How the abolition of the non-dom regime is now affecting individuals

The UK’s historic non-dom regime officially ended on 6 April 2025. After over two centuries of allowing UK resident non-doms to shelter offshore income and gains from UK tax under the remittance basis, the rules have now changed fundamentally to put non-doms and UK-doms on equal footing under the new residence-based regime.

As such, individuals who previously benefited from non-dom status are already experiencing the impact of the reforms.

Here are a few points affecting individuals to make note of.

Worldwide income and gains are now taxable after four years of UK residence

The remittance basis was abolished on 6 April 2025. It has been replaced by a four-year “Foreign Income and Gains (FIG) regime”, which applies to individuals in their first four tax years of UK residence so long as they were non-UK resident for the 10 preceding tax years.

During this four-year period, foreign income and gains are exempt from UK tax (subject to making a claim) irrespective of whether the foreign income and gains are remitted to the UK or not. This differs from the old non-dom remittance basis regime where foreign income and gains had to remain offshore in order to claim the tax exemption.

After the four years, UK residents are taxed on their worldwide income and gains in full.

Individuals who remit foreign income and gains that arose in a tax year where they did claim the remittance basis will still be taxed on the remittances, subject to making a designation under the Temporary Repatriation Facility (TRF) as explained below.

Transitional reliefs are live—but time-limited

Two transitional measures are currently in effect for those who previously claimed the remittance basis:

The Temporary Repatriation Facility (TRF) allows individuals to remit pre-6 April 2025 foreign income and gains to the UK at reduced flat rates:

• 12% for the 2025/26 and 2026/27 tax years, and
• 15% in 2027/28, the final year of the facility.

A Capital Gains Tax (CGT) rebasing election allows eligible individuals to rebase the value of foreign assets to 5 April 2019, reducing UK tax exposure on future disposals.

These are strictly time-limited reliefs—after April 2028, the TRF will no longer be available, and foreign income/gains remitted to the UK will be taxed at full marginal rates.

Inheritance Tax exposure now depends on residency

Previously, UK Inheritance Tax (IHT) liability was linked to an individual’s domicile status. As of 6 April 2025, a new residence-based IHT regime is being introduced. The key changes include:

• Exposure to IHT on worldwide assets after 10 years of UK residence.
• A 10-year tail, meaning individuals may remain within the UK IHT net for a decade after leaving the UK.

This marks a dramatic expansion in the scope of UK IHT to cover the non-UK estates of former non-doms once they are long-term resident.

Offshore Trusts no longer offer long-term protection

Under the old rules, trusts established by non-doms could protect foreign assets from UK taxation, even after the settlor became deemed domiciled. Post-abolition, these protections no longer apply.

Key changes include:

• Foreign income and gains in settlor-interested trusts are now taxable once the settlor’s four-year FIG period ends. After the fourth year, any income or gains generated in offshore trusts could become subject to UK taxation—even if they are not distributed.
• Trusts lose their excluded property status for IHT once the settlor hits 10 years of UK residence and so will fall within the relevant property regime where the trust is subject to 10-year anniversary charges on the value of the trust assets and exist charges when assets leave the trust.

This undermines many long-standing planning structures used by non-doms, requiring urgent review of trust arrangements.

Many are rethinking UK residency altogether

With the remittance basis abolished, long-term global taxation imposed, and expanded IHT exposure, many internationally mobile individuals are reconsidering their connection to the UK:

• Some have left or are planning to leave the UK before triggering the 10-year IHT residence threshold.
• Others may limit their stay in the UK to fewer than four tax years, to benefit from the FIG regime without becoming taxable on their worldwide income and gains.
• Many are revising or collapsing their offshore structures as it is no longer fit for purpose from a tax planning perspective.

The UK is now far less attractive for wealthier individuals looking for long-term residence with preferential tax treatment.

Conclusion

The abolition of the non-dom regime represents a landmark shift in the UK’s approach to taxing international wealth.

While some transitional measures offer limited relief, the overall direction is clear: the UK is moving toward a more uniform and global taxation system for all residents. Individuals affected by this change should seek professional advice urgently to review their residency status, offshore structures, and estate plans in light of the new rules.