What’s Changed for Non-UK Domiciled Individuals
As of 6 April 2025, the UK has abolished the remittance basis of taxation and replaced it with a residence-based regime. Under this new system, individuals who become UK residents but were non-UK domiciled will:
- No longer be able to claim the remittance basis. (gov.uk)
- Have their foreign income and gains (FIG) taxed based on residence rather than remitted status. (gov.uk)
- Be eligible for transitional arrangements, such as the Temporary Repatriation Facility (TRF), enabling bringing in accrued foreign income/gains at a reduced rate (12%) for a limited period. (gov.uk)
Key Elements and Timelines
| Element | Details |
|---|---|
| Grace period / TRF | Reduced tax on previously accrued FIG, taxed at 12%, under the facility. (gov.uk) |
| Rebase of foreign assets | Eligible individuals can rebase foreign assets for certain CGT purposes to 5 April 2017 (or 2019 in some rules) when meeting specific conditions. (gov.uk) |
| Overseas Workday Relief (OWR) | Retained and reformed, including extensions and simplifications. (gov.uk) |
| Inheritance Tax changes | Residence nil-rate band limits and rules fixed, tying UK inheritance taxation more closely to residence. (gov.uk) |
| Effective date | 6 April 2025. (gov.uk) |
Implications and Opportunities for Planning
1. Assess Residency and Domicile Status Now
- If you expect to become UK resident by or after 6 April 2025, consider how long you retain non-UK domicile status and what foreign assets/gains you hold. Early planning can reduce surprise tax costs.
- Where possible, time asset disposals or foreign income flows to align with transitional reliefs.
2. Use the Temporary Repatriation Facility Wisely
- If eligible, bring in foreign income/gains under TRF at the special 12% rate rather than deferring or remitting later at higher rates.
- Ensure compliance with TRF application deadlines and documentation requirements.
3. Rebase Assets Strategically
- Consider whether rebasing your foreign assets (for CGT) to the relevant date (e.g., 5 April 2017) will reduce taxable gain on future disposals.
4. Evaluate Overseas Workday Relief (OWR)
- For workers spending time abroad but employed by UK employers, the reformed OWR may offer tax savings—track days carefully and understand eligibility.
Risks & What to Watch Out For
- Higher tax exposure: Without remittance basis, foreign income/gains may now be taxable on arising rather than remittance—ensure you have full records.
- Anti-avoidance rules that may impact transfers, trusts or other arrangements. (gov.uk)
- Timing matters: missing the TRF window or failing to meet conditions could mean losing favorable treatment.
Practical Example
Lucy, a non-dom who has lived outside the UK for many years, becomes UK resident on 6 April 2025. She has foreign investment income accrued over years and some assets with large unrealised gains.
- She opts into the TRF to bring in accrued income at 12% instead of later paying full UK income tax.
- She rebases her foreign shares to 5 April 2017 under the rules to limit CGT when she eventually disposes of them.
- She checks if she qualifies for OWR if she splits her work time between the UK and abroad.
Checklist for Implementation
- Confirm dates of UK residence, domicile status and previous non-resident status.
- Identify all foreign income, gains, and assets before 6 April 2025.
- Calculate benefit of rebasing vs a later disposal.
- Keep detailed records of employment abroad / days worked overseas if using OWR.
- Seek professional advice for complex arrangements (e.g. trusts, offshore structures).
Becoming familiar with the new regime now can help non-UK domiciled individuals avoid avoidable tax charges and optimise planning for foreign income and assets.