The Old Regime vs the New FIG Regime
Old remittance basis regime (abolished 6 April 2025): Non-UK domiciled individuals could elect to be taxed on UK income and gains plus only foreign income and gains 'remitted' (brought to, used in, or benefiting) the UK. Foreign income kept offshore: not taxed in the UK. Cost: loss of UK personal allowance and CGT annual exempt amount; Remittance Basis Charge of £30,000 (7-12 UK tax years), £60,000 (12-17 years), or £90,000 (17+ years) for non-doms with significant income. This regime attracted wealthy non-UK domiciled individuals to the UK — particularly from Russia, India, the Middle East, and Hong Kong. New FIG regime (from 6 April 2025): Available to: individuals who become UK tax resident after being non-UK resident for all of the prior 10 UK tax years. Duration: the first 4 UK tax years of residence. Benefit: ALL foreign income and gains are exempt from UK income tax and CGT during the 4-year period — whether remitted to the UK or not. No separate election required; automatic if qualifying conditions are met. After 4 years: full UK worldwide taxation applies. Key improvement vs old regime: no remittance basis charge; no restriction on remitting foreign income to the UK during the FIG period. Key restriction vs old regime: fixed 4-year window (old regime had no expiry); requires 10-year clean-break of UK residence before becoming available again.
Temporary Repatriation Facility (TRF): Bringing Old Offshore Income to the UK
The Temporary Repatriation Facility (TRF) was introduced alongside the FIG reform to encourage existing and former non-doms to bring pre-April 2025 offshore income and gains to the UK. How it works: individuals who previously used the remittance basis can designate pre-April 2025 foreign income and gains and bring them to the UK at a reduced UK tax rate. TRF rates: 2025–26 tax year: 12%. 2026–27 tax year: 12%. 2027–28 tax year: 15%. After 2027–28: TRF closes — any remaining offshore income brought to the UK is taxed at full UK rates. Who can use TRF: individuals who previously used the remittance basis (either formally paid the RBC or used the automatic £2,000 de minimis or were within the first 7 years and used remittance basis without charge). What can be designated: pre-April 2025 foreign income and gains that arose in any year when the individual used the remittance basis. Important: TRF is a voluntary, time-limited opportunity. Many long-term non-doms who have accumulated significant offshore income and gains should model whether TRF at 12% is better than waiting (and potentially having those funds taxed at full rates if remitted later) or investing the offshore funds permanently abroad.
UK Inheritance Tax: The Non-Dom IHT Overhaul from April 2025
The IHT changes for non-doms are arguably more impactful than the income tax changes for long-term residents. Old IHT regime for non-doms: Non-domiciled individuals: UK-sited assets subject to UK IHT at 40%; foreign-sited assets exempt (excluded property). Foreign assets held in excluded property trusts (EPTs): outside UK IHT indefinitely, regardless of how long the settlor lived in the UK. New IHT regime from 6 April 2025: Non-doms who have been UK resident for 10 or more of the prior 20 tax years become 'long-term residents' (LTRs). Once an LTR: ALL worldwide assets (including formerly excluded foreign assets) are subject to UK IHT at 40% — regardless of domicile. Excluded property trust protection: trusts settled before April 2025 by non-doms who were not yet LTRs retain excluded property status for the trust assets, even after the settlor becomes an LTR. This is the critical grandfathering provision — trusts settled before the cut-off date retain protection. New trusts settled after April 2025 by LTRs: no excluded property protection. Loss of LTR status: if you cease UK residence, you leave LTR status and the IHT tail on foreign assets reduces over time (4-year tail for those who were UK resident 10-13 years; 10-year tail for those UK resident 20+ years). This is a new 'long tail' IHT exposure for long-term residents leaving the UK.
Overseas Workday Relief (OWR) Under the New Regime
Overseas Workday Relief (OWR) allows qualifying individuals to exclude from UK income tax the portion of their UK employment income attributable to workdays spent outside the UK. OWR under the new rules (from April 2025): OWR is now available for the first 4 UK tax years for qualifying FIG-eligible individuals (those who have been non-UK resident for 10+ years before arriving). How OWR works: employment income is split based on the ratio of UK workdays to total workdays. The non-UK workday proportion is excluded from UK income tax. Cap: the lower of (a) the amount actually paid into or kept in an overseas account, or (b) the proportion of income attributable to overseas workdays. Importantly — under the new regime, OWR income does NOT need to be kept outside the UK. Under the old regime, OWR required the income to be kept offshore to maintain the exemption — this was administratively burdensome. The new OWR is simpler: the overseas workday fraction is simply excluded, regardless of where the funds are held. Practical use: executives who travel internationally for work and spend a significant portion of their time outside the UK can reduce their UK employment income tax bill substantially. Record-keeping: maintain detailed day-by-day travel records (passport stamps, boarding passes, diary) to support the overseas workday allocation.
Planning Strategies Under the New FIG Regime
The 4-year FIG regime creates specific planning opportunities and constraints: (1) Timing of arrival: arrive in the UK having been non-resident for 10+ consecutive tax years to access FIG. A person who has been UK resident within the prior 10 years does NOT qualify — even one UK tax year of residence in the prior 10 disqualifies the 4-year FIG window. (2) Asset realisation during FIG: sell appreciated foreign assets (shares, property) during the 4-year FIG window — gains are exempt from UK CGT. Timing large capital events (business sales, property disposals) to coincide with FIG years is one of the most valuable planning opportunities. (3) Trust planning: consider whether offshore trusts settled before UK arrival can distribute FIG-year income tax-free to the FIG beneficiary — subject to the trust's applicable anti-avoidance rules. (4) After 4 years: consider whether ongoing UK residence is still beneficial, or whether a period of non-UK residence (to reset the 10-year clock for a future FIG window) is more tax-efficient. The 10-year non-residence requirement means this reset takes a full decade. (5) Spouse planning: each spouse has their own FIG eligibility — if both spouses have been non-UK resident for 10+ years, both can independently benefit from the 4-year FIG window.