UK tax adviser and a US tax adviser to ensure both UK and US obligations are met.

How Newshams Can Help

At Newshams Tax Advisers, we specialise in international tax planning for individuals moving to or living in the UK. Our approach includes:

• Assessing your eligibility for the FIG regime
• Pre-arrival tax planning to maximise the FIG benefit
• Ongoing advice during the 4-year FIG period
• Planning for the end of the FIG period
• Trust planning (for pre-2025 trusts)
• Coordination with your US tax adviser (for US expats)
• Claims under the Temporary Repatriation Facility

Book a consultation to discuss your FIG regime planning, or contact us for an informal discussion.

Frequently Asked Questions

What is the FIG regime? The Foreign Income and Gains (FIG) regime, introduced in April 2025, replaces the old non-dom remittance basis. New arrivals who haven't been UK resident in the previous 10 years can claim relief on foreign income and gains for their first 4 years of UK residence.

Who qualifies for the FIG regime? Individuals who are UK resident in the current tax year and have not been UK resident in any of the 10 tax years immediately before the current tax year. The claim is made on the self-assessment tax return.

How long does the FIG regime last? The FIG regime provides relief for a maximum of 4 consecutive tax years. After 4 years, the individual is taxed on their worldwide income and gains (the same as any other UK resident).

What happened to the non-dom regime? The non-dom remittance basis was abolished from 6 April 2025. Existing non-doms who previously claimed the remittance basis are subject to transitional arrangements (50% relief on foreign income for 2025/26, then full taxation from 2026/27).

Can I claim the FIG regime if I was previously UK resident? No. To qualify for the FIG regime, you must not have been UK resident in any of the 10 tax years immediately before the current tax year. If you were UK resident in any of those years, you cannot claim the FIG regime.