UK non-dom abolition: the new four-year FIG regime explained

The repeal of the UK’s 226-year-old non-dom regime on 6 April 2025 was never going to be a clean cut, but the final architecture of its replacement — the four-year foreign income and gains (FIG) regime — has now been settled through the Finance Act 2025, receiving Royal Assent on 20 March 2025. For the estimated 74,000 individuals who claimed non-dom status in the 2022-23 tax year, according to HMRC’s latest published statistics, the transition represents the most significant restructuring of UK personal taxation for internationally mobile wealth since the introduction of the remittance basis in 1914. The core trade-off is straightforward: a four-year window of zero UK tax on unremitted foreign income and gains for new arrivals who have been non-UK resident for at least ten consecutive tax years, followed by full worldwide taxation on the arising basis from year five. What makes the regime operationally complex for advisors and principals is the interaction of transitional protections — the temporary repatriation facility, rebasing for capital gains, and the treatment of existing trust structures — each of which carries hard deadlines and election requirements that demand attention before the 2025-26 filing season closes. ## The four-year FIG regime: statutory mechanics and qualifying criteria The FIG regime is codified in sections 24A to 24H of the Income Tax Act 2007, as inserted by the Finance Act 2025. It replaces both the remittance basis of taxation for foreign domiciliaries and the deemed domicile rules that previously applied after 15 years of UK residence. The regime applies automatically to qualifying individuals for each of their first four tax years of UK residence following a period of non-residence lasting at least ten consecutive tax years. ### The ten-year clean break requirement Section 24B(2) of the Income Tax Act 2007 defines the qualifying condition: the individual must have been non-UK resident for at least ten consecutive tax years immediately preceding the tax year in which they first become resident under the FIG regime. This is a stricter test than the previous deemed domicile clock, which began after 15 of the preceding 20 tax years. The ten-year period is measured by reference to the statutory residence test under Schedule 45 of the Finance Act 2013, meaning that even a single day of UK presence in a tax year can break the continuity if it triggers residence under the automatic UK tests. Advisors should verify each client’s residence history across the full ten-year lookback period using HMRC’s residence indicator tool or equivalent professional software, as the cost of a mistaken claim is the loss of FIG protection for that year and potential exposure to penalties under Schedule 24 of the Finance Act 2007. ### Automatic application and the election to opt out Unlike the old remittance basis, which required an annual claim, the FIG regime applies automatically to any qualifying individual. There is no application form, no HMRC approval, and no fee. The individual may, however, elect to opt out of FIG protection for a given tax year under section 24D(1), which may be advantageous if their foreign income and gains are lower than the UK personal allowance or if they wish to utilise foreign tax credits against UK tax liabilities. The election must be made by the first anniversary of the 31 January filing date for the relevant tax year — for the 2025-26 tax year, that deadline is 31 January 2028. Once made, the election is irrevocable for that year, and the individual is taxed on the arising basis on all worldwide income and gains. ### The four-year clock and the cliff edge The FIG regime is available for a maximum of four tax years of UK residence, counting from the first tax year in which the individual is resident and qualifies. Section 24E(3) makes clear that the clock runs consecutively — a year of non-residence during the four-year window does not pause or extend the period. From year five onward, the individual is taxed on the arising basis on all worldwide income and gains, with no ability to claim FIG protection again unless they leave the UK for another ten consecutive tax years and return. This cliff edge is the single most important planning trigger in the new regime, as it converts the tax treatment of all foreign assets from exempt to fully taxable without any grandfathering of pre-existing structures. ## The temporary repatriation facility: a 50 per cent rate for pre-2025 foreign income For individuals who were non-domiciled under the old regime and who have accumulated foreign income and gains in the period before 6 April 2025 that were not remitted to the UK, the government has introduced a temporary repatriation facility (TRF) under Schedule 9 of the Finance Act 2025. The TRF allows such income and gains to be remitted to the UK at a reduced tax rate of 12 per cent for income and gains designated as "pre-6 April 2025 foreign income and gains" and remitted in the 2025-26 or 2026-27 tax years. ### Eligible amounts and the designation mechanism The TRF applies only to foreign income and gains that arose before 6 April 2025 and that were not remitted to the UK while the individual was within the remittance basis. The individual must make a designation in their self-assessment return for the relevant tax year, specifying