TRW & Co · UK tax
Non-Dom Abolition and the Four-Year FIG Regime
The non dom tax changes in force since 6 April 2025 replaced domicile with residence. New arrivals after ten years abroad can claim a four-year exemption for foreign income and gains, former remittance basis users can repatriate at 12% until their 2026-27 return, and inheritance tax now reaches anyone resident for ten of the last twenty years.
Key pointThe 12% temporary repatriation rate is available only for designations in returns for 2025-26 and 2026-27, so the 2026-27 return is the last chance to use it before the rate rises to 15%.
At a glance
Domicile no longer matters
From 6 April 2025 the remittance basis ended and UK tax on foreign income, gains and estates depends on residence rather than domicile.
Four-year FIG window
Qualifying new residents with at least ten consecutive years of non-UK residence can claim exemption on foreign income and gains for four tax years.
Repatriation at 12%
Former remittance basis users can designate pre-2025 foreign income and gains at 12% in 2025-26 or 2026-27 returns, and 15% in 2027-28.
Ten-of-twenty IHT test
Long-term UK residents, resident for ten of the previous twenty tax years, are within inheritance tax on worldwide assets, with a tail after leaving.
Allowances lost on claim
A FIG claim removes the Personal Allowance and capital gains tax annual exempt amount for that year, so small claims can be counterproductive.
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The short answer: what the non dom tax changes did
The non dom tax changes that took effect on 6 April 2025 abolished the remittance basis and removed domicile as the test for UK tax. Income tax and capital gains tax now depend on residence. New arrivals who have been non-UK resident for at least ten consecutive tax years can claim a four-year exemption for foreign income and gains (the FIG regime). Everyone else who is UK resident is taxed on worldwide income and gains as they arise.
Inheritance tax moved to a residence test too. Someone who has been UK resident for at least ten of the previous twenty tax years is a long-term UK resident, and their worldwide assets are within the scope of inheritance tax. For former remittance basis users, a temporary repatriation facility (TRF) allows foreign income and gains from earlier years to be designated and taxed at a reduced flat rate for a limited window.
The rules were introduced by the Finance Act 2025 and refined by the Finance Act 2026. As of October 2026, the core design is settled law. The practical questions are about timing: how many FIG years you have left, whether to use the TRF before its rate rises, and how trusts and estates should be restructured.
The legal framework: from domicile to residence
Before April 2025, an individual who was UK resident but not domiciled here could claim the remittance basis. Foreign income and gains were then taxed only when brought to the UK. Deemed domicile rules limited this for long-term residents, and inheritance tax on foreign assets also depended on domicile.
Part 2 of the Finance Act 2025 replaced those special rules. Its main elements are as follows.
- Relief for new residents. A claim-based exemption for foreign income and gains during the first four tax years of UK residence, for qualifying new residents.
- End of the remittance basis. The remittance basis is not available for tax years from 2025-26. Pre-2025 foreign income and gains remain taxable if remitted, subject to the TRF.
- Temporary repatriation facility. A designation regime, set out in Schedule 10 to the Finance Act 2025, for former remittance basis users.
- Rebasing. An automatic rebasing to 5 April 2017 market value for certain foreign assets held by former remittance basis users, with an option to elect out.
- Inheritance tax. The domicile and deemed domicile tests are replaced by a long-term residence test, including for the excluded property rules on trusts.
Residence itself is still decided by the statutory residence test. Our guide to the statutory residence test explains how day counts, ties and automatic tests work, which now drive almost every outcome in this area.
The four-year FIG regime at the heart of the non dom tax changes
According to HMRC’s guidance on the four-year FIG regime, you are a qualifying resident if you are UK resident under the statutory residence test and are within your first four years of UK residence following at least ten consecutive years of non-UK residence. Unused years cannot be carried forward. If you become non-resident temporarily during the four-year window, you cannot claim for those years but can claim for any remaining years on return.
The regime is claimed through Self Assessment, and you can choose which sources of foreign income and gains to claim on. Eligible income includes profits of a trade carried on wholly outside the UK, overseas property profits, dividends from non-UK companies and foreign interest. Foreign employment income is not covered by the FIG exemption; it is dealt with under Overseas Workday Relief, which has been reformed alongside the FIG regime.
