Goodbye Domicile, Hello FIG (Foreign Income and Gains)

The End of the UK's Non-Dom Rules from April 2025 – What You Need to Know About the New FIG Regime

For many years, people living in the UK who weren't UK-domiciled ("non-doms") could use the remittance basis of taxation. This meant they only paid UK tax on their foreign income or capital gains if they brought the money into the UK.

That system ended on 5 April 2025.

From 6 April 2025, a new system known as the Foreign Income and Gains (FIG) regime came into effect. It will apply to anyone living in the UK, regardless of their domicile.

What's Changing?

1. Remittance basis scrapped: The old rules allowing foreign income and gains to be kept offshore tax-free (unless remitted to the UK) will no longer exist.

2. New 4-year FIG regime: From April 2025, new UK residents (people who haven't been UK tax resident for the past 10 tax years) can use a new 4-year scheme. What this means is that, for them, there is:

   • No UK tax on any foreign income or gains earned during those four years.

   • No tax if you bring that money into the UK during those four years.

   • After year 4, all worldwide income and gains become fully taxable in the UK.

3. No FIG for long-term residents: If you've lived in the UK for more than 4 of the past 10 tax years, you won't qualify for the FIG regime. From April 2025, you'll be taxed on all your worldwide income and gains in the same way as a UK-domiciled person – even if the money stays overseas.

   
   

What About My Existing Offshore Funds?

There are special, temporary rules to help people adjust:

a. One-year "cleansing" opportunity (2025/26 tax year): You can bring in old offshore money and gains to the UK at a flat tax rate of 12%, as long as it wasn't previously taxed in the UK.

b. Temporary 50% exemption (2025/26 only):If you don’t qualify for the 4-year FIG regime, half of your foreign income from 2025/26 will be ignored for tax purposes.

c. Offshore Trusts:Special rules will apply to offshore trusts, especially for long-term residents. In many cases, the protections for non-doms will fall away. If you’re a beneficiary or settlor of a trust, you may be taxed on the trust’s income and gains from April 2025 onwards.

Worked Example 1: Long-Term UK Resident

Anna has lived in the UK for 12 years. She has foreign investments that pay £50,000 a year into an offshore account.

Until 5 April 2025: She pays no UK tax if she doesn’t bring the money into the UK. From 6 April 2025: She pays full UK tax on the £50,000 - whether or not she brings it into the UK. In 2025/26 only: She pays tax on just £25,000 due to the 50% exemption.

Worked Example 2: New Arrival in the UK

Raj moves to the UK on 10 April 2025. He hasn’t lived here before.He earns £70,000 a year in overseas investment income.

From 2025/26 to 2028/29:Raj pays no UK tax on the £70,000 per year. He can even bring it into the UK tax-free.From 2029/30 onwards: He will be taxed like everyone else on all his global income.

Important Note: This blog provides a general overview. Tax law is complex, and individual circumstances vary. It is strongly recommended to seek professional tax advice for your specific situation. There may be nuances and exceptions not covered here.