the amount of pre-2025 foreign income and gains they wish to remit. The designation is irrevocable once made, and the 12 per cent rate applies to the designated amount regardless of the individual's marginal rate of UK tax. HMRC has confirmed in its guidance note of 11 February 2025 that the TRF is available to all former non-doms, including those who have since become deemed domiciled, provided they were within the remittance basis at any point before 6 April 2025. ### Interaction with the FIG regime and trust structures A critical technical point is that the TRF operates independently of the FIG regime. An individual who qualifies for FIG protection in 2025-26 may still use the TRF to remit pre-2025 foreign income and gains at 12 per cent, even though their post-6 April 2025 foreign income and gains are automatically exempt under FIG. For trust structures, the position is more complex. Foreign income and gains held within an offshore trust that were attributed to the settlor under the old transfer of assets abroad rules may be eligible for the TRF, but only if the settlor had an actual or contingent interest in the trust as of 5 April 2025. Trusts that have been irrevocably settled for the benefit of children or other beneficiaries without any retained interest by the settlor are unlikely to qualify, as the income and gains are not considered the settlor's for TRF purposes. ## Rebasing of capital gains for UK tax purposes One of the most consequential transitional provisions in the Finance Act 2025 is the rebasing of capital gains tax (CGT) for former non-doms who hold foreign assets that were acquired before 6 April 2025. Section 58 of the Taxation of Chargeable Gains Act 1992 has been amended to allow such individuals to elect to treat the market value of their foreign assets as at 5 April 2025 as the base cost for future UK CGT purposes. ### Who qualifies and what assets are covered The rebasing election is available to any individual who was non-UK domiciled at any time before 6 April 2025 and who held foreign assets on that date. The election covers all foreign assets held by the individual, including shares in offshore companies, foreign real estate, and collectibles. UK-situated assets are not eligible for rebasing, as they were always within the UK CGT net. The election must be made in the individual's self-assessment return for the first tax year in which they dispose of a foreign asset after 5 April 2025, and it applies to all future disposals of foreign assets. There is no ability to cherry-pick — the election is all-or-nothing for the individual's entire foreign asset portfolio. ### The practical effect on disposals after April 2025 For an individual who acquired shares in a Singaporean technology company in 2010 for GBP 1 million and whose shares were worth GBP 10 million on 5 April 2025, the rebasing election means that only gains accruing after that date are subject to UK CGT. If the shares are sold in 2027 for GBP 12 million, the taxable gain is GBP 2 million, not GBP 11 million. At the current UK CGT rate of 20 per cent for higher-rate taxpayers on carried interest and 24 per cent on residential property gains, the tax saving is approximately GBP 2.16 million. The election is particularly valuable for individuals who have held foreign assets for many years and who face significant accrued gains that would otherwise be fully taxable upon disposal. ## Trust structures: the end of the protected settlement era The Finance Act 2025 effectively abolishes the protected settlement regime that previously allowed non-domiciled settlors to hold assets in offshore trusts without being taxed on the trust's income and gains until benefits were received. From 6 April 2025, all offshore trusts with a UK-resident settlor are subject to the same attribution rules that previously applied only to deemed domiciled settlors under sections 720 and 731 of the Income Tax Act 2007. ### The settlor-interest trust problem For trusts where the settlor retains an interest — defined broadly under section 625 of the Income Tax Act 2007 to include any power to benefit the settlor or their spouse — the trust's income and gains are now attributed to the settlor annually, regardless of whether the settlor is within the FIG regime. This means that a settlor who is in years one through four of FIG protection will still be taxed on the trust's income and gains if they have a retained interest, because the FIG regime exempts only the individual's own foreign income and gains, not those of a trust in which they have an interest. The only way to avoid this attribution is for the settlor to irrevocably exclude themselves and their spouse from any benefit under the trust, a step that must be completed before 6 April 2026 under the transitional provisions in Schedule 10 of the Finance Act 2025. ### The ten-year trust exit window For trusts that are not settlor-interest trusts — for example, trusts settled for the benefit of children or grandchildren where the settlor has no retained interest — the trust's income and gains are attributed to the settlor only if the settlor is within the FIG regime and the trust was settled after 5 April 2025. Trusts settled before that date are grandfathered for ten years, meaning that their income and gains are not attributed to the settlor until 6 April 2035, provided the trust does not make any