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April 5, 2024

Non-Dom No More: The End of the Remittance Basis for UK Non-Domiciliaries

As part of the UK's Spring Budget 2024, the Chancellor, Jeremy Hunt, announced the abolition of the remittance basis for income and capital gains tax for non-UK domiciled, UK resident individuals, with effect from 6 April 2025. HMRC have also since issued a technical note dated 7 March 2024 on the proposed abolition of the remittance basis of assessment, with effect from 6 April 2025.

What is the non-dom tax regime?

The non-dom regime has formed part of the UK’s tax system for over 200 years, dating back to when income tax was first introduced in 1799 by William Pitt to fund the Napoleonic Wars. Where the conditions are met, it has enabled UK resident individuals whose permanent home is outside the UK (“non-doms”) to benefit from the ‘remittance basis’, the fundamental principle of which is to exempt foreign income and gains from UK taxation unless remitted (brought back) to the UK.

Abolition of the Remittance Basis

Use of domicile status has been tapered away in recent years, with a 15-year ‘cap’ on the number of years a non-dom could benefit under the rules being introduced in 2017. However, from 6 April 2025, the remittance basis will be abolished for UK resident non-doms, marking a massive step towards a residency based, rather than domicile based, tax system.

The Replacement

From 6 April 2025, the remittance basis will be replaced with a new 4-year foreign income and gains (FIG) regime for individuals who become UK tax resident after a period of 10 years of non-UK residence.

  • If an individual has not been UK resident for a period of 10 years or more and then becomes UK resident, they will benefit from the FIG regime for a period of 4 years.
  • If an individual has been non-UK resident for less than ten years and becomes UK resident, they will not get the tax-free FIG holiday.

How does the FIG holiday work?

If someone is eligible for the FIG holiday, tax will not be chargeable on foreign income and gains arising in the first 4 years after they become UK resident. In contrast to the existing remittance basis regime, their foreign income and gains will be tax free whether or not they remitted to the UK. Individuals will also not pay tax on non-resident trust distributions.

UK tax on income and gains will be payable, as is the case currently for non-domiciled individuals.

For those who have been UK tax resident for less than 4 years (after 10 years of non-UK tax residence), the new regime will be available for any tax year of UK residence in the remainder of those 4 years.

Overseas Workday Relief

Overseas Workday Relief (OWR), for the first 3 years of UK residence, will remain the same. However, for 2025/26 onwards, eligibility for OWR will be based on an employee’s residency status and whether they opt to use the new 4-year FIG regime (as opposed to being based on an individual’s domicile status and whether they elect to use the remittance basis under the current rules).

Trust Protections

From 6 April 2025, the protection from income tax and CGT arising in settlor-interested trusts will no longer be available for non-doms and deemed-domiciled settlors who do not qualify for the 4-year FIG regime. For these individuals, tax will be charged on future foreign income and gains as they arise within the trust (whenever established).

Foreign income and gains arising in non-resident trusts from 6 April 2025 will be taxed on the settlor or transferor (if they have been UK resident for more than 4 tax years) on an arising basis (which is currently the case for UK domiciled settlors or transferors).

Foreign income or gains which arose in the trust before 6 April 2025 will be taxed on settlors or beneficiaries if they are matched to worldwide trust distributions or other benefits. Where the benefit is provided will not be relevant. Such income and gains should therefore be kept separate from income and gains which arise or are realised on and after 6 April 2025.

Beneficiaries and settlors who are within the 4-year FIG regime will also be able to receive benefits from 6 April 2025 free from any UK tax charged whether or not the benefits are received in the UK.

Non-Dom Inheritance Tax

Broadly speaking, there seems to be an intention to also move inheritance tax (IHT) to a more residency-based system from 6 April 2025, however nothing has been confirmed and there will be a period of consultation before this.

Given the other changes, it’s reasonable to predict that IHT may be charged on individuals who have been UK resident for 10 years, and individuals who have left the UK may still fall within the scope of IHT for 10 years of non-residency.

As is the case now, UK situs assets will remain within the scope of IHT.

Non-UK assets held by non-UK trusts which benefit from ‘excluded property’ status are currently expected to remain outside the scope of IHT.

Transitional Relief

For those who:

  1. Currently have non-dom status;
  2. Move from the remittance basis to the arising basis; and
  3. Are not eligible for the new 4-year FIG regime.

Transitional relief will be available for 2025/26 only and these individuals will pay tax on 50% of their foreign income. This applies to foreign income only and there are separate rules for chargeable gains.


For individuals who have claimed the remittance basis and remain neither UK domiciled nor deemed domiciled, capital gains tax rebasing of non-UK sited assets (held on 5 April 2019) will be available.

The changes seem to signify a clear intention to move away from a domicile-based system to a residency-based one, thus ensuring those that are considered to be UK resident under the statutory residency test are subject to UK income, capital gains, and inheritance tax on more of their foreign income/gains. If you would like any further information regarding domicile, the remittance basis, or the changes announced in the Spring Budget, please do not hesitate to contact a member of our team today.

Disclaimer: This article is for general information only and is not intended to constitute individual advice. It is recommended that you seek independent tax advice.

Contact us today to discuss your tax requirements.
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