Tax residency and wealth structuring for new United Kingdom residents

The abolition of the non-domiciled tax regime on 6 April 2025 represents the most consequential change to United Kingdom personal taxation for internationally mobile wealth in a generation. Anyone who became UK resident after that date is subject to a new framework — the Foreign Income and Gains (FIG) regime — that replaces the remittance basis with a time-limited exemption on foreign income and gains for new arrivals. The transition is not optional: HMRC’s official guidance, updated on 23 April 2024, states explicitly that “before 6 April 2025, UK residents who had their permanent home (‘domicile’) outside the UK did not have to pay UK tax on foreign income,” and that those rules no longer apply for new residents. For a high-net-worth individual contemplating a move to London, the difference between arriving before or after that date, and between structuring assets before or after establishing residency, can alter net lifetime tax liabilities by seven figures. This article maps the statutory boundaries of UK tax residence, the FIG regime’s mechanics, the capital-gains treatment of pre-arrival disposals, and the pre-migration planning steps that produce materially different outcomes. ## The statutory residence test and when the clock starts UK tax residence is determined by the Statutory Residence Test (SRT), codified in Schedule 45 of the Finance Act 2013, and it operates on a tax-year basis running from 6 April to 5 April. An individual who spends 183 days or more in the UK during a tax year is automatically resident. For those spending fewer than 183 days, the SRT applies a three-part test: the automatic overseas test, the automatic UK test, and the sufficient ties test, which counts connections such as family, accommodation, and work patterns. A person who arrives in the UK partway through a tax year may be resident from their date of arrival if they meet the sufficient ties test for the remainder of the year, but the key distinction is between “resident” and “UK domiciled” — a status that, for new arrivals, is now largely irrelevant for tax purposes. ### The 183-day rule and split-year treatment The 183-day rule is absolute: any day of physical presence in the UK at midnight counts as a day of presence. There is no de minimis exception for transit or short visits. However, the SRT includes split-year treatment in certain circumstances, meaning an individual can be treated as non-resident for the part of the tax year before their arrival if they meet specific conditions — for example, arriving to take up full-time employment or to commence a full-time course of study. For a high-net-worth individual who does not meet the employment or study conditions, split-year treatment is generally unavailable, and the entire tax year from the date of arrival may count as a period of UK residence. This matters because the FIG regime’s four-year exemption clock starts on the first day of UK residence, not on the first day of the tax year. ### The sufficient ties test for partial-year arrivals An individual who spends between 16 and 90 days in the UK in a tax year must count their “UK ties” — a formula that includes family ties, accommodation ties, work ties, and, for those who have been UK resident in any of the previous three tax years, a 90-day tie. For a first-time UK resident who has never been resident before, the threshold is higher: they can spend up to 45 days in the UK without becoming resident, provided they have no UK accommodation available for a continuous period of 91 days or more. The practical implication is that a prospective resident can visit London for property viewings, advisor meetings, and school visits without triggering residency, as long as they do not own or lease accommodation and keep total days below 46. Once a lease is signed or a property purchased, the accommodation tie is activated, and the day count drops to 16 days before the sufficient ties test applies. ## The FIG regime: four-year exemption and what it covers The Foreign Income and Gains (FIG) regime, effective from 6 April 2025, grants new UK residents an exemption from UK tax on foreign income and gains arising during their first four tax years of residence, provided they have not been UK resident in any of the ten preceding tax years. This replaces the old remittance basis, which required a claim and an annual charge of £30,000 or £60,000 depending on length of residence. Under FIG, no claim is necessary — the exemption applies automatically to foreign income and gains that arise in the first four years, regardless of whether the funds are brought into the UK. The exemption does not apply to UK-source income or gains, which remain taxable from day one. ### Qualifying conditions and the ten-year lookback The critical eligibility condition is the ten-year non-residence period. An individual who has been UK resident for even a single tax year within the ten years preceding their current arrival does not qualify for FIG. This is a bright-line test with no exceptions for short stays or de minimis presence. For a returning UK national who lived abroad for nine years but spent 20 days in the UK during one of those years, the clock resets. The ten-year lookback is measured from the start of the current tax year of residence, not from the date of arrival. A person who arrives on 1 December 2025 and becomes resident from that date must have been non-resident for all ten tax years from 2015-16 through 2024-25. ### What qualifies as foreign income and gains Foreign income includes dividends from non-UK companies, interest on foreign bank accounts, rental income from overseas property, and foreign employment income for days worked outside the UK. Foreign gains include capital gains from the disposal of non-UK assets — shares in foreign companies, foreign real estate, and foreign collectibles. The exemption does not extend to gains on UK-situated assets, even if the individual was non-resident when the asset was acquired. A US citizen who sells shares in a Delaware corporation after becoming UK resident will pay no UK tax on the gain during the four-year window, but a sale of shares in a UK private company will be fully taxable from the first day of residence. ## Capital gains: the pre-arrival disposal window and rebasing Capital gains tax (CGT) in the UK is chargeable on disposals of assets