Non-Dom UK Tax 2026 -- What Changed After April 2025 Abolition

Last reviewed: 26 April 2026

Non-dom UK tax 2026 is governed by the Finance Act 2025, which received Royal Assent on 20 March 2025 and took effect from 6 April 2025. The Act abolished the concept of domicile as the basis for determining UK tax liability on foreign income and gains, replacing it with a purely residence-based system. Individuals who were previously taxed on the remittance basis -- paying UK tax only on foreign income and gains brought to the UK -- are now taxed on a worldwide basis unless they qualify for the new four-year Foreign Income and Gains (FIG) exemption. This is the most significant structural change to UK international tax since the remittance basis rules were modernised in 2008. For context on how your UK residence test is determined before and after these changes, see our UK tax residency guide.

The abolition of non-dom UK tax status has material consequences for international investors, executives on secondment, and high-net-worth individuals who had structured their affairs to benefit from the remittance basis. Assets held in offshore trusts, offshore investment portfolios, and offshore bank accounts are now in scope for UK taxation from year 5 of UK residence. The FIG exemption and the Temporary Repatriation Facility create a two-year window (2025/26 and 2026/27) during which transitional planning is possible. For those with offshore investments affected by these rules, see our UK expat investments guide for context on structuring overseas assets within the new regime.

The four-year FIG exemption explained

The Foreign Income and Gains (FIG) exemption is the replacement for the remittance basis for individuals who have not been UK resident in any of the preceding 10 tax years. An individual who arrives in the UK for the first time, or who returns after 10 or more years of non-UK residence, qualifies for the FIG exemption. Under the FIG exemption, foreign income and gains are completely exempt from UK taxation in years 1 through 4 of UK residence -- regardless of whether those funds are remitted to the UK. This is an improvement over the remittance basis in one respect: FIG-exempt amounts can be brought to the UK freely without triggering UK tax. From the fifth year of UK residence, worldwide taxation applies without any FIG exemption.

The FIG exemption applies automatically -- there is no election required, unlike the remittance basis charge which required individuals with income or gains above certain thresholds to pay £30,000 or £60,000 per year to access it. However, individuals must claim the FIG exemption on their Self Assessment return if they wish to use it for a specific year; HMRC guidance published in April 2025 under the Finance Act 2025 explanatory notes confirms that failing to claim results in the income being taxed on the arising basis. The FIG exemption does not apply to UK-source income or gains, which remain taxable in all years of UK residence. HMRC published technical guidance on the FIG exemption and transitional rules in the HMRC Residence, Domicile and Remittance Basis manual (updated April 2025), which is the primary source for the operational detail of the new regime.

Who was affected by the non-dom abolition from April 2025

Three groups are directly affected by the abolition of non-dom UK tax status. First, individuals who previously claimed the remittance basis and have been UK-resident for four or more years: from 6 April 2025, all their foreign income and gains -- whether remitted or not -- are subject to UK income tax and capital gains tax. Second, individuals who had been UK resident for 15 or more years and claimed "deemed domicile" status under the pre-2025 rules: these individuals were already taxed on a worldwide basis but had access to transitional rules that cease to apply. Third, UK-resident individuals with offshore trusts: the protections that previously excluded trust income from UK tax for non-dom beneficiaries now depend on whether the beneficiary qualifies for the FIG exemption.

The Spring Budget 2024 announcement and subsequent consultation established that approximately 74,000 individuals in the UK were non-UK domiciled in 2022/23 (the most recent year of HMRC data published at the time of the Budget); of these, approximately 37,000 claimed the remittance basis, paying £8.9 billion in UK tax on UK-source income and gains. The OBR estimated in its March 2024 Economic and Fiscal Outlook that the behavioural response (departures of non-doms from the UK) would reduce the static revenue gain by approximately 25%, resulting in a net revenue yield of approximately £2.7 billion per year by 2028/29. Actual departure rates and portfolio reallocation during 2024/25 are not yet captured in published HMRC statistics as of April 2026.

The Temporary Repatriation Facility

The Temporary Repatriation Facility (TRF) allows individuals who previously sheltered foreign income and gains under the remittance basis to bring those funds to the UK at a preferential tax rate. The TRF operates for three years: 12% in 2025/26, 15% in 2026/27, and 17% in 2027/28. After 2027/28, previously sheltered foreign income and gains remain taxable in full if remitted to the UK. The TRF applies to "designated foreign income and gains" -- funds that were earned or arose outside the UK in years when the individual claimed the remittance basis and did not remit them. Capital already remitted and taxed in prior years is not within scope.