What a FIG claim costs
A claim is not free. HMRC’s guidance states that claimants lose the income tax Personal Allowance and the capital gains tax annual exempt amount for the year, as well as certain other allowances. Foreign income claimed under the regime is also counted when working out adjusted net income for childcare support and the High Income Child Benefit Charge. For someone with modest foreign income, claiming can cost more than it saves.
Arrivals before April 2025
People who became UK resident before 6 April 2025 can use the regime only for the years of their four-year window that fall in 2025-26 or later. HMRC’s example is someone who arrived in May 2022 after ten years abroad: they have just one eligible year, 2025-26. Many long-standing residents therefore have no FIG years at all and are now taxed on the arising basis.
The temporary repatriation facility: rates and deadlines
The TRF is aimed at people who used the remittance basis and still have offshore funds made up of untaxed foreign income and gains from before April 2025. Under Schedule 10, an individual can only designate qualifying overseas capital if they were taxed on the remittance basis for at least one tax year before 2025-26, and they must be UK resident for the year of designation.
Designation is made by election in the Self Assessment return for 2025-26, 2026-27 or 2027-28. The charge is 12% of the amount designated in a return for 2025-26 or 2026-27, rising to 15% for designations in the 2027-28 return. Once designated and taxed, the amounts can be brought to the UK without a further remittance charge.
| Element | Who it applies to | Key rule | Time limit |
|---|---|---|---|
| Four-year FIG regime | Qualifying new residents after at least ten consecutive years of non-UK residence | Claimed foreign income and gains exempt; allowances lost for the year | First four tax years of UK residence only |
| Arising basis | All other UK residents | Worldwide income and gains taxed as they arise | Ongoing |
| Temporary repatriation facility | Former remittance basis users who are UK resident in the year of designation | 12% charge for 2025-26 and 2026-27 designations; 15% for 2027-28 | Returns for 2025-26 to 2027-28 |
| Rebasing to 5 April 2017 | Certain former remittance basis users who were never UK-domiciled | Foreign assets held on 5 April 2017 treated as acquired at market value on that date | Disposals on or after 6 April 2025; election to disapply available |
| Long-term UK residence (IHT) | UK resident for ten of the previous twenty tax years | Worldwide assets within inheritance tax; tail of up to ten years after leaving | Tested each tax year |
The 2026-27 return is the last one in which the 12% rate is available. Anyone weighing a designation should model it well before the filing deadline for that year rather than at the last minute.
How the non dom tax changes affect inheritance tax and trusts
HMRC’s guidance on long-term UK residence explains that, from 6 April 2025, you are a long-term UK resident in a tax year if you have been UK resident for the previous ten consecutive tax years or for at least ten of the previous twenty. Non-UK assets of a long-term resident are within the scope of inheritance tax on gifts and on death.
Long-term residence does not end immediately on leaving. Status can continue for up to ten tax years after departure, with a shorter tail for those who were resident for fewer years. HMRC’s examples are a three-year tail after ten to thirteen years of residence, rising by a year for each additional year. Transitional rules apply to people who were not UK-domiciled on 30 October 2024 and who left the UK before the new rules began.
Offshore trusts
For trusts, the excluded property status of non-UK assets now depends on whether the settlor is a long-term UK resident at the relevant time, rather than on the settlor’s domicile when the trust was created. Protections that previously sheltered foreign income and gains arising in settlor-interested trusts set up by non-doms ended from April 2025. Settlors who are not within the FIG regime can now be taxed on trust income and gains as they arise.
Budget 2025 announced a cap on the relevant property charges for trusts that held excluded property before 30 October 2024, along with anti-avoidance measures for trusts and offshore structures. Trustees should review the position of each trust against the settlor’s residence history. Our trust lawyers and the Trust Registration Service guide cover the related registration duties.
Responding to the non dom tax changes: a step-by-step approach
- Build a residence history. Record your UK residence status for each of the last twenty tax years using the statutory residence test. Every later decision depends on it.
