The United Kingdom abolished the non-domiciled tax regime on 6 April 2025 and replaced it with a four-year foreign income and gains regime. A year on, the interesting question is not whether wealthy foreign residents left. It is which ones the new rules were built to keep.
What actually replaced it
The remittance basis, which let a non-dom keep foreign income outside UK tax indefinitely so long as it stayed offshore, is gone. In its place is a regime described by HM Treasury’s technical note and set out for claimants in HMRC’s guidance.
- 100 percent relief on qualifying foreign income and gains
- Four consecutive tax years from the year UK residence begins
- Ten-year cleanout: the claimant must not have been UK tax resident in any of the 10 tax years before arrival
- Claimed annually, not granted automatically
Read the eligibility test carefully and the design becomes obvious. The regime is generous to someone arriving for the first time and closed to someone who has been here for years. It recruits rather than retains.
The regime is generous to someone arriving for the first time and closed to someone who has been here for years.
Rich & Richer
Four years is a short planning horizon
For a family relocating around schooling, a four-year window and a decade of prior non-residence is workable. For a family whose UK connection is already established, the arithmetic changed overnight from indefinite shelter to worldwide taxation, and there is no transitional path back into the relief.
That asymmetry is what makes the policy hard to read from headline residency counts. Arrivals and departures can both rise at once, because the regime is actively sorting one group from the other.
Inheritance tax is the larger change
Most coverage focused on income and gains. The reform also moved inheritance tax onto a residence-based test. For families holding UK property inside offshore structures built for the old domicile rules, that is the change that reaches the balance sheet, and it is the one worth taking advice on first. The published thresholds and rates sit in HMRC’s inheritance tax tables.
What it means for prime property
Prime central London has always been priced partly on tax residency. When the residency proposition changes, the buyer pool changes with it, and the effect shows up first in transaction volume and time on market rather than in headline asking prices. Sellers hold their number long after demand has moved.
The same dynamic has run through the other European markets we track, from prime Paris to the destinations expatriate buyers have been rotating into. Families restructuring around a residence-based regime tend to review entity and estate arrangements at the same time, considerations set out in this private client overview.
Frequently asked questions
When did the UK abolish the non-dom regime?
On 6 April 2025. It was replaced by a four-year foreign income and gains regime.
What is the four-year FIG regime?
New arrivals who have not been UK tax resident in any of the previous 10 consecutive tax years can claim 100 percent relief on qualifying foreign income and gains for their first four years of UK residence. The claim must be made for each year.
Who does the FIG regime exclude?
Anyone who has been UK tax resident at any point in the prior 10 tax years. That captures most long-settled non-doms, who moved from an indefinite remittance basis to worldwide taxation.
Does the FIG regime cover inheritance tax?
No. The reform also moved inheritance tax to a residence-based test, which is a separate and for many families more consequential change than the income tax rules.