Introduction
The Autumn Budget 2025 confirmed that the UK’s non-dom tax reforms, first announced in the Spring Budget 2024, will proceed as planned. The remittance basis system ended on 5 April 2025, and from 6 April 2025, the UK now operates a residence-based system for taxing foreign income and gains (FIG).
4-Year FIG Exemption for New Arrivals
Individuals moving to the UK after at least 10 consecutive tax years of non-residence can claim full UK tax relief on foreign income and gains for their first four years of UK residence. These funds can be brought into the UK tax-free during that period.
Existing residents with fewer than four years’ residence as of 6 April 2025 may also use the 4-year FIG exemption until the end of their own fourth year.
Long-Term Residents (4+ Years by April 2025)
Anyone who has already been resident for four or more tax years by 6 April 2025 will be taxed on worldwide income and gains as they arise, with no remittance-based relief available.
Transitional Measures for Existing Non-Doms
The following measures remain unchanged after the Autumn Budget 2025:
- 50% foreign income reduction for 2025/26 for individuals losing access to the remittance basis on 6 April 2025.
- Temporary Repatriation Facility (TRF): Remitting pre-6 April 2025 FIG at a 12% rate in tax years 2025/26 and 2026/27.
- Asset rebasing: Relevant foreign assets can be rebased to their 5 April 2019 value for disposals on or after 6 April 2025.
- Protected trust FIG: Generated before 6 April 2025 remains outside the UK tax net unless benefits are provided to UK residents who have been here more than four years.
Our View
The Autumn Budget 2025 reinforces the UK’s shift to a residence-based FIG system without weakening the policy direction. The continuation of the reforms:
- Aligns the UK more closely with other OECD tax systems.
- Simplifies administration for new arrivals through the 4-year FIG exemption.
- Removes the long-term benefits previously available to non-doms and may materially affect decisions for those with substantial offshore income or gains.
How We Can Help
Our Tax and Accountancy team can assist you with:
- Determining eligibility for the 4-year FIG exemption.
- Planning for the end of the remittance basis.
- Understanding the transitional options available for 2024/25 and 2025/26.
- Preparing your Self-Assessment return and advising on the most tax-efficient approach for your circumstances.
If you believe you will be affected by these changes, please contact your usual adviser.
Non-Dom IHT & Trusts
Inheritance Tax (IHT) Changes
From 6 April 2025, IHT will be charged on worldwide assets for individuals who have been UK resident for ten out of the last twenty tax years. Those meeting this “long-term resident” test will remain within the scope of IHT for up to ten years after leaving the UK. The length of this IHT “tail” depends on the number of years of residence:
- 10–13 years’ UK residence → 3-year tail
- Each additional year of residence → +1 year
- 20 years’ UK residence → maximum 10-year tail
Individuals with a UK domicile, such as British expatriates, will generally be outside the scope of IHT on non-UK assets if they have not been resident in the UK for at least 10 of the last 20 tax years. UK-situs assets, however, remain fully chargeable to IHT for all individuals, regardless of residence or domicile.
Excluded Property Trusts
While domicile has been largely removed as a factor for IHT, it continues to be relevant for trust assets. Pre-existing trusts created by a non-UK domiciled individual before 30 October 2024, holding non-UK situs assets, will retain features of the excluded property regime, combined with elements of the relevant property regime that typically applied to UK domiciles.
Gift with reservation of benefit rules do not apply to these trusts. Instead, such trusts are subject to ten-yearly periodic charges and exit charges, generally at a rate of 6%, depending on whether the settlor is a long-term UK resident. Notably, the rules apply even if the settlor is no longer resident as of 6 April 2025, and the exit charge may apply when the settlor ceases to be a long-term resident.
The information provided in this guide is intended as a general overview to help readers understand the key measures introduced in the UK Budget 2025. It does not claim to be exhaustive and should not be relied upon as a substitute for tailored professional advice. If you have any questions or require specific guidance, please
speak to one of our experts.