made while the individual is UK resident, regardless of where the asset is situated. For assets held at the date of arrival, the base cost for UK CGT purposes is the original acquisition cost, not the market value at the date of arrival — unless the individual qualifies for a statutory rebasing election. The UK does not operate a universal step-up in basis on becoming resident, which creates a significant exposure for assets with substantial embedded gains. ### The temporary non-resident rule and deemed disposal An individual who disposes of an asset while non-resident but within five tax years of leaving the UK is subject to the temporary non-resident rule: the gain is treated as arising in the tax year of return to the UK. This rule applies to individuals who were UK resident for at least four of the seven tax years before departure and who return within five years. For a new resident who has never been UK resident before, the rule does not apply, but for a returning former resident, it is a trap. A disposal of a foreign company share by a returning UK national in year three of their absence will be taxed as if it occurred in the year of their return, at the rates applicable in that year. ### Pre-arrival crystallisation strategies The most common pre-arrival planning step is to crystallise gains on assets that the individual intends to hold through the UK residence period, by selling and repurchasing before arrival. This resets the base cost to the market value at the date of arrival, and the gain realised before arrival is not subject to UK CGT because the individual is non-resident. The repurchase must be a genuine transaction — a wash sale or same-day repurchase through a connected party may be challenged under the UK’s wide anti-avoidance rules. For assets that cannot be sold without triggering a taxable event in the home jurisdiction, such as closely held company shares subject to shareholder agreements, the alternative is to hold them through a non-UK trust or company structure that does not itself become UK resident. ## Pre-arrival trust and entity structuring Trusts and companies that become UK resident are subject to UK tax on their worldwide income and gains. A trust becomes UK resident if the majority of its trustees are UK resident or if the trust is administered in the UK. A company becomes UK resident if its central management and control is exercised in the UK, regardless of where it is incorporated. For a high-net-worth individual who controls a family trust or a holding company, the act of moving to the UK can inadvertently trigger UK tax residence for the structure itself. ### The settlor-interested trust trap A trust in which the settlor or the settlor’s spouse retains an interest — defined broadly as the ability to benefit from the trust’s capital or income — is treated as transparent for UK tax purposes while the settlor is UK resident. All income and gains of the trust are attributed to the settlor and taxed as if they arose directly. This rule applies regardless of the trust’s residence status. A non-UK resident trust with a UK resident settlor who has an interest is therefore fully exposed to UK tax on its worldwide income and gains. The only way to avoid this is for the settlor to irrevocably exclude themselves and their spouse from any benefit, which may be impossible if the trust was established for estate planning or asset protection purposes. ### Non-UK resident company structures A non-UK resident company that is controlled by a UK resident individual is subject to the UK’s controlled foreign company (CFC) rules, which can attribute the company’s profits to the UK resident shareholder if the company is resident in a low-tax jurisdiction and meets the “chargeable profits” test. The CFC rules are complex and fact-specific, but the general principle is that passive income — interest, dividends, royalties — earned by a non-UK company controlled by a UK resident is likely to be attributed and taxed in the UK. Active trading income is generally excluded, but the boundary between active and passive is narrow. For a family office that holds a portfolio of liquid investments through a non-UK company, the CFC rules will almost certainly apply, and the company should be restructured before the individual becomes UK resident. ## The visa pathway and its interaction with tax residence The visa route an individual uses to enter the UK does not directly determine their tax residence status — the SRT applies uniformly to all individuals physically present in the UK. However, the visa type affects the timing of arrival, the ability to work, and the availability of certain reliefs such as Overseas Workday Relief (OWR), which was retained in modified form after the FIG regime’s introduction. ### The Global Talent visa and the three-year settlement track The Global Talent visa, as described on the UK government’s application page, allows individuals who are “a leader or potential leader” in academia, research, arts and culture, or digital technology to live and work in the UK for up to five years, with the possibility of settlement (indefinite leave to remain) after three years. The application fee is £766, plus an immigration health surcharge of £1,035 per year. For a high-net-worth individual in the technology sector, the Global Talent visa offers a faster path to settlement than the Skilled Worker visa, which requires five years before settlement eligibility. Settlement is relevant for tax purposes because it removes the immigration-law constraints on leaving the UK for extended periods, which can affect the SRT’s day-count analysis. A settled individual can spend more than 90 days outside the UK without risking their immigration status, whereas a visa holder may need to maintain continuous residence to qualify for settlement. ### The Innovator Founder visa and business ownership The Innovator Founder visa, which replaced the earlier Innovator visa, is designed for individuals who “want to set up and run an innovative business in the UK.” The visa lasts three years, with no limit on extensions, and settlement is possible after three years. The application fee is £1,357 for applications made outside the UK, plus a £1,000 endorsement fee and £500 per meeting with the endorsing body. The visa permits the holder to work for their own business and to take on additional employment requiring at least a level 3 qualification. For