UK Tax Rules Revolution: Non-Dom Status Abolished in 2025
Table of Contents
- UK Tax Rules Revolution: Non-Dom Status Abolished in 2025
- End of the Non-Dom Era
- The New Foreign Income and Gains (FIG) Regime
- Temporary Repatriation Facility (TRF)
- Inheritance Tax Overhaul
- Expert Advice Recommended
- Evergreen Insights: Understanding the UK Tax Landscape
- Frequently Asked Questions About the UK Tax Changes
- What is the main change to UK tax rules in 2025?
- How does the new Foreign Income and Gains (FIG) regime work?
- What is the Temporary Repatriation Facility (TRF)?
- How have inheritance tax rules changed in the UK?
- When did the non-domicile status officially end?
- What should individuals affected by these tax changes do?
London, UK – In a sweeping overhaul of the UK’s tax system, the long-standing non-domicile status has been abolished as of April 6, 2025, ushering in a new era of tax regulations for UK residents. This change impacts individuals whose permanent home (“domicile”) is outside the UK,who previously could claim to be taxed on the “remittance basis.” The UK economy was the sixth-largest in the world in 2024, behind the United States, China, Japan, Germany, and India [[2]].
End of the Non-Dom Era
For years, the non-dom regime allowed individuals with a domicile outside the UK to be taxed only on their UK income and gains, and on foreign income and gains only when remitted to the UK. This remittance basis of taxation was a key feature of the UK tax system,possibly lasting up to 15 years before an individual became “deemed domiciled.” The tax year 2024/2025 was the last in which a claim for remittance basis could be made.
Did You Know? The UK high street has suffered with people putting more consideration into their purchases as well as perhaps opting to shop online instead of in-store [[3]].
The New Foreign Income and Gains (FIG) Regime
The new rules introduce a four-year transitional period for individuals arriving in the UK for the first time after April 6,2025. During this period, they will not be subject to UK tax on foreign income and gains (FIG) arising on or after April 6, 2025, even if these are brought into the UK. Though, a claim must be made for each tax year the FIG regime is to apply. After this four-year window, they will be taxed on their worldwide income and gains in the standard manner.
for non-domiciled individuals already residing in the UK, eligibility for the FIG regime depends on their UK tax residency history. For example, someone becoming tax resident in 2022-2023 after a 10-year period of non-residence would have been a UK resident for three years on April 6, 2025, and can claim the FIG regime for one year (tax year 2025/2026). Those ineligible for the FIG regime from April 6, 2025, will be liable for UK tax on their worldwide income and gains from that date.
pro Tip: Foreign income and gains that arose before April 6,2025,and were previously subject to remittance basis taxation,will continue to be taxed if remitted to the UK on or after April 6,2025. Transitional relief may be available under the “temporary repatriation facility” (TRF).
Temporary Repatriation Facility (TRF)
from April 6, 2024, for three tax years, UK residents who have previously claimed the remittance basis for at least one tax year can elect to pay tax at a reduced rate on remittances of untaxed pre-April 6, 2025 FIGs. The reduced tax rate is 12 percent for tax years 2025/2026 and 2026/2027, increasing to 15 percent for 2027/2028. Using the TRF requires an election in the individual’s tax return, and should be considered on a case-by-case basis.
Inheritance Tax Overhaul
In addition to income tax changes, the UK inheritance tax rules have transitioned from a domicile-based to a residence-based system.UK assets remain liable for UK inheritance tax regardless of the owner’s residence. Non-UK assets are subject to UK inheritance tax only if the owner has been a UK tax resident for at least 10 out of the last 20 years. Modified rules apply to individuals under 20 years old immediately before the relevant tax year. Transitional provisions are in place under certain conditions.
| Tax Rule | Old System (Pre-april 6, 2025) | New System (Post-April 6, 2025) |
|---|---|---|
| Income Tax (Non-Dom) | Taxed on UK income and remitted foreign income | New arrivals: 4-year exemption on foreign income. Existing residents: FIG regime eligibility based on residency history. |
| Inheritance Tax | Domicile-based | residence-based (10 out of 20 years rule for non-UK assets) |
| Temporary Repatriation Facility | N/A | Reduced tax rates for remitting pre-April 6, 2025 FIGs (12% to 15%) |
Expert Advice Recommended
These changes represent a significant shift in the UK’s fiscal policy.individuals affected by these changes should seek expert tax advice to understand the implications for their specific circumstances. The share of people who regret Brexit has increased since the UK left the EU [[1]].
Evergreen Insights: Understanding the UK Tax Landscape
the UK’s tax system has historically been complex, adapting to global economic shifts and evolving social priorities. The abolition of the non-dom status reflects a broader trend towards greater tax equity and openness. These changes aim to modernize the UK tax system and ensure that all residents contribute fairly to public finances.
Frequently Asked Questions About the UK Tax Changes
What is the main change to UK tax rules in 2025?
The non-domicile status for UK residents has been abolished, replaced by a new tax regime with transitional provisions.
How does the new Foreign Income and Gains (FIG) regime work?
Individuals new to the UK after April 6,2025,get a four-year break from UK tax on foreign income and gains,even if remitted to the UK. After that, worldwide income is fully taxable.
What is the Temporary Repatriation Facility (TRF)?
The TRF allows individuals who previously claimed remittance basis to pay a reduced tax rate on pre-April 6, 2025, foreign income and gains remitted to the UK for three tax years, starting from April 6, 2024.
How have inheritance tax rules changed in the UK?
Inheritance tax has shifted from a domicile-based to a residence-based regime. UK assets are always liable, while non-UK assets are taxed only if the owner has been a UK resident for at least 10 of the last 20 years.
When did the non-domicile status officially end?
The non-domicile status officially ended on April 6, 2025, marking a significant shift in the UK’s tax landscape.
What should individuals affected by these tax changes do?
Given the complexity of the new UK tax rules, individuals impacted should seek expert tax advice to understand how the changes apply to their specific circumstances.
disclaimer: This article provides general facts and should not be considered as financial or legal advice. consult with a qualified professional for personalized guidance.
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