The UK non-UK domiciled (‘non-dom) regime is being replaced: what RJP clients need to know (in plain English)

October 2025

From 6 April 2025, the UK has stopped using the old “remittance basis” for non-doms and moved to a residence-based system. If you (or your family members) have been relying on the non-dom rules, in previous years, this is a big shift. Here’s what’s changing, why it matters now, and what we’re seeing so far on people leaving the UK.

What’s changing—at a glance

• Remittance basis abolished from 6 April 2025. The old choice for UK resident non-doms to pay UK tax only on foreign income/gains they bring to the UK (and sometimes a Remittance Basis Charge) has gone.
• New 4-year “foreign income & gains” (FIG) window for new arrivals to the UK. If you become UK-resident after 10 tax years of non-UK residence, you can ignore all foreign income and gains for UK tax purposes for your first four tax years in the UK, and you can bring those funds to the UK with no extra charge. After year 4, you’re taxed like everyone else on worldwide income and gains.
• Overseas Workday Relief (OWR) aligned and capped. OWR runs for up to 4 years and is capped at the lower of £300,000 or 30% of total employment income from 6 April 2025.
• Inheritance Tax (IHT) becomes residence-based. Broadly, you’re within scope of IHT on worldwide assets once you are a long-term resident of the UK (generally 10 of the last 20 tax years), and you may remain in scope 3–10 years after leaving (“tail”).

Trusts settled by long-term residents are also affected. (Transitional details apply.)

Transitional easements for existing non-doms.
– Temporary Repatriation Facility (TRF): bring pre-6 April 2025 foreign income/gains to the UK at reduced rates (12% for two years, 15% in the third), available for three tax years from 2025/26.
– CGT rebasing: ability to rebase certain foreign assets held on 5 April 2017 to that date’s value on disposal.

Why this matters now

1. The new rules have already started. Decisions you took before 5 April 2025 can materially change your outcomes—e.g., whether to realise gains offshore, how to use the TRF, or how to reorganise trust and banking arrangements.
2. Cash-flow and compliance will change. Many UK-resident non-doms who don’t qualify for the new 4-year window will move to the arising basis—i.e., UK tax charged each year on worldwide income and gains. This impacts quarterly payments on account, foreign tax credit planning, and record-keeping.
3. IHT exposure widens for long-term UK residents. If you are approaching the 10-out-of-20 threshold, estate and trust planning may need revisiting soon.

What it means for UK-resident non-doms (practical scenarios)

• Those already UK-resident and here long term (no 4-year window):

Expect to be taxed on worldwide income/gains from 6 April 2025. Consider:

o Using the TRF to clean up historic mixed funds at 12%/15%.
o Reviewing portfolio location, use of wrappers, and foreign tax credits.
o Re-mapping remittance strategies (they largely become redundant) to simple onshore/offshore cash management.

• New or returning to the UK after 10 non-UK resident years:

You may qualify for the 4-year FIG regime which is very valuable. Plan arrivals and employment start dates carefully to maximise the window (including OWR).

• Trusts and IHT:

Protection for settlor-interested trusts tied to domicile falls away unless you’re in the 4-year window. For long-term residents, trust and holding structures may face UK tax on FIG as it arises and IHT exposure for non-UK assets. Early trust reviews are essential.

Are people leaving the UK because of the change?

The short answer: early indicators suggest some departures, but no evidence of a mass exodus beyond what officials forecast—at least so far.

• HMRC’s latest full non-dom statistics (covering the year to April 2024, i.e., before the rule change) show ~83,000 non-dom/deemed-dom taxpayers and £12–12.5bn in combined liabilities left the UK; they don’t yet capture behavioural change after April 2025. The next publication with post-change data won’t land until 2026.
• Early 2025/26 payroll and admin data reviewed by HMRC (as reported by the Financial Times) indicate departures are broadly in line with the OBR’s assumptions: roughly 25% of non-doms with trusts and ~10% without trusts are leaving. That is meaningful, but not the large-scale exodus some headlines predicted. (These are provisional and subject to revision.)

Five action points to discuss with RJP LLP

1. TRF game plan: Review the actions you took pre-6 April 2025.
2. Arrival/timing strategy: If you could qualify for the 4-year FIG window, align UK tax residence start, employment contracts, and compensation timing (including OWR cap) to maximise relief.
3. Portfolio & structure review: Shift from remittance-based thinking to arising-basis optimisation—asset location, wrappers (ISAs/pensions where eligible), use of foreign tax credits, and currency planning.
4. Trusts & estate planning: Re-assess trust protections, potential FIG taxation, and IHT exposure under the residence-based rules (including the 10-of-20 test and the post-departure tail). Consider pre-exposure reorganisations.
5. Employment & mobility: For internationally mobile executives, re-design compensation, equity awards, and travel patterns in light of the 4-year OWR cap and new PAYE mechanics.

Key dates

• Previous – 5 April 2025: Pre-change planning, especially TRF scoping and any disposals or reorganisations that were better under current rules. Were these managed?
• From 6 April 2025: New residence-based regime live; OWR cap applies; trust and IHT rules start to pivot to residence tests (with transitional wrinkles).
• 2026: First HMRC statistical release likely to include post-change behaviour.

Bottom line

For many UK-resident non-doms without access to the 4-year window, the UK has become a worldwide taxation jurisdiction from 2025/26—so planning shifts from “what not to remit” to “what arises, where, and when.” For new arrivals, the 4-year FIG regime can still be highly attractive but requires careful timing and documentation. And while some non-doms are leaving, the best evidence so far suggests departures are material but broadly within forecasts, not a wholesale flight.

If you need help, contact partners@rjp.co.uk.

This note is general guidance for RJP LLP clients and isn’t a substitute for tailored advice.