a business owner who intends to relocate their operating company to the UK, the Innovator Founder visa is the most direct route, but the business must be “different from anything else on the market” — a requirement that is assessed by an approved endorsing body and that may be difficult for a holding company or a passive investment vehicle to satisfy. ### The Skilled Worker visa and employer sponsorship The Skilled Worker visa requires a job offer from a Home Office-approved employer and a certificate of sponsorship. The visa lasts up to five years, with settlement after five years. The minimum salary threshold depends on the occupation and the date of the certificate of sponsorship, but for most roles it is above £38,700 per year. For a high-net-worth individual who is employed by a multinational corporation and transferred to the UK, the Skilled Worker visa is the standard route. The Overseas Workday Relief (OWR) is available to individuals who are seconded to the UK and who meet the conditions — essentially, they pay UK tax only on the UK workdays and do not pay UK tax on income from days worked abroad. The OWR rules changed on 6 April 2025, and the government’s guidance states that “employees are eligible for OWR in 2023-24 or 2024-25 for their first year since returning to the UK should still be able to claim OWR for the full three years.” For new arrivals after that date, the availability of OWR is limited to the first three tax years of residence and applies only to employment income, not to investment or business income. ## Inheritance tax and the deemed domicile rule UK inheritance tax (IHT) applies to the worldwide estate of any individual who is domiciled in the UK, or who is deemed domiciled under section 267 of the Inheritance Tax Act 1984. An individual becomes deemed domiciled in the UK after having been resident in the UK for at least 15 of the previous 20 tax years. This rule was not changed by the FIG regime’s introduction. A new resident therefore has a 15-year window during which their non-UK assets are outside the scope of UK IHT, provided they do not bring those assets into the UK or use them as security for UK borrowing. After the 15-year threshold, all worldwide assets become subject to IHT at 40 per cent on the value above the nil-rate band of £325,000. ### The excluded property trust strategy A non-UK resident trust that holds non-UK assets and whose settlor is not UK domiciled or deemed domiciled at the time the trust was created is an “excluded property trust” for IHT purposes. The trust’s assets remain outside the UK IHT net even after the settlor becomes deemed domiciled, provided the trust was settled before the settlor became UK resident and the settlor did not add UK assets to the trust. This is one of the few permanent IHT shelters available to UK residents, and it requires the trust to be established before the individual’s first day of UK residence. For a settlor who has already become UK resident, a new trust will be within the IHT net from inception. ### The 15-year clock and exit planning An individual who leaves the UK before the 15-year deemed domicile threshold is reached will not become deemed domiciled, and their non-UK assets will never be subject to UK IHT, regardless of how long they lived in the UK. For an individual who stays beyond 15 years, the deemed domicile status persists for three tax years after departure, meaning IHT exposure continues for three years after leaving. This asymmetry — three years of tail exposure after a 15-year tail of immunity — is a critical consideration for anyone who views their UK residence as temporary. The decision to sell or gift non-UK assets before the 15-year anniversary can eliminate IHT exposure permanently. ## Practical takeaways for the incoming resident The following conclusions are drawn from the statutory framework and the primary-source guidance cited above, and they represent the minimum set of actions that should be evaluated before establishing UK residence. 1. The FIG four-year exemption applies automatically to foreign income and gains for individuals who have not been UK resident in any of the ten preceding tax years, but it does not cover UK-source income or gains, which are taxable from day one. 2. Pre-arrival crystallisation of capital gains on non-UK assets should be completed before the first day of UK residence, as the UK does not provide a step-up in basis on arrival and the temporary non-resident rule may trap disposals made within five years of departure for returning former residents. 3. Non-UK trusts and companies should be reviewed for UK residence risk before the individual’s arrival, with particular attention to the settlor-interested trust rules and the controlled foreign company rules, both of which can attribute worldwide income to a UK resident individual. 4. The 15-year deemed domicile clock for inheritance tax begins on the first day of UK residence, and excluded property trusts must be settled before that date to achieve permanent IHT protection for non-UK assets. 5. The visa route — Global Talent, Innovator Founder, or Skilled Worker — affects settlement timing and the availability of Overseas Workday Relief, but it does not change the SRT or the FIG regime, which apply uniformly to all residents. 6. The ten-year non-residence lookback for FIG eligibility is measured from the start of the current tax year, not from the date of arrival, and even a single tax year of UK residence within that period disqualifies the individual from the four-year exemption. ## Sources [UK government: Statutory Residence Test (SRT) guidance](https://www.gov.uk/government/publications/statutory-residence-test-srt) [UK government: Non-domiciled residents — FIG regime](https://www.gov.uk/tax-foreign-income/non-domiciled-residents) [UK government: Changes to the taxation of non-UK domiciled individuals](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals) [UK government: Global Talent visa](https://www.gov.uk/global-talent) [UK government: Innovator Founder visa](https://www.gov.uk/innovator-founder-visa) [UK government: Skilled Worker visa](https://www.gov.uk/skilled-worker-visa) [UK government: Overseas Workday Relief guidance](https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim44000) [UK legislation: Inheritance Tax Act 1984, section 267 (deemed domicile)](https://www.legislation.gov.uk/ukpga/1984/51/section/267)