The Labour government has confirmed significant reforms to how non-domiciled individuals are taxed in the UK, effective from 6 April 2025. We set out the principal changes.

From domicile to residence

The subjective "domicile" concept is replaced with a clearer "long-term UK residence" test. A person is a long-term UK resident (LTUR) if they have been UK resident in at least 10 of the preceding 20 tax years. The main practical advantage is certainty: rather than relying on a subjective domicile analysis, the test is simply one of counting years.

The Foreign Income and Gains regime

Those who arrive in the UK after at least 10 consecutive years of non-UK residence may benefit from the new Foreign Income and Gains (FIG) regime for their first four years of UK residence. Under this regime, non-UK income and gains are free of UK tax — including when remitted to the UK — and distributions from non-UK trusts are exempt. This is significantly more straightforward than the remittance basis it replaces, though it covers a shorter period.

Transitional provisions

A Temporary Repatriation Facility will allow those who previously used the remittance basis to bring previously untaxed foreign income and gains into the UK at a reduced tax rate during a limited window.

Trusts

Existing offshore trusts will lose their "protected" status for income tax and CGT purposes once the settlor becomes a LTUR. Additional IHT changes take effect from April 2026.

Inheritance Tax

Worldwide estates will become subject to IHT after ten years of UK residence. Ten consecutive years of non-UK residence are required to regain exemption on non-UK assets.

If you would like to discuss how these changes affect your position, please contact Paul Davidoff or a member of the team.