- Identify FIG years. Work out whether you are a qualifying new resident and which of your four years remain. Decide each year whether a claim is worth the loss of allowances.
- Map pre-2025 offshore funds. Separate clean capital from untaxed foreign income and gains in each account. Good segregation records make TRF designations and future remittances far easier.
- Model the TRF. Compare the 12% charge in the 2026-27 return with the tax that would otherwise arise on future remittances. Remember the rate rises to 15% for 2027-28.
- Check rebasing. For foreign assets held on 5 April 2017, confirm whether automatic rebasing applies and whether electing out would ever help, for example where the asset has fallen in value.
- Review trusts and estate plans. Test each trust and will against long-term residence, including the tail after leaving the UK, and update letters of wishes and distribution policies.
- Diary claims and elections. FIG claims and TRF designations are made in returns; missing a return or deadline usually means losing the benefit.
The TRF window is finite and the cheaper rate ends with the 2026-27 return. If you have untaxed pre-2025 foreign income or gains that you expect to use in the UK, get the numbers modelled now, while there is still time to trace and evidence the funds properly.
Illustrative scenario: two families, two outcomes
Illustrative only; generic parties and simplified facts. Family A moved to London from Singapore in 2025 after more than ten years abroad. Their first four years of residence fall entirely under the new regime. They decide each year whether a FIG claim on their overseas rental income and portfolio is worth giving up their allowances. They also plan any gifts of foreign assets before they reach long-term residence, after advice on how gifts and trusts are treated.
Family B has lived in the UK since 2010 and used the remittance basis for years. They have no FIG years left. Their worldwide income is now taxed as it arises and their worldwide estate is already within inheritance tax. They hold an offshore account containing untaxed foreign income from before 2025. Designating it under the TRF in their 2026-27 return at 12% may be cheaper than paying full rates on future remittances. Assets held since before April 2017 may benefit from rebasing.
The same non dom tax changes produce very different decisions for the two families. A one-size-fits-all plan is unlikely to work for either.
Common mistakes with the non dom tax changes
Assuming you qualify for FIG because you were a non-dom
The FIG regime has nothing to do with domicile. It turns on ten consecutive tax years of non-UK residence before arrival, followed by UK residence. Many people who were non-doms under the old rules have been UK resident for too long to qualify, and from 6 April 2025 they are taxed on the arising basis. Check the residence history year by year, applying the statutory residence test, rather than relying on how you were treated under the old regime.
Claiming FIG on small amounts of foreign income
A FIG claim removes the income tax Personal Allowance and the capital gains tax annual exempt amount for the year. Where foreign income is modest, the lost allowances can be worth more than the exemption. Claims can be made on selected sources, so the right answer may be to claim on some and not others. Run the comparison each year rather than claiming by default.
Mixing funds before using the TRF
The TRF depends on identifying qualifying overseas capital, which means tracing what the funds represent. Accounts that mix clean capital, income and gains from different years are hard to analyse. Moving or reinvesting funds before the analysis is complete can make it harder to show what was designated. Keep accounts separate, preserve bank statements and investment records, and take advice before transferring anything.
Forgetting the inheritance tax tail after leaving
People who leave the UK often assume that their foreign estate falls outside inheritance tax immediately. Under the long-term residence test, status can continue for several tax years after departure, and up to ten for those with long UK residence. Gifts, trust distributions and wills should be planned with the tail in mind, and the position of any trust they have created should be reviewed at the same time.
Cross-border angle: Bangladesh, the Gulf and Singapore
Many of the families affected by the non dom tax changes have assets in more than one country. Where a family has land, businesses or bank accounts in Bangladesh, the UK position must be read together with the UK–Bangladesh double tax treaty and Bangladeshi inheritance rules. Our guide to UK inheritance tax on Bangladesh assets explains how the two systems overlap.
For clients relocating from Dubai or Singapore, where personal income tax is low or absent, the four-year FIG window can be a valuable bridge. Arrival timing, the split-year rules and the structure of overseas holdings should be settled before the move, not after. Our international private client team coordinates with advisers in other jurisdictions where foreign law is relevant.
