If you are a non-dom or expat living in the UK this article explains your tax situation, including information about the Remittance Basis of taxation and other matters that affect non-doms living in the UK, including the abolition of the non-dom rules and introduction of the new foreign income and gains tax regime.
From the 6 April 2025 onwards, the current remittance basis of taxation will be abolished for UK resident non-domiciled individuals, being replaced by a residence-based regime.
This is a new 4-year foreign income and gains (FIG) regime for individuals who become UK tax residents after a period of 10 tax years of non-UK residence. Under this new regime, eligible individuals will receive 100% relief on foreign income and gains for their first four years of UK tax residence.
As the new regime is residence-based, non-dom status will have less significance moving forward. Instead of relying on domicile status, the new rules will focus on an individual's UK tax residence status to determine tax liabilities.
We consider both the non-dom remittance basis regime which applies until, plus the new foreign income and gains regime (FIG) which applies from 6 April 2025 onwards.
Please do not rely on this article to make any financial decisions about your non-dom status or tax situation under the new foreign income and gain rules.
If you are unsure about the difference between domicile and residence, learn more by reading our guide explaining the differences between domicile and residence >
Not all non-dom's have the same tax requirements s, if you are a US citizen living in the UK, please read our guide to the tax requirements of US expats living in the UK >
As a UK resident non-dom (non-domiciled) individual you have the option of being taxed on two basis, the arising basis and remittance basis up to and including the 2024/25 UK tax year.
The arising basis is when you will be liable to UK taxation on your worldwide income and gains when it arises.
In all tax years up until 5 April 2025, to be a non-dom (or non-domiciled) tax resident in the UK, you would typically be a foreign national living in the UK. For all these tax years, up until 5 April 2025, the remittance basis regime was in place and is still relevant for tax filings in respect of any of those earlier years.
While you may be considered a tax resident, your domicile would typically remain as your country of birth i.e. your domicile of origin. If you are considered as a "non-dom" you would not usually consider the UK your permanent home i.e. you haven’t ruled out ever moving back to your home country at some point
Depending on your personal circumstances, your tax residence status in the UK may change from year to year, so to ensure you are aware of the tax consequences, we always recommend you seek independent and qualified tax advice.
The Remittance Basis of Assessment allows non-doms to choose to be taxed only on their UK income and gains and ONLY foreign income and gains you bring into (remit) to the UK. Since April 2017, if you were either born in the UK or are a long term resident of the UK (resident for at least fifteen out of the last twenty tax years) you could no longer use the remittance basis and you would be taxed on the arising basis.
Under the remittance basis regime, non-doms have the option of electing to claim the remittance basis every tax year depending on their circumstances for that year. For example one year it may have been more tax efficient to be taxed on the arising basis as opposed to claiming the remittance basis.
To claim for the remittance basis, it is effectively free of charge for the first seven years of residency. After that if an individual wanted to enjoy this favourable treatment there would be an annual charge known as remittance basis charge.
The remittance basis charge is £30,000 if you have been resident for seven out of the last nine years rising to £60,000 if you have been resident for twelve out of the last fourteen years.
If you are a UK resident claiming the remittance basis of taxation in a tax year, you will lose your entitlement to your tax free personal allowances (£12,570 in 2023/24 and 2024/25) and capital gains tax free allowance in that year unless your total income and gains in the year is less than £2,000.
To claim for remittance basis, you file a self-assessment tax return. The remittance basis is not automatic! If you do not claim for this treatment, the tax authorities will assume you are taxed on the arising basis and hence you will have to declare your worldwide income!
If you are a UK resident non-domiciled individual with foreign income and gains of more than £2,000 per tax year you will need to consider every tax year which of the two basis is more tax efficient for you. This is very important.
This area of tax is very complex and as such we strongly advise you seek professional tax advice early to ensure you fully comply with UK tax laws. The onerous is on you to ensure you make the correct declaration.
Foreign income comprises investment income such as bank interest, dividends, pensions and rental income (and any other income). Gains may relate to disposal of foreign property or shares (or any other assets).
In the UK, there are three rates of income tax which would be apply to an individual’s income in a tax year starting at 20% for an income of £50,270 or lower, 40% for income up to £125,000 and 45% for income over £125k per tax year.
If you are a UK resident and your total income from various sources is less than £100,000 you will also receive a tax-free personal allowance of £12,570 (2022/24 and 2023/25 tax years). This personal allowance means that you will not be charged tax on the first £12,570 of your income. You are not entitled to this allowance if you claim the remittance basis and your overseas income or gains are greater than £2,000.
If you are UK resident non-dom individual, you may be liable to income tax on your worldwide income, unless you claim the remittance basis of taxation and keep your foreign income abroad.
Capital gains tax rates are 18% and 28% depending on your total taxable income. For example, if you are higher rate tax payer (pay tax at 40% or 45%), you will be liable to Capital Gains tax at 28%. Every individual is entitled to a capital gains tax free allowance (£3,000 in 2024/25) so only gains in excess of this allowance will be chargeable to capital gains tax. A UK resident non dom claiming the remittance basis will lose their entitlement to this allowance.
Overseas Workday Relief is a tax relief for non-doms who are tax resident in the UK, electing to use the Remittance Basis of Assessment who also work abroad for a UK based business.
In essence, Overseas Workday Relief ensures that any income received from the UK for work conducted outside of the UK is not taxed in the UK.
