What are the April 2025 non-dom tax changes?

From 6 April 2025, the remittance basis was abolished and replaced by the FIG regime. New arrivals get 4 years of relief on foreign income and gains. Existing non-doms have transitional provisions including 50% relief in 2025/26. The April 2025 non-dom reforms abolished the remittance basis and replaced it with the Foreign Income and Gains (FIG) regime. Key changes: (1) The FIG regime provides a 4-year relief for new arrivals — individuals who become UK resident after 10+ years of non-residence can claim relief on foreign income and gains for their first 4 years of UK residence. (2) Transitional provisions for existing non-doms include: 50% relief on foreign income for 2025/26 (the first year), a temporary repatriation facility for existing foreign income/gains, and rebasing of foreign assets to 5 April 2025 market value for CGT (with conditions). (3) IHT continues to be determined by domicile (not residence), but deemed domicile rules apply after 15 of 20 years of UK residence. (4) Overseas trusts established before 6 April 2025 may retain some protection, but the interaction with the new regime is complex. Relevant legislation: Finance Act 2025 (FIG regime and transitional provisions); Finance (No. 2) Act 2024 (legislative framework). Example: An individual who has been UK resident and non-domiciled for 5 years, using the remittance basis, will transition to the new regime in 2025/26. They get 50% relief on foreign income for 2025/26 (transitional provision). From 2026/27, they are taxed on worldwide income and gains with no relief (unless they qualify for the FIG regime, which they won't as they have been UK resident for more than 4 years). Common mistake: Assuming that the FIG regime applies to existing non-doms. It only applies to new arrivals (10+ years of non-residence before arrival). Existing non-doms get transitional provisions, not the 4-year FIG relief.

What is the FIG regime?

The Foreign Income and Gains (FIG) regime provides 4 years of relief from UK tax on foreign income and gains for new arrivals who have been non-resident for at least 10 consecutive years before becoming UK resident. The FIG regime is the replacement for the remittance basis. It provides a 4-year relief for new arrivals to the UK. Key features: (1) Eligibility — the individual must have been non-UK-resident for at least 10 consecutive tax years immediately before becoming UK resident. (2) Relief period — the first 4 tax years of UK residence. (3) Relief — foreign income and gains during the relief period are not subject to UK income tax or CGT, regardless of whether they are remitted to the UK. (4) Claim — the relief must be claimed on the self-assessment return. (5) No election — unlike the remittance basis, there is no annual election. The FIG regime is automatically available to qualifying individuals, but must be claimed. After the 4-year period, the individual is taxed on worldwide income and gains like any other UK resident. Relevant legislation: Finance Act 2025, Sections 8-15 (FIG regime). Example: An individual who has lived in the US for 12 years moves to the UK in June 2025. They qualify for the FIG regime: their foreign income and gains (US-source income, US investment gains) are not subject to UK tax for the first 4 tax years (2025/26 to 2028/29). UK-source income is taxed as normal. From 2029/30, they are taxed on worldwide income and gains. Common mistake: Assuming that the FIG regime applies to anyone who was previously non-resident. The 10-year non-residence requirement is strict — even a single year of UK residence in the preceding 10 years can disqualify the individual.

How does the rebasing of foreign assets work?

Foreign assets held on 5 April 2025 by non-domiciled individuals can be rebased to their market value on that date. This means only gains after 5 April 2025 are subject to UK CGT, not the gain from original purchase. The rebasing provision allows non-domiciled individuals to rebase foreign assets to their market value at 5 April 2025. This means that when the asset is subsequently sold, the CGT is calculated based on the gain from the 5 April 2025 value, not the original purchase price. Conditions for rebasing: (1) The asset must have been held on 5 April 2025. (2) The individual must have been non-UK-domiciled on 5 April 2025. (3) The asset must not be UK-sited (UK assets are not eligible). (4) The individual must become deemed domiciled or transition to the new regime. Rebasing prevents former non-doms from being taxed on historic gains that accrued while they were on the remittance basis. The rebasing applies automatically for qualifying assets, but the individual must keep evidence of the market value at 5 April 2025. Relevant legislation: Finance Act 2025, Sections 18-20 (rebasing provisions). Example: A non-dom purchased foreign shares for £100,000 in 2010. On 5 April 2025, the shares are worth £500,000. They sell the shares in 2027 for £600,000. Without rebasing, the gain would be £500,000 (£600,000 - £100,000). With rebasing, the gain is £100,000 (£600,000 - £500,000), significantly reducing the CGT liability. Common mistake: Not obtaining a valuation of foreign assets at 5 April 2025. The rebasing is based on the market value at that date, and without evidence of the value, HMRC may challenge the rebased cost.