What to do next: checklist
- Confirm your residence status for each of the last twenty tax years.
- If you arrived recently, list your remaining FIG years and the sources you might claim on.
- If you used the remittance basis, quantify pre-2025 untaxed foreign income and gains and model a TRF designation for 2026-27.
- Check whether automatic rebasing to 5 April 2017 applies to your foreign assets.
- Review every trust you created, or benefit from, against the long-term residence rules.
- Update your will and estate plan for worldwide assets.
- Keep the Budget 2025 technical amendments and any changes at the 28 October 2026 Budget under review.
TRW & Co’s London office is authorised and regulated by the Solicitors Regulation Authority. We advise internationally mobile individuals, families and trustees on the non dom tax changes alongside our tax lawyers in London. To arrange a review, contact our London office at info@trw.co or +880 1779 127165.
Frequently asked questions
01Has the non-dom regime been abolished?
Yes. From 6 April 2025, the remittance basis was abolished and domicile ceased to be the test for UK income tax, capital gains tax and inheritance tax. It was replaced by a residence-based system introduced by the Finance Act 2025. Qualifying new residents can claim a four-year exemption on foreign income and gains, and inheritance tax applies to worldwide assets of long-term UK residents. Pre-2025 foreign income and gains can still be taxed if remitted, unless designated under the temporary repatriation facility.
02Who qualifies for the four-year FIG regime?
You qualify if you are UK resident under the statutory residence test and are within your first four tax years of UK residence after at least ten consecutive tax years of non-UK residence. People who arrived before 6 April 2025 can use only the years of their four-year window that fall in 2025-26 or later. Unused years cannot be rolled forward, and years in which you are temporarily non-resident cannot be claimed, although remaining years can be used on your return.
03What is the temporary repatriation facility rate?
Under Schedule 10 to the Finance Act 2025, the charge is 12% of qualifying overseas capital designated in a return for 2025-26 or 2026-27, and 15% for amounts designated in the 2027-28 return. Only individuals who were taxed on the remittance basis for at least one year before 2025-26 can designate, and they must be UK resident for the year of designation. Designation is made by election in the Self Assessment return.
04Do I lose my personal allowance if I claim FIG?
Yes. HMRC guidance confirms that if you claim relief under the four-year FIG regime, you lose the income tax Personal Allowance and the capital gains tax annual exempt amount for that year, along with certain other allowances. Foreign income you claim on also counts towards adjusted net income for childcare support and the High Income Child Benefit Charge. You can choose which sources to claim on, so compare the saving with the allowances lost.
05When does inheritance tax apply to foreign assets now?
Inheritance tax applies to non-UK assets of a long-term UK resident. You are long-term resident if you have been UK resident for the previous ten consecutive tax years, or for ten or more of the previous twenty. The status can continue for up to ten tax years after you leave, with a shorter tail if your UK residence was shorter. Trust assets are tested by reference to the settlor’s long-term residence status at the relevant time.
06Can former non-doms rebase foreign assets?
Some can. The Finance Act 2025 provides that, for disposals on or after 6 April 2025, a foreign asset held on 5 April 2017 is treated as acquired at its market value on that date if the owner was never UK-domiciled before 2025-26 and claimed the remittance basis for at least one year from 2017-18 to 2024-25. The asset must not have been situated in the UK between 6 March 2024 and 5 April 2025. An election can disapply rebasing.
Sources and official materials
- Check if you can claim the 4-year foreign income and gains regime — HMRC eligibility, claims and allowances lost under the FIG regime
- Inheritance Tax if you’re a long-term UK resident — HMRC guidance on the ten-of-twenty test and the tail after leaving
- Finance Act 2025 — Part 2 replaces the special rules relating to domicile
- Finance Act 2025, Schedule 10: temporary repatriation facility — Designation elections and the 12% and 15% charges
- Capital Gains Tax rates and allowances — Annual exempt amount and the position of qualifying new residents
- Budget 2025: Overview of tax legislation and rates — Technical amendments to the residence-based regime and trust measures
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.