UK abolishes non-domicile tax status: What you need to know

A major shift in UK tax legislation took effect on 6 April 2025, marking the end of the long-standing concept of domicile as a key factor in determining how individuals are taxed on their income, gains, and inheritance.

From now on, UK tax treatment will be based solely on residence status—a move that simplifies the rules but also introduces new planning opportunities and risks, especially for those with international ties or complex financial arrangements

What’s changing?

Under the new rules:

• Domicile status is no longer relevant for income and gains received after 5 April 2025
• Inheritance Tax (IHT) will also move away from domicile as a connecting factor, instead focusing on how long an individual has been UK resident
• British expats who have lived overseas for at least 10 years may now benefit from the new regime if they return to the UK

New terms to know

The new legislation brings with it new terminology:

• Long-term resident (LTR) – an individual who has been resident for 10 of the previous 20 tax years
• FIG – foreign income and gains
• Four-year FIG – a claim that may be made by individuals in their first four years of UK residence if followed by a period of non-residence lasting 10 consecutive tax years
• Transitional repatriation facility (TRF) – a flat rate of tax for unremitted FIG of former non-doms that benefitted from the remittance basis, claimable for 2025/26 (12%) , 2026/27 (12%) and 2027/28 (15%)

What does the end of non-domicile tax mean for you?

Anyone who was taxed as a non-domicile under the remittance basis in earlier years will still need to consider the earlier legislation for pre-6 April 2025 FIG but may be able to benefit from certain reliefs under the new regime.

Our tax experts specialise in the former non-domicile legislation and can also help you navigate the new legislation, including if:

1. You are leaving or returning to the UK
2. You were non-UK resident for 10 consecutive years and wish to claim the 4-year FIG (being in the first four years of UK residence)
3. You have been UK resident for less than 10 years
4. You were previously resident in the UK as a remittance basis user and are due to return after remitting FIG when non-resident
5. You have come to the UK after being overseas for 10 years, but still spend time working overseas,
6. You previously claimed the remittance basis and are interested in the TRF for your unremitted FIG
7. You are non-resident and selling UK property or shares in a property-rich company
8. You are a settlor of an offshore trust and close family members including spouse/civil partner, children or grandchildren can benefit from the trust
9. You are a beneficiary of an offshore trust and receive trust distributions/benefits
10. You were a former remittance basis user and hold foreign assets that were acquired before 6 April 2017
11. You receive income/gains in another country and wish to claim double tax treaty relief
12. You have made a mistake when declaring foreign income/gains and need to regularise your past tax affairs with HMRC

The new regime may cause you to come within the UK’s inheritance tax net sooner or, if you’re a British expat, take your foreign assets outside of IHT. We can help you to plan in the following situations:

• You are living in the UK and expect to become a LTR
• You are a British expat who has been living overseas for at least 10 years and own foreign assets
• You are a LTR but are thinking of leaving the UK
• You are a settlor of an offshore trust and you can benefit from the trust
• You are not yet a LTR and wish to consider setting up an offshore trust
• Your spouse/civil partner has a different LTR status to yours
• You are resident or domiciled in another country with an estate treaty with the UK
• You are a not a LTR and wish to make lifetime gifts

We also provide services to offshore trustees affected by non-domicile tax changes, including:

• Advising on the trust’s residence status for UK tax purposes
• Relevant income and stockpiled gains calculations
• Advice about breaking/importing the trust
• IHT exit charges (LTR settlors and settlors losing their LTR status)
• IHT 10-year anniversary charges (LTR settlors)
• Settlors able to benefit from the April 2008 rebasing

Whether you’re a returning expat, a long-term UK resident, or a trustee managing offshore structures, our team is here to help you make sense of the new regime—and plan with confidence. Get in touch with us here.