In April 2025, the UK’s ‘non-domicile regime’ was replaced with a new residence-based test. This includes factors like an individual’s links to both the UK and other countries and trust structures they are connected to.
This means that from the 2025/26 UK tax year onwards, individuals who meet specific conditions may be eligible for Foreign Income and Gains (FIG) relief. This applies to individuals who were non-UK resident for at least the 10 tax years immediately preceding their first year of UK residence.
What was introduced?
The FIG regime allows individuals to be exempt from UK tax on most forms of foreign income and gains for four years starting on 6 April 2025.
For the years you claim, you will lose entitlement to income tax personal allowances and annual exempt amounts for capital gains.
It’s important to note that the regime doesn’t automatically take effect, so you need to make a claim and nominate all sources of FIG that you wish the rules to apply to.
Inheritance tax (IHT)
The UK has also moved to a residence-based system for IHT from 6 April 2025 that will see IHT being charged on worldwide assets for individuals who have been UK resident in ten out of the last twenty tax years. Such individuals remain within the scope of IHT for up to ten years following exit from the UK. The length of time that they remain within the scope of IHT depends on how long they were resident in the UK.
UK assets remain within the scope of IHT for all individuals irrespective of residence status. Meaning that changes to the UK IHT rules on business assets may also need to be considered where a non-dom holds such UK assets personally or in trust.
Contact us if you need tax advice on the new residency rules.
