UK Tax Residence & the End of Non-Dom: The FIG Regime Explained (2025/26)

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UK tax residence determines the entire scope of your UK tax exposure, and the rules changed fundamentally in April 2025 with the abolition of the non-dom regime. This guide explains the Statutory Residence Test, the new residence-based FIG regime, what replaced domicile, and what internationally mobile individuals need to know under the new system.

What is the Statutory Residence Test?

The Statutory Residence Test (SRT) determines whether you’re UK tax resident for a tax year, which decides whether you’re taxed on your worldwide income and gains or only on UK-source income. The test combines the number of days you spend in the UK with ‘ties’ to the country — such as family, accommodation, work and previous residence — through a series of automatic and sufficient-ties tests.

Broadly, more days and more ties make you resident. The test is detailed and the day-counting precise, so individuals near the boundaries must track their UK presence carefully. Getting residence status right is the foundation of international tax planning, because it determines the entire scope of what the UK can tax — making the SRT the first question for anyone moving to or from the UK.

Why does tax residence matter so much?

UK residents are generally taxed on their worldwide income and gains — the ‘arising basis’ — while non-residents are taxed only on UK-source income. So residence status can mean the difference between the UK taxing your global earnings and investments or just your UK income. For anyone with foreign income, assets or business interests, this distinction is enormous.

Residence also affects entitlement to allowances, the treatment of foreign gains, and how double-taxation treaties apply. Because the consequences are so significant, establishing residence status correctly — and planning around it when moving countries — is among the most valuable tax exercises an internationally mobile person can undertake. The SRT provides the framework, but the application can be complex.

What was the non-dom regime and why was it abolished?

For over two centuries, UK-resident but non-UK-domiciled individuals could use the ‘remittance basis’ to avoid UK tax on foreign income and gains unless they brought them into the UK. This non-dom regime, based on the concept of domicile (broadly your permanent home), was a cornerstone of UK tax for international clients. It was abolished from 6 April 2025.

The government removed the ‘outdated concept’ of domicile from the tax system, replacing it with a residence-based approach on the principle that those who make their home in the UK should pay UK tax. This was the biggest change to UK tax for international individuals in a generation, ending a system that had existed for more than 200 years and reshaping planning for globally mobile people.

What is the new FIG regime?

The Foreign Income and Gains (FIG) regime replaced the remittance basis from 6 April 2025. Qualifying new arrivals — those who were non-UK resident for the previous ten consecutive tax years — can claim 100% relief from UK tax on their foreign income and gains for their first four years of UK residence. After four years, they’re taxed on their worldwide income and gains like any other UK resident.

This four-year window is generous but time-limited, a significant shortening of the planning horizon compared with the old indefinite remittance basis. For new arrivals it offers a valuable period of relief on foreign income and gains; for existing non-doms, the change means moving onto the arising basis unless transitional relief applies. The regime makes the UK less attractive for very long-term international residents than before.

What transitional rules apply to former non-doms?

Transitional measures soften the change for existing non-doms. A Temporary Repatriation Facility (TRF) lets former remittance-basis users bring pre-April 2025 foreign income and gains into the UK at a reduced rate — 12% for 2025/26 and 2026/27, rising to 15% for 2027/28 — rather than the normal rates. This is a limited-time window to repatriate previously sheltered funds tax-efficiently.

Other transitional reliefs and the extension of overseas workday relief also apply in specific circumstances. These rules are complex and time-sensitive, with the favourable TRF rates available only for a limited period. Former non-doms with significant unremitted foreign income and gains should take expert advice promptly, as the window to use these transitional reliefs is closing.

How did Inheritance Tax change for non-doms?

Alongside income tax, Inheritance Tax moved from a domicile-based to a residence-based system from April 2025. In broad terms, UK assets remain within UK IHT regardless of residence, while non-UK assets fall within UK IHT only if the individual has been UK resident for at least 10 of the previous 20 years. A modified test applies to the young, and transitional provisions exist.

