For decades, the tax status of wealthy foreigners in the United Kingdom rested on domicile—an English concept of deep connection between a person and a jurisdiction that operated above ordinary residence. It was the foundation of the famous non-dom regime with remittance basis taxation. From 6 April 2025, domicile as a tax factor has been abolished, and understanding its former logic is essential to grasp the new system.
Why the regime was abolished
Taxation based on domicile dates back to the early 19th century, but in its modern form non-dom became a politically vulnerable construct: tens of thousands of wealthy residents paid no tax on foreign income for years. According to HMRC, around 83,000 people used the status in 2022/23. The dismantling began with Conservative Chancellor Jeremy Hunt in the spring budget of 6 March 2024, promising to replace domicile with a regime based on tax residence. The Labour government that came to power after the election confirmed the abolition in the autumn budget of 30 October 2024 and tightened it by removing some transitional reliefs. The new rules came into force on 6 April 2025.
What is domicile and why was it special
Domicile in English law is a person's enduring connection with a territory, distinct from place of residence and harder to change. It distinguished between domicile of origin (from the father at birth), domicile of dependence, and domicile of choice. A UK resident with a foreign domicile (non-dom) could pay tax for years only on income brought into the country (remittance basis), leaving foreign income outside UK taxation.
The deemed domicile rule (until 6 April 2025)
To limit indefinite use of non-dom status, deemed domicile was introduced from April 2017—an "imputed" domicile for long-term residents. It arose on one of two grounds.
- Long residence: residence in the United Kingdom for 15 of the previous 20 tax years.
- Formerly domiciled resident: born in the United Kingdom with a British domicile of origin, who became a UK resident again.
The consequences were significant: the person lost the right to remittance basis and was taxed on worldwide income and capital gains on an arising basis, and their worldwide assets fell within the scope of inheritance tax. Previous protections for offshore trusts were also narrowed.
What changed from 6 April 2025
The reform abolished domicile and deemed domicile as factors for income tax, capital gains tax, and inheritance tax. The system was switched to a residence criterion.
- Instead of remittance basis, FIG was introduced—a four-year regime under which those arriving for the first time after ten years of non-residence exempt foreign income and gains from UK tax for the first four years of residence.
- For inheritance tax, domicile was replaced by the long-term residence test.
FIG: four-year window for new arrivals
The main replacement for remittance basis is the FIG (foreign income and gains) regime. It can be used by a qualifying new resident: someone who became a UK tax resident after at least ten consecutive years of non-residence. This includes both first-time arrivals and returning Britons who have lived abroad long enough. For the first four years of residence, such a person claims exemption of foreign income and gains from UK tax—regardless of whether the funds are brought into the country. After four years, the relief disappears and tax is calculated on worldwide income on an arising basis.
Inheritance tax: transition to long-term residence
From 6 April 2025, worldwide assets fall under UK IHT if a person has been resident for at least 10 of the last 20 tax years (long-term resident). This connection does not disappear on the day of departure: a so-called IHT tail remains. Its length depends on the length of stay—a minimum of three years for those who lived in the country for 10–13 years, and then one year for each additional year of residence, up to ten years. Full reset occurs after ten consecutive years of non-residence—the same logic as in FIG.
The reform also reshaped trust taxation. Previously, an offshore excluded property trust protected foreign assets from IHT depending on the settlor's domicile; now its status mirrors the settlor's residence. As soon as the settlor becomes a long-term resident, trust assets enter the IHT perimeter with entry, periodic (once every ten years), and exit charges. This changes the calculation for those who used trusts for asset protection relying on the previous regime.
Transitional measures
For those who used the old regime, reliefs are provided. The Temporary Repatriation Facility (TRF) opens a three-year window (2025/26–2027/28) to bring into the UK previously untransferred foreign income and gains at a concessionary rate: 12% when designated in 2025/26 and 2026/27, and 15% in 2027/28; tax is paid through self-assessment. Separately, rebasing applies—revaluation of certain foreign assets to their value on 5 April 2017 for CGT purposes, which reduces taxable gains on future sale.
What this means in practice
The old threshold of "15 out of 20" is no longer the benchmark. Now the key figures are four years of FIG for new arrivals and ten out of twenty years for worldwide assets to fall under inheritance tax. For those considering departure, the IHT tail is important: the tax connection to the UK continues for years after changing country, and this must be factored into succession planning in advance.
This material is for informational and analytical purposes only and does not replace individual legal or tax advice.
Q/A
Has domicile been abolished completely in the United Kingdom?
No. From 6 April 2025, domicile and deemed domicile ceased to be the principal connecting factors for Income Tax, CGT and IHT, which moved to residence-based rules. Common-law domicile did not disappear from private international law and may still affect matters such as the law governing succession to movable property.
Who can claim relief under the four-year FIG regime?
A qualifying new resident must become UK tax resident after at least ten consecutive tax years of non-UK residence and be within the first four years of that new residence period. Relief is claimed through Self Assessment for selected foreign income and gains; unused years cannot be carried forward, and specified personal allowances are lost for a claim year.
Can FIG-relieved income be remitted to the UK without additional tax?
Yes. Eligible foreign income or gains arising from 6 April 2025 and covered by a valid FIG claim can be remitted without a separate remittance charge. This does not automatically cover historic amounts from the former remittance basis: bringing those funds to the UK normally needs separate analysis, and qualifying amounts may instead be designated under the TRF.
How does the Temporary Repatriation Facility work?
The TRF is available to qualifying former remittance-basis users for designating certain foreign income and gains that arose before 6 April 2025. The charge is 12% for a designation in 2025/26 or 2026/27 and 15% in 2027/28. The designation is made through Self Assessment, and the designated amount need not be remitted to the UK at the same time.
When do overseas assets enter UK Inheritance Tax after the reform?
A person generally becomes a long-term UK resident after residence in at least 10 of the previous 20 tax years, after which overseas assets may enter the IHT scope. Following departure, that status lasts for 3–10 tax years depending on residence history; ten consecutive non-resident years reset the test. Trust and transitional cases require a separate calculation at the relevant event date.