UK Non-Dome Regime abolished
From April 6, 2025, the non-domicile regime for UK resident individuals has been abolished and replaced by a new regime that includes transitional provisions.
UK None-Dome Regime abolished. The non-dom regime had been a distinctive characteristic of the UK tax system for decades, enabling (HNW-, UNW-) individuals whose place of domicile was outside the UK to make an annual claim to be taxed on the remittance basis. The remittance basis of taxation provided that persons would be taxed on their UK-source income and gains, but only on their non-UK-source income and gains to the extent they were actually remitted. The status could last up to 15 years before they are deemed domiciled. The new regime means that the last UK tax year in which a taxpayer can claim the remittance basis of taxation is 2024/2025.
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New rules - Transitions Rules
Under the new tax regime, individuals who move to the UK for the first time after April 6, 2025, will have only a 4-year transitional period during which they are not subject to UK tax on foreign income and gains (FIG) arising on or after that date, even if the income is remitted to the UK. After these four years, they will then be fully taxable on their worldwide income and gains in the usual way. Each tax year, a taxpayer must claim that the FIG regime applies.
For non-domiciled individuals who are already tax resident in the UK, the transitional period is shortened. Some may be able to benefit from the FIG regime for a period of time, depending on when they first became UK tax resident (for example, an individual who became tax resident in 2022-2023 after 10 years of non-residence would have been UK resident for three years on April 6, 2025, and so can claim the FIG regime for one year, being tax year 2025/2026). For others, who were not eligible for the FIG regime on April 6, 2025, they will be liable to UK tax on their worldwide income and gains from that date. FIGs that arose to a remittance basis user before April 6, 2025, will continue to be taxed if remitted to the UK on or after April 6, 2025, subject to the application of any transitional relief under the “temporary repatriation facility” (TRF).
From April 6, 2024, for three tax years, UK resident individuals who have previously made a claim to be taxed on the remittance basis for at least one tax year can elect to pay tax at a reduced rate on remittances of untaxed pre-April 6, 2025, FIGs. For tax years 2025/2026 and 2026/2027, the reduced rate of tax is 12 percent; for 2027/2028, it rises to 15 percent. To use the TRF, the individual must make an election on their tax return for the relevant year; however, whether to make such an election should be considered on a case-by-case basis.
Contact us if you need help with your filings or want to discuss alternatives. Several countries offer None-Dome Taxation rules. Find out more on our websites firstadvisor.eu and firstadvisor.ch – for Switzerland.
FAQ - Fragen und Antworten
The UK changes its Rules for UK Non-Domes from April 6, 2025. What does it mean?
From April 6, 2025, the non-domicile regime for UK resident individuals has been abolished and replaced by a new regime that includes transitional provisions. The non-dom regime had been a distinctive characteristic of the UK tax system for decades, enabling (HNW-, UNW-) individuals whose place of domicile was outside the UK to make an annual claim to be taxed on the remittance basis. The remittance basis of taxation provided that persons would be taxed on their UK-source income and gains, but only on their non-UK-source income and gains to the extent they were actually remitted. The status could last up to 15 years before they are deemed domiciled. The new regime means that the last UK tax year in which a taxpayer can claim the remittance basis of taxation is 2024/2025.
What changes for UK Non-Domes from April 6, 2025?
Under the new tax regime, individuals who move to the UK for the first time after April 6, 2025, will have only a 4-year transitional period during which they are not subject to UK tax on foreign income and gains (FIG) arising on or after that date, even if the income is remitted to the UK. After these four years, they will then be fully taxable on their worldwide income and gains in the usual way. Each tax year, a taxpayer must claim that the FIG regime applies.
Do I have Alternatives?
There are multiple options available. We strongly recommend consulting us to discuss your options and avoid hasty decisions. In either case, taxpayers can claim a four-year transitional period—enough time to think about clever alternatives.
