The Non-Dom Regime Is Gone: How BrightTax Helps Practices Handle Foreign Income Under the New Rules

The non-dom regime was one of the most contested features of the UK tax system. Under the old remittance basis, UK residents who claimed non-UK domicile status could elect to be taxed only on income and gains arising in the UK, and on foreign income and gains only when brought to the UK. Long-term residents could maintain this position almost indefinitely, with the cost being a remittance basis charge (£30,000 or £60,000 depending on years of residence) in later years.

From 6 April 2025, all UK resident individuals are taxed on their worldwide income and gains as they arise, regardless of domicile. The concept of domicile remains relevant for inheritance tax, but it no longer determines the scope of income and capital gains tax for UK residents. Practices that have been preparing returns for non-dom clients using the remittance basis must now work with a fundamentally different framework for 2025/26 onwards.

The New Four-Year FIG Regime

To avoid deterring new arrivals, the government introduced a replacement relief for individuals who become UK resident after at least ten consecutive years of non-UK residence. These “qualifying new residents” can elect to pay no UK tax on foreign income and gains for up to four consecutive tax years from the year of their first UK residence.

The FIG exemption is elective — it must be claimed on the self-assessment return for each year it applies. Where the election is made, the individual pays UK tax at normal rates on UK-source income and gains but their foreign income and gains in that year are fully exempt. Losses in the FIG period cannot be set against UK income, and certain anti-avoidance rules apply to prevent manipulation.

The four-year window is fixed and non-renewable. A qualifying new resident who arrives in 2025/26 can claim the FIG exemption for 2025/26, 2026/27, 2027/28, and 2028/29. After that, worldwide taxation applies in full. The practical planning consequence is that new arrivals with substantial foreign income or investment portfolios have a defined window in which to review their structure before full UK taxation applies.

The Temporary Repatriation Facility

For individuals who were using the remittance basis before 6 April 2025 and have foreign income and gains accumulated in overseas structures that have not yet been remitted to the UK, the Temporary Repatriation Facility (TRF) offers a reduced tax rate to bring those funds to the UK.

Under the TRF: pre-April 2025 unremitted foreign income and gains can be designated and taxed at 12% in 2025/26 or 2026/27, rising to 15% in 2027/28. After 2027/28, any unremitted income that is subsequently brought to the UK will be taxed at normal income tax and CGT rates — the TRF window will have closed.

The TRF is particularly relevant for clients who accumulated foreign income in offshore accounts, trusts, or investment structures whilst on the remittance basis and who want to bring funds to the UK without incurring tax at full marginal rates. At 12% in 2026/27, the TRF offers a significant discount compared to the 45% additional rate that would otherwise apply to large income remittances.

The practical steps for practices are: identify which clients were using the remittance basis before April 2025; estimate the value of their unremitted foreign income and gains; model whether the TRF rate produces a better outcome than continued deferral; and make the TRF designation on the 2025/26 or 2026/27 self-assessment return as appropriate.

CGT Rebasing for Former Remittance Basis Users

Individuals who were UK resident but non-domiciled before 2025/26 and who claimed the remittance basis for at least one tax year between 2017/18 and 2024/25 benefit from a CGT rebasing of foreign assets. For disposals on or after 6 April 2025, foreign assets held on 5 April 2017 are treated as acquired at their market value on that date, rather than their original acquisition cost.

This rebasing is automatic for qualifying individuals — no election is required. It reduces the gain on foreign assets disposed of from 2025/26 onwards by excluding the period of growth before April 2017. For clients with long-held foreign investment portfolios, the rebasing can produce a material reduction in CGT on future disposals.

Practices managing returns for former remittance basis users should obtain valuations of relevant foreign assets as at 5 April 2017 to support any future CGT computations. The rebasing only applies where the asset was held on that date; assets acquired after 5 April 2017 use the actual acquisition cost.

Trust Changes from April 2025

Prior to April 2025, income and gains within offshore trusts where the settlor was a UK-resident non-dom were protected from UK tax in certain circumstances. From April 2025, this protection has been removed. UK-resident settlors of offshore trusts are now taxed on trust income and gains as if they were their own — regardless of domicile status.

For clients who settled offshore trusts whilst using the remittance basis, the 2025/26 return represents the first year in which the worldwide income of the trust must be reported on their UK self-assessment. For trusts with complex investment structures or multiple jurisdictions, gathering this information requires early engagement with the trustee.

BrightTax supports the self-assessment return workflow for clients with foreign income, overseas trusts, and CGT on foreign assets — including the FIG regime election, TRF designation, and rebased CGT computations. For practices managing former non-dom clients through the transition, BrightTax provides the structure to ensure each element of the new framework is handled correctly within the 2025/26 and 2026/27 returns.

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