Non-Dom Regime Abolished – What It Means Now

With the abolition of the non-domicile regime from 6 April 2025, individuals who do not qualify for relief under the new residence-based rules will be taxed on their worldwide income and gains in the same way as any other UK resident. 

The changes, from 6th April 2025 are: 

• The implementation of UK tax relief on eligible Foreign Income and Gains (FIG) for qualifying new residents in their first four years of tax residence in the UK. 

• The implementation of a Temporary Repatriation Facility (TRF) for individuals previously taxed on the remittance basis. 

• Replacement of the domicile-based Inheritance Tax (IHT) system with a residence-based system. 

FIG Regime 

Individuals arriving in the UK can claim UK tax relief on their overseas income and gains for the first four years after arriving in the UK. The individual must have arrived in the UK within the 23/24 tax year (or later) and must not have been a UK resident for 10 consecutive tax years prior to arrival. Residence is determined by the UK’s Statutory Residence Test.

Any claim to use the FIG should be considered carefully, as there are consequences to making a claim such as loosing entitlement to the UK’s personal allowance (plus blind persons allowance), and you will be ineligible to claim married couples allowance, the annual exemption (for capital gains tax) or any overseas losses generated. 

To use the FIG regime, the individual must be in self-assessment, and the claim must be itemised on the return each year (if it is required). There is no upper limit to the level of relief that can be claimed but it must be made within 1 year of the ordinary filing deadline for the tax year. 

For individuals that do not meet the requirements for the FIG regime, that have sold overseas assets after 6 April 2025, it is possible to make a re-basing election, to the value of the asset at 5 April 2017, so long as the asset was held at that time, the individual has not been considered “deemed” domiciled prior to 6 April 2025 and during the period (6 April 2016 and 5 April 2025) a claim for the remittance basis was made. This rebasing election could reduce the UK capital gains tax by effectively increasing the base cost in calculating the gain of the asset being sold. 

Temporary Repatriation Facility (TRF) 

Former remittance users may benefit from the Temporary Repatriation Facility (TRF) if they have untaxed overseas income and gains that they wish to bring into the UK. 

For three years from 6 April 2025, individuals can designate unremitted/untaxed overseas income and gains that arose before 6 April 2025. This is then taxed at 12% for the first 2 years and 15% in the third year. Once completed, no further UK tax is payable on the designated income and gains. If the TRF is not utilised, any overseas income and gains remitted to the UK (by a former remittance basis user) will be taxed in line with the normal income and capital gains tax rates. 

The claim must be made on the individuals tax return within 1 year of the ordinary filing deadline for the tax year. The designated income does not need to be reported in future years (i.e. as it is remitted) 

Inheritance Tax 

A fundamental change has occurred, the domicile of an individual was previously the precursor to charging inheritance tax in the UK. This however has been replaced with the concept of “long term” resident. An individuals’ overseas assets will be within the scope of UK IHT if the deceased had been UK tax resident for 10 of the last 20 years prior to their death. 

An individual remains within the scope of UK IHT if they have been considered “long term” resident for a period of not less than 3 years, if they leave the UK (if an individual was long term resident for more than 13 years, they will remain within the scope of UK IHT for 1 additional year, for each year over 13 years that they were considered long term resident, up to an overall maximum of 20 years).   

What Should You Do Now? 

• Review your tax residency: Are you eligible for any reliefs? 

• Check your offshore income and assets: could these now be taxable in the UK. 

• Trusts and estate planning: If you used offshore trusts, seek updated advice. 

• Plan repatriation: The TRF could offer a limited-time opportunity to bring money into the UK with lower tax. 

If you haven’t reviewed your tax position since these changes took effect in April 2025, now’s the time. 

To ensure you’re fully compliant, speak to a member of the Phinch team and take advantage of any transitional reliefs that may still be available.