This aligns IHT with the new residence-based approach to income and gains, ending the domicile-based IHT protection non-doms previously enjoyed on their non-UK assets. For internationally mobile individuals with significant overseas wealth, this is a major change requiring review of estate plans, as long-term UK residents now bring their worldwide estates within UK IHT.

What should internationally mobile individuals do now?

The 2025 changes make residence status and timing more important than ever. New arrivals should plan to use the four-year FIG window; existing non-doms should consider the TRF and review whether the UK remains the right base; and anyone with foreign income, gains or assets should reassess their position under the new residence-based rules, including for IHT. Treaty residence and double-taxation relief add further layers.

Because the changes are far-reaching and the transitional reliefs time-limited, expert, case-specific advice is essential for affected individuals. The shift from domicile to residence has reshaped UK tax for the internationally mobile, and decisions made now — about where to be resident, when to repatriate funds, and how to structure assets — have lasting consequences under the new system.

How does split-year treatment work?

When you move to or from the UK partway through a tax year, split-year treatment can apply, splitting the year into a UK-resident part and a non-resident part for tax purposes. This means you’re not taxed as a UK resident on foreign income for the portion of the year before you arrived or after you left, provided the conditions are met.

Split-year treatment prevents the unfair outcome of full-year UK taxation when you were only resident for part of it. The rules have specific cases and conditions under the Statutory Residence Test, and qualifying for the right case matters for how your income around the move is taxed. For anyone relocating mid-year, understanding split-year treatment is essential to getting their first or last year’s UK tax right.

What records should internationally mobile individuals keep?

For those near the residence boundaries, meticulous records are essential: a day-count diary of UK presence, evidence of ties like accommodation and family, records of foreign income and gains, and documentation of any treaty positions or reliefs claimed. The Statutory Residence Test depends on precise day-counting and ties, so contemporaneous records are vital to support your residence status.

Under the new FIG regime and residence-based IHT, records of arrival dates, prior non-residence, and the source and timing of foreign income and gains take on added importance. HMRC compliance checks in this area can be detailed, and the burden of proving your position rests with you. Keeping comprehensive records is therefore not optional for the internationally mobile — it’s the foundation of defending your tax position.

Why the 2025 changes demand a fresh look

The abolition of non-dom status and the move to residence-based taxation mean that anyone who structured their affairs under the old rules should revisit them entirely. Strategies built on domicile, the remittance basis, or domicile-based IHT protection may no longer achieve their aims, and continuing with them unchanged could lead to unexpected UK tax on worldwide income, gains and assets.

A fresh review should cover residence status under the SRT, eligibility for the FIG regime, use of the Temporary Repatriation Facility, and the IHT implications of long-term UK residence. Because the stakes are high and the rules complex and new, specialist advice is strongly recommended. The 2025 changes are too significant to navigate on assumptions carried over from the previous regime.

Common residence and FIG-regime mistakes

Typical errors include miscounting UK days under the Statutory Residence Test, assuming the old non-dom rules still apply, missing the time-limited Temporary Repatriation Facility window, and overlooking the new residence-based IHT exposure on worldwide assets. Each can lead to unexpected UK tax or missed planning opportunities under the new system.

Avoiding them means tracking UK presence precisely, understanding the post-2025 rules, acting on the TRF before it closes, and reviewing IHT exposure as a long-term resident. Because the rules are new and complex and the stakes high, specialist advice is strongly recommended. The internationally mobile who plan under the current rules — rather than the old ones — protect themselves from costly surprises.

Should I consider leaving the UK after the changes?

Some affected individuals are weighing whether to remain UK resident under the new rules or relocate to a jurisdiction with more favourable treatment of foreign income and wealth. This is a major decision involving tax, family, lifestyle and business factors, and the tax saving must be weighed against the upheaval and the rules of any destination country.

For those genuinely mobile, the calculation has changed with the abolition of non-dom status, and some may find another jurisdiction more attractive. But leaving the UK has its own tax consequences, including potential exit considerations and the need to genuinely become non-resident under the Statutory Residence Test. This is precisely the kind of high-stakes, personal decision where specialist cross-border advice is indispensable.

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