To be able to claim before the 2025/26 tax year, you had to use the Remittance Basis of Assessment and meet other criteria.
Overseas Workday Relief (OWR) will be retained and simplified from the 2025/26 tax year onwards. Eligibility for OWR will be based on an employee’s residence and whether they opt to use the new 4-year FIG regime.
A full explanation of Overseas Workday relief is covered in this article: Overseas Workday Relief Explained >
As previously mentioned, the remittance basis of taxation will be abolished from 6 April 2025 onwards, being replaced by a residence-based regime, the Foreign Income and Gains (FIG) regime, as detailed below.
To facilitate the transition to the new tax regime, the government has introduced a Temporary Repatriation Facility (TRF). This facility allows individuals who previously claimed the remittance basis to remit foreign income and gains accrued before 6 April 2025 to the UK at reduced tax rates. The TRF is available for three tax years, with the following rates:
To benefit from this facility, income and gains must have been generated before 6 April 2025. It will be necessary to identify, and designate funds earmarked for the TRF through your Self-Assessment tax returns.
From 6 April 2025, the UK will introduce a new 4-year Foreign Income and Gains (FIG) regime to replace the remittance basis.
This will apply to individuals who become UK tax residents after a period of 10 consecutive tax years of non-UK residence.
Very broadly, under the FIG regime 100% relief will apply to foreign income and gains for the first 4 tax years of UK tax residence and Individuals will only be taxed on their UK-source income and gains during this period.
After the 4-year period, individuals will become subject to UK tax on their worldwide income and gains on the arising basis.
The FIG regime does extend to overseas workdays for expats coming to work in the UK, similar to overseas workdays relief claims that applied when a remittance basis claim was made.
To qualify for the FIG regime Individuals must be non-UK resident for at least 10 tax years before they come to the UK..
Claiming the relief and reporting your income will require specialist support, we wholeheartedly recommend seeking professional advice early to ensure full compliance with UK tax laws. Please note the responsibility lies with you to make accurate declarations under the UK’s Self-Assessment tax regime.
Up until 6 April 2025, if you were UK resident non-dom or not deemed domicile (had been resident in the UK for less than 15 out of the last 20 tax years) in the UK you would only be liable for UK inheritance tax on assets situated in the UK.
However, if you became domicile or deemed domicile (had been resident in the UK for at least 15 out of the last 20 years) in the UK, you would have be liable for UK inheritance tax on your worldwide assets.
From 6 April 2025, the concept of domicile as a relevant connecting factor in the UK tax system will be replaced by a system based on tax residence. Consequently, individuals who are long term UK tax residents in the tax year of death will be liable for UK inheritance tax (IHT) on their worldwide assets, regardless of their domicile status.
Broadly you will be subject to UK IHT if you have been UK tax resident for at least ten out of the previous 20 tax years.
A new inheritance tax ‘tail' provision will also be introduced from 6 April 2025, extending IHT liability for individuals after they cease to be UK tax residents. The duration of this 'tail' depends on the length of prior UK residency and will range from 3 to 10 years.
This means that upon death during the 'tax tail' period, individuals will be subject to UK IHT on their worldwide estates, regardless of their domicile status.UK inheritance tax will be payable where the total value of the estate of the deceased is over the nil-rate band (NRB) of £325,000. If the final estate is valued at under £325,000 there is no inheritance tax to pay. Any amount over this will typically attract an inheritance tax charge of 40%. However, there may be further reliefs available.
In a simple example with no additional reliefs, if the estate was worth £400,000, there would be no inheritance tax due on the first £325,000, but 40% on £75,000.
Inheritance tax will be charged on:
It is possible to mitigate UK inheritance tax but will require careful planning with a tax adviser and independent financial adviser.
In the UK, some individuals are required to complete a self-assessment tax return which means it is your responsibility to report your taxable income and gains to the HMRC before paying the tax which is due. The onerous is on you to notify HMRC that you need to file a tax return and not the other way round!
The 2024/25 tax year ended on the 5th April 2025 and tax returns for incomes and gains made during the year to 5th April 2025 need to be submitted and paid before January 31st 2026, or a fine of £100 will be imposed for late filing which will increase the longer the return remain outstanding. Penalties can also apply if taxes are paid late.
In extreme circumstances, HMRC may investigate individuals and conduct an investigation covering the previous 20 years, so it is important that you keep records for as long as possible.
Incorrect submission of a tax return could incur a fine as well as a penalty of up to 100% of the total tax due. The severity of any penalty will be dependent on the behaviour of the individual on how the underpayment has occurred and if it was deliberate or accidental and who made the discovering of the underpayment.
It is also possible to pay too much tax in a tax year and your tax return will uncover this and mean that you may be the recipient of a tax refund!
If you are resident not domiciled in the UK with foreign income and gains of more than £2,000 per tax year, you will have to submit a tax return and it is important that you get assistance on ensuring that you complete your tax return correctly to avoid potential penalties, and also ensure you have not overpaid your UK tax.
If you are living in the UK and have questions or concerns over your tax situation, you can use our free UK tax introduction service to speak to a trusted UK tax expert who specialises in UK Non-Dom and Expat tax matters.
As part of our free introduction service, our partner will offer you a free initial consultation of around 15 minutes, during which you can discuss your situation and get basic guidance on your situation.
Following your consultation, if required our partner will be able to propose formal services including:
Any proposal will include a detailed overview of any potential fees and costs, but you will be under no obligation to proceed with any proposals or advice.
