UK Non-Dom Reform 2026: FIG Regime Replaces Remittance Basis from April 2025

On 6 April 2025, the UK’s longstanding non-domicile (non-dom) regime was abolished and replaced by a entirely new framework: the Foreign Income and Gains (FIG) regime. This is one of the most significant changes to UK personal tax in a generation, affecting thousands of internationally mobile professionals, investors, and long-term foreign nationals living in the UK.

This guide explains exactly how the new FIG regime works, who benefits and who loses compared to the old non-dom system, the details of the Temporary Repatriation Facility (TRF) for bringing historic foreign income to the UK, the sweeping changes to offshore trusts, and the new residence-based inheritance tax rules that came into effect simultaneously.

FIG Regime: The 4-Year Foreign Income and Gains Exemption

The Foreign Income and Gains (FIG) regime applies automatically to individuals who become UK tax resident and have not been UK tax resident in any of the 10 consecutive tax years before the year in which they become resident. There is no election required — it applies by default, though individuals can opt out if it is advantageous to do so (for example, to access foreign tax credits on foreign income).

What the FIG Regime Provides

• 0% UK income tax on foreign employment income, foreign dividends, foreign interest, and foreign rental income for the first 4 qualifying tax years
• 0% UK capital gains tax on gains from foreign assets disposed of in the first 4 qualifying tax years
• No need to keep foreign income or gains outside the UK — they can be brought to the UK without triggering UK tax (unlike the old remittance basis)
• No annual remittance basis charge (the old £30,000/£60,000/£90,000 annual charge no longer exists)

From Year 5 Onwards

Once the 4-year FIG period ends, the individual is taxed on worldwide income and gains at standard UK rates (20–45% income tax, 18–24% CGT). There is no transitional relief or tapering — it is a cliff edge from year 5.

Who Benefits Most

The FIG regime is most valuable for individuals in their first 4 years of UK residency with significant foreign income streams — for example, high-earning professionals relocating from the US or Asia with large investment portfolios, or executives receiving foreign bonuses. The ability to bring foreign money to the UK freely (without remittance basis restrictions) is a significant simplification over the old system.

10-Year Temporary Repatriation Facility (TRF)

The Temporary Repatriation Facility (TRF) addresses the position of individuals who built up foreign income and gains under the old remittance basis (pre-6 April 2025) that were never brought to the UK. These ‘stockpiled’ foreign funds would normally be taxable at full UK rates (up to 45% income tax or 24% CGT) if remitted to the UK after April 2025.

TRF Reduced Tax Rates

The TRF allows qualifying individuals to designate pre-6 April 2025 foreign income and gains and pay a reduced rate of UK tax:

• 2025–26 and 2026–27 tax years: 12% on designated amounts
• 2027–28 tax year: 15% on designated amounts
• After 2027–28: TRF closes. Any remaining unremitted pre-April 2025 foreign income or gains would be taxable at full UK rates if brought to the UK.

Who Can Use the TRF

The TRF is available to individuals who were eligible for the remittance basis at any point before 6 April 2025 and have unremitted foreign income or gains from those periods. The amounts designated do not need to be physically remitted to the UK in the TRF year — designating them crystallises the reduced rate, and the funds can be brought to the UK at any time thereafter free of further UK tax.

Practical Significance

For long-term non-doms with large stockpiles of foreign income held offshore — potentially millions of pounds — the TRF represents a significant one-time opportunity. At 12%, the TRF rate is materially less than the 45% income tax or 24% CGT that would otherwise apply. The 3-year window (ending after 2027–28) is limited, and professional advice is strongly recommended before designating amounts.

Inheritance Tax Changes from April 2025

Simultaneously with the non-dom abolition, the UK reformed its inheritance tax (IHT) rules to move from a domicile-based to a residence-based system. This is a major structural change affecting foreign nationals who have been living in the UK for extended periods.

New IHT Rule: 10-Year Long-Term Residency Test

From 6 April 2025, individuals who have been UK tax resident for 10 or more of the previous 20 tax years are treated as ‘long-term residents’ for IHT purposes. Long-term residents have their worldwide assets (not just UK assets) included in their UK IHT estate. The standard IHT rate of 40% (above the £325,000 nil-rate band, or £500,000 with the residence nil-rate band for a family home) applies to the worldwide estate.

Leaving the UK

An individual who leaves the UK and becomes non-resident retains long-term resident status — and therefore worldwide IHT exposure — for a ‘tail period’ of between 3 and 10 years after departure, depending on how long they were resident in the UK. Those resident for 10–19 years have a 3-year tail; those resident for 20+ years have a 10-year tail.

Who Loses Most

Long-term foreign nationals who have lived in the UK for 10+ years and had significant assets in their home country (US investment accounts, Asian real estate, foreign business interests) were previously outside the scope of UK IHT on those assets. From April 2025, those assets are in scope if they remain UK resident. This requires urgent estate planning review for many individuals.

Who Wins and Who Loses Under the New Rules

Who Benefits from the FIG Regime

• New arrivals in first 4 years: The FIG regime is considerably simpler and in many respects more generous than the old non-dom system. No annual charge, no need to segregate clean and tainted funds, no remittance tracking — just a clean 4-year exemption with the ability to bring foreign money to the UK freely.
• High earners relocating for a defined period: Executives, fund managers, and finance professionals on 2–4 year UK assignments benefit from the straightforward exemption.
• Individuals with pre-April 2025 foreign income stockpiles: The TRF at 12% is a significant opportunity to crystallise a much lower tax rate than would otherwise apply.

Who Loses Under the New Rules

• Long-term non-doms (years 5–15 of residency): Under the old system, non-doms could use the remittance basis indefinitely (with an annual charge from year 7). Under the new rules, there is no equivalent benefit after year 4. This group faces the sharpest increase in UK tax liability.
• Non-doms with large foreign asset estates: The move to residence-based IHT means those who have lived in the UK for 10+ years now face UK IHT on worldwide estates, potentially for the first time.
• Offshore trust settlors: Pre-existing excluded property trusts that were sheltering non-UK assets from IHT lose their protection where the settlor is a UK long-term resident. Professional restructuring advice is urgently needed.

US Expats Specifically

US citizens in the UK face a particularly complex position. The US–UK tax treaty interacts with both the old and new regimes, and the FIG regime’s exclusion of foreign income from UK tax can create situations where foreign income is taxable in the US but not the UK — potentially generating US tax without a corresponding UK foreign tax credit to offset it. Specialist US/UK dual-tax advice is essential.