Key policy overhaul: What changed since April 2025
The UK’s tax treatment for individuals arriving from abroad or previously non-domiciled has fundamentally changed:
- Remittance basis abolished: replaced by a residence-based system, removing domicile as a key factor. (gov.uk)
- FIG (Foreign Income & Gains) regime: New arrivals who weren’t UK residents for 10 consecutive years prior can qualify for 100% relief on foreign income & gains brought into the UK during their first four tax years of residence. (gov.uk)
- Overseas Workday Relief (OWR) extended: from 3 to 4 years, subject to residence criteria and financial caps. No more need to keep employment income offshore if eligible. (gov.uk)
Inheritance Tax (IHT) and overseas assets
- The shift is from a domicile-based to a residence-based system for IHT. Long-term residents (10 of the last 20 tax years) may be liable on their worldwide assets when the new rules apply. (gov.uk)
- Settlements (trusts) created by non-UK domiciled or formerly domiciled individuals after 6 April 2025 may bring non-UK assets into charge under IHT depending on residence criteria and the “tail” period after leaving the UK. (gov.uk)
Actionable advice for affected individuals
- Check your residence history and arrival date: Did you become UK resident after long non-residence? If yes, you might be in the FIG regime.
- Calculate eligible foreign income and gains: Foreign income/gains pre-6 April 2025 may still be relevant via reduced-rate Temporary Repatriation Facility (TRF). TRF includes gains and income in trusts. (gov.uk)
- Consider employment arrangements: For OWR eligibility, ensure income and employment conditions are satisfied; claim relief where possible.
- Review estate planning: If you are, or will be, a long-term resident, assess how the residence-based IHT rules affect your assets and trusts.
- Trustees beware: Distributions from overseas trusts may now be taxed on arising basis, not just when remitted. Plan trusts accordingly. (gov.uk)
Practical example
James moved to the UK on 1 May 2025 after 15 years abroad. He holds rental income overseas and had assets in foreign trusts.
- He qualifies for the FIG regime (first eligible resident year in 2025-26).
- Gains accrued in trusts pre-6 April 2025 fall under TRF at reduced rates. After that, trust income arises basis applies.
- If James has already assets outside UK worth £5 million: under residence-based IHT, he may need to include them depending on residence tenure (10 of 20 rule).
Pitfalls & common misunderstandings
- FIG relief is not automatic—you must opt in and meet criteria.
- Foreign income/gains “brought into the UK” includes remittances, but tax on non-UK gains may trigger even if you don’t physically bring money home.
- The new rules don’t give past REBs for all foreign income—only limited relief for some pre-6 April 2025 income via TRF.
Bottom line
If you're or were a non-UK domiciled individual, or new to UK residence, you must understand how the FIG regime, OWR, and new IHT rules interact. With careful planning of arrival dates, trust structures, and income remittances, you can optimise tax exposure under these changes.