To use the TRF, an individual designates amounts on their 2025/26, 2026/27, or 2027/28 Self Assessment return and pays the TRF rate on the designated amount. There is no requirement to actually bring the funds to the UK; designation alone at the TRF rate settles the historic remittance basis liability, clearing the offshore funds for future remittance without further UK tax. HMRC guidance notes that funds in offshore trusts may also be designated under the TRF in certain circumstances, subject to rules on identifying the trust’s foreign income and gains. Advisers specialising in non-dom planning have noted that the 12% TRF rate for 2025/26 represents a significant discount against the 45% additional rate income tax that would apply to the same income if remitted after 2027/28.

Transitional rules for existing non-doms

The Finance Act 2025 included specific transitional rules for individuals who held non-dom status before 6 April 2025. Three key transitional provisions apply. First, rebasing relief: individuals who held qualifying assets (foreign assets standing at a gain) on 5 April 2017 can elect to rebase those assets to their market value on 5 April 2017 for CGT purposes, reducing the historic gain subject to UK tax. This applies to non-UK resident assets only. Second, a 50% income tax reduction on foreign income in 2025/26 only for individuals who claimed the remittance basis in 2024/25 -- a partial transitional relief to smooth the first year of full worldwide taxation. Third, the Mixed Fund rules have been simplified for TRF purposes, allowing cleaner separation of the remittance basis pool from clean capital.

The Finance Act 2025 also amended the rules on protected trusts (offshore trusts set up by non-doms before becoming deemed-domiciled). From 6 April 2025, the protected trust status -- which previously excluded trust income and gains from UK tax for non-dom trustees and UK-resident non-dom beneficiaries -- was removed. Trustees of offshore trusts with UK-resident beneficiaries who previously relied on protected trust status should have reviewed their position with a specialist adviser before 6 April 2025. HMRC’s Trust and Estate Returns for 2025/26 include new boxes for offshore trust income disclosures following the Finance Act 2025 amendments, published in draft self assessment forms issued December 2025.

Inheritance tax: the new residence-based test

The Finance Act 2025 also reformed UK inheritance tax (IHT) for non-doms. Previously, IHT was charged on the worldwide estate of individuals who were UK-domiciled or deemed-domiciled (resident in the UK for 15 of the prior 20 years). From 6 April 2025, the charge is based on "long-term residence" rather than domicile. An individual who has been UK resident for at least 10 of the prior 20 tax years is a "long-term UK resident" for IHT purposes and is charged IHT on their worldwide estate. Individuals who have left the UK can shed long-term resident status by spending fewer than four of the next ten years in the UK (for those who had been UK resident for 10-19 years) or up to ten years outside the UK (for those who had been UK resident for 20 or more consecutive years). The nil-rate band remains £325,000 per individual and £650,000 per married couple for 2025/26, with the residential nil-rate band of £175,000 per person applying where a main residence passes to direct descendants.

The new IHT residence-based rules create a significant cliff-edge for long-term UK residents who have built worldwide estates under the old domicile regime. An individual who had been UK resident for 14 years (previously one year below the 15-year deemed-domicile threshold) became a long-term UK resident for IHT purposes on 6 April 2025 if they had been UK resident for 10 or more of the prior 20 years. Excluded property trusts -- offshore trusts established by non-domiciled individuals that sheltered non-UK assets from IHT -- were also affected; from April 2025, assets in excluded property trusts are within scope of IHT if the settlor is a long-term UK resident at the date of the chargeable event. HMRC published detailed IHT transitional guidance in its IHT manual, updated March 2025, which is the operative source for these rules. For the full picture on IHT for expats and non-doms, see our detailed article on UK expat investments and asset structuring.

Impact on offshore trusts and investment structures

Offshore trusts established by non-doms before 6 April 2025 face the most complex transitional picture. The removal of protected trust status means that UK-resident beneficiaries who receive distributions from offshore trusts are now assessed on the income and gains attributed to them under Chapter 2 and Chapter 3 TCGA 1992 rules. Stockpiled trust income from prior years remains potentially chargeable if distributed after April 2025, subject to the TRF being available where the income arose in a remittance-basis year. HMRC has indicated that it will provide further guidance on the interaction between offshore trust attribution rules and the FIG exemption in a technical update scheduled for mid-2026; as of April 2026, practitioners rely on the Finance Act 2025 explanatory notes and HMRC’s updated Trust, Settlement and Estates manual.

Investment portfolios held in offshore bonds (portfolio bonds and life assurance policies) were a popular structure for non-doms because gains within the bond were deferred and the bond could be segmented for flexible drawdown. From April 2025, the gain on a full surrender or segment encashment of an offshore bond by a non-dom who no longer qualifies for the remittance basis is charged to income tax in the UK in the year of encashment. Top-slicing relief remains available to spread the gain over the policy years. Individuals who held offshore bonds under remittance-basis planning should review their drawdown strategy with a tax adviser, as encashment during the TRF window (2025/26 or 2026/27) and using the TRF to designate the gain may be more efficient than encashing after 2027/28 when the full income tax rate applies.