How does IHT change for former non-doms after April 2025?

IHT continues to be determined by domicile (not residence). Former non-doms who have been UK resident for 15+ of the last 20 years become deemed domiciled and are subject to IHT on worldwide assets. The April 2025 income tax/CGT changes do not directly change the IHT rules. The April 2025 reforms changed the income tax and CGT treatment of non-doms (abolishing the remittance basis and introducing the FIG regime), but IHT continues to be determined by domicile. Key IHT points for former non-doms: (1) Deemed domicile — individuals who have been UK resident for at least 15 of the last 20 tax years are 'deemed domiciled' for IHT purposes, regardless of their actual domicile. This means they are subject to UK IHT on worldwide assets. (2) Former deemed domiciles — individuals who were deemed domiciled but have left the UK may remain deemed domiciled for IHT purposes for up to 3 years after leaving (the '3-year tail'). (3) Overseas trusts — trusts established before becoming deemed domiciled may retain some protection from IHT, but the rules are complex. (4) Spouse exemption — the spouse exemption is capped at £390,000 for non-UK-domiciled spouses (but unlimited for UK-domiciled or deemed-domiciled spouses). (5) Review — former non-doms who have been in the UK for many years should review their IHT position, as they may now be subject to IHT on worldwide assets. Relevant legislation: Finance Act 2025 (FIG regime — income tax/CGT); Inheritance Tax Act 1984, Sections 267-267A (deemed domicile for IHT). Example: A non-dom who has been UK resident for 16 years is now deemed domiciled for IHT purposes. Their worldwide assets (including foreign property and investments) are subject to UK IHT. They should review their estate plan and consider IHT planning strategies, such as lifetime gifting, trust structures, and life insurance. Common mistake: Assuming that the April 2025 changes only affect income tax and CGT. While the FIG regime is an income tax/CGT change, the deemed domicile rules mean that long-term UK residents are also subject to IHT on worldwide assets.

International Tax › Domicile

Non-Dom Reforms: The April 2025 Changes

The remittance basis was abolished from 6 April 2025, replaced by the Foreign Income and Gains (FIG) regime. Understand the new rules, transitional provisions, and how former non-doms are affected.

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The April 2025 non-dom reforms represent the most significant change to the taxation of non-domiciled individuals in a generation. The remittance basis was abolished and replaced by the Foreign Income and Gains (FIG) regime, a residence-based system that provides temporary relief for new arrivals and transitional provisions for existing non-doms. The changes affect income tax, capital gains tax, and the IHT treatment of former non-doms.

Abolition of the Remittance Basis

From 6 April 2025, the remittance basis was abolished. Previously, non-domiciled individuals could elect to be taxed on the remittance basis, paying UK tax only on UK income and gains and on foreign income/gains remitted to the UK. Under the new system, UK-resident individuals are taxed on their worldwide income and gains, subject to the FIG regime reliefs.

The FIG Regime

The Foreign Income and Gains (FIG) regime provides a 4-year relief for new arrivals. Individuals who become UK resident after a period of at least 10 consecutive years of non-residence can claim relief on foreign income and gains for the first 4 years of UK residence. During this period, foreign income and gains are not subject to UK tax, regardless of whether they are remitted to the UK. After 4 years, the individual is taxed on worldwide income and gains.

Transitional Provisions

Transitional provisions apply to existing non-doms who were using the remittance basis before 6 April 2025. These include: (1) A 50% relief on foreign income for 2025/26 (the first year of the new regime). (2) A temporary repatriation facility allowing existing remittances to be taxed at a reduced rate. (3) Special rules for overseas trusts established before 6 April 2025. (4) Rebasining of foreign assets to market value at 5 April 2025 for CGT purposes (with conditions).

IHT and Domicile

IHT continues to be determined by domicile (not residence), but the deemed domicile rules (15 out of 20 years of UK residence) mean that long-term UK residents become subject to IHT on worldwide assets. The April 2025 changes do not directly change the IHT domicile rules, but the abolition of the remittance basis means that former non-doms who have been in the UK for many years should review their IHT position.

Key Points

What You Need to Know

The remittance basis was abolished from 6 April 2025
The FIG regime provides 4-year relief for new arrivals (10+ years of non-residence required)
Transitional provisions include 50% relief on foreign income in 2025/26
IHT continues to be determined by domicile, not residence
Former non-doms should review their tax position urgently

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