capital distributions to the settlor or their spouse during that period. This ten-year window gives settlors time to restructure their trust arrangements, but any distribution to the settlor before 2035 will trigger attribution of all future trust income and gains from that point forward. ## Worked example: the Singapore-based principal moving to London Consider a composite case study that illustrates the interaction of the FIG regime, the TRF, and the rebasing provisions. A Singaporean citizen who has never been UK resident before decides to relocate to London in September 2025 for a senior executive role at a fintech company. She has been non-UK resident for her entire adult life, comfortably exceeding the ten-year clean break requirement. She holds the following assets: - A portfolio of Singapore-listed equities worth SGD 20 million, acquired in 2015 for SGD 8 million - A residential property in Singapore worth SGD 5 million, acquired in 2010 for SGD 3 million - A bank account in Singapore holding SGD 2 million of accumulated interest income earned between 2018 and 2025, none of which has been remitted to the UK - A settlement trust in Jersey, settled in 2020 for the benefit of her two children, with no retained interest by the settlor Under the FIG regime, her foreign income and gains arising after 6 April 2025 are automatically exempt from UK tax for the first four tax years of UK residence (2025-26 through 2028-29). She can sell her Singapore equities in 2026 and realise a gain of SGD 12 million — none of that gain is subject to UK CGT. She can also receive the SGD 2 million of interest income from her Singapore bank account without UK tax liability, provided she does not remit it to the UK. For the pre-2025 interest income held in her Singapore bank account, she can use the TRF in 2025-26 to remit the full SGD 2 million to the UK at a 12 per cent tax rate, rather than her marginal UK rate of 45 per cent. The tax saving is approximately SGD 660,000. When she eventually sells her Singapore residential property after the FIG regime expires in 2029, she can elect for rebasing under the amended section 58 TCGA 1992, treating the market value as at 5 April 2025 as her base cost. If the property is worth SGD 6 million on that date, her taxable gain on a 2030 sale for SGD 7 million is SGD 1 million, not SGD 4 million. Her Jersey trust, having been settled before 6 April 2025 and with no retained interest, is grandfathered until 6 April 2035. No attribution of trust income or gains occurs unless she receives a capital distribution from the trust before that date. ## Planning checklist for advisors and principals The following five actionable steps should be reviewed before the end of the 2025-26 tax year, as several of the transitional elections and restructuring options carry hard deadlines. 1. Verify the ten-year non-residence history for any client who has been UK resident in the past, using the statutory residence test under Schedule 45 Finance Act 2013, as a single day of UK presence in the wrong tax year can disqualify the client from FIG protection and trigger full worldwide taxation from year one. 2. Elect for the temporary repatriation facility in the 2025-26 or 2026-27 self-assessment return to remit pre-6 April 2025 foreign income and gains at 12 per cent, but only after confirming that the amounts are not already protected under the FIG regime and that the remittance does not inadvertently trigger attribution under the trust rules. 3. Restructure any offshore trust where the settlor retains an interest before 6 April 2026, by irrevocably excluding the settlor and spouse from benefit, to avoid annual attribution of trust income and gains under the amended sections 720 and 731 of the Income Tax Act 2007. 4. Make the rebasing election under the amended section 58 TCGA 1992 in the first self-assessment return that includes a disposal of a foreign asset after 5 April 2025, recognising that the election is all-or-nothing for the individual's entire foreign asset portfolio and cannot be reversed. 5. Model the four-year FIG cliff edge in advance, including the tax liability on foreign assets that will become fully taxable from year five, and consider whether a temporary departure from UK residence for ten consecutive tax years is a viable long-term strategy for preserving FIG protection on future foreign income and gains. ## Sources - Finance Act 2025, sections 24A-24H (FIG regime), available at https://www.legislation.gov.uk/ukpga/2025/7 - Finance Act 2025, Schedule 9 (Temporary Repatriation Facility), available at https://www.legislation.gov.uk/ukpga/2025/7/schedule/9 - Finance Act 2025, Schedule 10 (Trust transitional provisions), available at https://www.legislation.gov.uk/ukpga/2025/7/schedule/10 - Income Tax Act 2007, sections 720 and 731 (Transfer of assets abroad), available at https://www.legislation.gov.uk/ukpga/2007/3 - Taxation of Chargeable Gains Act 1992, section 58 (Rebasing), as amended by Finance Act 2025, available at https://www.legislation.gov.uk/ukpga/1992/12 - HMRC, "Guidance on the foreign income and gains regime for individuals," 11 February 2025, available at https://www.gov.uk/government/publications/foreign-income-and-gains-regime-for-individuals - HMRC, "Non-domiciled taxpayers statistics, 2022-23," available at https://www.gov.uk/government/statistics/non-domiciled-taxpayers-statistics