Self Assessment reporting for former non-doms

From 6 April 2025, all individuals who are UK tax resident and who have foreign income or gains -- regardless of domicile -- must report that income on the UK Self Assessment return. HMRC updated the SA106 (Foreign) and SA109 (Residence, Remittance Basis etc) supplementary pages for the 2025/26 tax year to reflect the new regime. The SA109 for 2025/26 includes boxes for claiming the FIG exemption and for designating amounts under the Temporary Repatriation Facility. HMRC published provisional 2025/26 Self Assessment filing guidance in January 2026; full guidance with worked examples is expected with the release of the 2025/26 tax return pack in April 2026.

HMRC has stated that it will apply the standard penalty regime to late or inaccurate returns for 2025/26 onwards; no additional transitional concession on penalties applies for former non-doms. The deadline for filing a 2025/26 Self Assessment return online is 31 January 2027; the payment on account deadline for any 2025/26 tax liability is 31 July 2026 (first payment on account) and 31 January 2027 (second payment on account plus balancing payment). Former non-doms who had previously claimed the remittance basis but whose income was below the filing threshold should consider whether their new worldwide income triggers a filing obligation for 2025/26.

This article is for general information only and does not constitute tax, legal, financial or immigration advice. Rules and rates change; verify with the primary sources cited or consult a qualified adviser before acting.

FAQ

When exactly was the non-dom UK tax regime abolished?

The non-dom UK tax regime was abolished from 6 April 2025, the start of the 2025/26 UK tax year. The Finance Act 2025 received Royal Assent on 20 March 2025, giving individuals approximately two weeks of notice before the new rules took effect. Individuals who were in the UK on 6 April 2025 and had been UK-resident for four or more consecutive years lost remittance basis access on that date and became subject to full worldwide taxation.

What is the four-year FIG exemption and who qualifies?

The Foreign Income and Gains (FIG) exemption provides a 100% exemption from UK tax on foreign income and gains for individuals in their first four years of UK residence, provided they have not been UK-resident in any of the preceding 10 tax years. It is the replacement for the remittance basis and applies automatically but must be claimed on the Self Assessment return to be effective. From year five, the individual is taxed on worldwide income and gains like any other UK resident.

What is the Temporary Repatriation Facility rate in 2026?

The TRF rate is 12% in 2025/26 and 15% in 2026/27; it rises to 17% in 2027/28, after which the facility closes. Designating offshore funds at the TRF rate settles the historic UK remittance basis liability on those funds, allowing them to be remitted to the UK freely thereafter. Individuals have until 31 January 2027 to designate and pay the TRF charge for 2025/26 via their Self Assessment return.

How does the IHT change affect non-doms who have lived in the UK for 12 years?

From April 2025, individuals who have been UK resident for at least 10 of the prior 20 tax years are "long-term UK residents" for IHT purposes and are subject to IHT on their worldwide estate. A person UK-resident for 12 years would be a long-term UK resident from 6 April 2025, even if they had never been UK-domiciled. The worldwide estate is charged at 40% above the nil-rate band of £325,000 (plus the residential nil-rate band of £175,000 where applicable) on death or on chargeable lifetime transfers above £325,000.

Can I still avoid UK tax on foreign income by leaving the UK?

Leaving the UK removes UK residence and therefore UK worldwide taxation for years of non-UK residence. The new "long-term resident" IHT tail (up to 10 years for those resident 20+ consecutive years) means that departing long-term residents remain within UK IHT scope for a period after leaving. HMRC’s SRT determines the date of cessation of UK residence; the third automatic overseas test (fewer than 16 days in the UK for prior UK residents) is the most commonly applicable test. See our leaving-UK tax guide for the full SRT framework.

Are offshore trusts still useful after the non-dom abolition?

Offshore trusts established before 6 April 2025 by former non-doms have lost their protected trust status. From April 2025, income and gains in these trusts attributed to UK-resident beneficiaries are chargeable in the UK. New offshore trusts established by long-term UK residents after April 2025 do not benefit from any excluded property status for IHT purposes. Offshore trusts may still serve purposes in estate planning for assets outside the IHT long-term residence tail, but the primary tax advantage for UK-resident non-doms has been eliminated. Specialist advice is essential given the complexity of the transitional rules.

Sources

1. Finance Act 2025 -- full text (legislation.gov.uk) (verified 26 April 2026)
2. HMRC -- Changes to the taxation of non-UK domiciled individuals (Spring Budget 2024) (verified 26 April 2026)
3. HMRC -- Residence, Domicile and Remittance Basis Manual (updated 2025) (verified 26 April 2026)
4. OBR -- Economic and Fiscal Outlook March 2024 (verified 26 April 2026)
5. HM Treasury -- Spring Budget 2024 documents (verified 26 April 2026)