With effect from 6.4.25 the preferential tax treatment enjoyed by UK resident individuals whose permanent home is outside the UK (‘non-doms’) has been withdrawn.
Before this date, non-doms could benefit from the remittance basis of taxation for up to fifteen years, essentially exempting their offshore income and gains from UK tax unless remitted to the UK.
In its place a new residence-based system has been introduced whereby qualifying new arrivals to the UK can apply for foreign income and gains (‘FIG’) relief, meaning they will not be taxed on their FIG – regardless of whether remitted to the UK – for the first four consecutive years of UK tax residence. After this period they will be taxed on their FIG as UK income or gains. To qualify for FIG relief the individual must not have been resident in the UK in any of the ten years prior to their arrival.
Claiming FIG relief is optional and you can choose to claim it on some or all of your FIG. A separate claim must be made for each source of income and/or gain on the self assessment tax return. Your entitlement to certain other reliefs and allowances may be affected, for example the tax-free personal allowance for income tax and annual exempt amount for capital gains tax (CGT) will be lost if FIG relief is claimed. The relief will also be included in the adjusted net income calculation for tax-free childcare benefits and the high-income child benefit charge.
We can help you decide whether to claim FIG relief and help you submit the claim(s).
Individuals who are not eligible for relief under the new system or who decide not to apply for FIG relief will be subject to tax on their foreign income in the same way as any UK taxpayer.
Transitional arrangements are in place for CGT on foreign capital assets. Individuals who have claimed the remittance basis in any of the years from 2017-18 to 2024-25 can rebase those assets to their market value at 5.4.17. Foreign assets held in trusts are generally not eligible for rebasing.
A temporary repatriation facility will allow existing non-doms to remit previously accrued foreign income and gains to the UK after 6.4.25 at a reduced rate. This will be a flat rate of 12% for 2025-26 and 2026-27 and 15% for 2027-28.
A new residence-based system has been introduced to replace the domicile basis for inheritance tax from 6.4.25.
If you have received income or gains outside the UK and are not sure where you stand under the new rules, contact us.
