Non Dom Tax UK: How the New Rules Work in 2026/27

The UK’s old non dom tax regime no longer operates in the way it did before April 2025.

The remittance basis has been abolished and domicile has largely been replaced by tax residence as the key test for taxing foreign income and gains.

From 6 April 2025, UK residents are generally taxed on their worldwide income and gains as they arise.

The main exception for new arrivals is the four-year Foreign Income and Gains regime, usually shortened to the FIG regime.

Someone who becomes UK resident after at least 10 consecutive tax years of non-UK residence may claim relief on qualifying foreign income and gains during their first four UK-resident tax years.

For people who previously used the remittance basis, transitional measures remain important in 2026/27.

These include the Temporary Repatriation Facility at 12%, possible rebasing of qualifying foreign assets to their 5 April 2017 value, and new residence-based Inheritance Tax rules.

The term “non-dom” is therefore still widely used, but anyone planning their tax affairs in 2026 needs to understand that the underlying system has fundamentally changed.

What Does Non Dom Tax Mean in 2026?

Historically, a UK resident who was considered non-domiciled could potentially use the remittance basis and leave qualifying foreign income and gains outside the UK tax charge until they were brought into the country.

That system ended on 6 April 2025.

The government replaced it with a residence-based framework.

Area	Old non-dom system	Current system from April 2025
Main connecting factor	Domicile	Tax residence
Foreign income and gains	Remittance basis potentially available	Normally taxed as they arise
New arrivals	Domicile-based treatment	Four-year FIG regime if eligible
Bringing relieved FIG to UK	Could trigger remittance tax	No additional tax where FIG relief applies
Long-term resident test for IHT	Domicile/deemed domicile	Residence-based test
Remittance basis charge	£30,000 or £60,000 in relevant cases	Abolished with the remittance basis
Transitional relief	Not applicable	TRF and eligible CGT rebasing

HMRC’s official non-dom tax reform guidance confirms that the remittance basis was replaced by the four-year FIG regime and that Inheritance Tax also moved towards a residence-based framework.

This means old advice discussing how long someone can remain a “non-dom” before becoming deemed domiciled should not be used as the starting point for the 2026/27 tax year.

Why Was the Old Non-Dom Regime Abolished?

The move away from domicile had been developing politically before the final reform took effect.

Former Chancellor Jeremy Hunt announced plans in the March 2024 Budget to replace the remittance basis with a residence-based foreign income and gains regime.

The incoming Labour government retained the basic move away from domicile but changed parts of the transitional arrangements and offshore trust treatment.

In the October 2024 Budget, then-Chancellor Rachel Reeves said:

“If you make Britain your home, you should pay your tax here.”

She then confirmed that the government would remove the old non-dom regime and the concept of domicile from the relevant tax framework from April 2025.

The policy objective was therefore not simply to increase one tax rate. It fundamentally changed which connection to the UK determines how foreign wealth is taxed.

Who Can Use the Four-Year FIG Regime?

The new FIG regime is designed mainly for people arriving in the UK after a substantial period overseas.

To qualify in a tax year, an individual generally needs to:

• Be UK tax resident under the Statutory Residence Test.
• Be within their first four tax years of UK residence.
• Have been non-UK resident for the previous 10 consecutive tax years.
• Make the appropriate FIG claim for the relevant tax year.

Someone can check the detailed eligibility conditions through HMRC’s four-year Foreign Income and Gains regime.

The four years begin with the person’s first UK-resident tax year after the qualifying period abroad.

They are not four years that can simply be saved and used whenever convenient.

For example, someone who becomes UK resident in 2025/26 could potentially have:

Tax year	Potential FIG position
2025/26	Year 1
2026/27	Year 2
2027/28	Year 3
2028/29	Year 4
2029/30	FIG period ended

A person does not have to claim FIG relief every year, but skipping a year does not extend the four-year window.

Split-Year and Interrupted Residence

Residence timing can become more complicated where someone arrives in or leaves the UK partway through a tax year.

Where split-year treatment applies to the year someone becomes UK resident, that tax year can still count as one of the qualifying years within the four-year FIG period.

It is therefore important not to assume that only a complete 12-month period of UK residence starts the clock.

Likewise, if someone becomes non-UK resident during their four-year FIG window, relief cannot normally be claimed for that non-resident year and the unused period cannot simply be added to the end.

The four-year framework continues to be determined by the original sequence of tax years rather than by the number of years in which a claim was actually made.

This makes the exact residence history under the Statutory Residence Test particularly important for people who move regularly between countries.

Claim Mechanics and Lost Allowances

FIG relief is not automatically applied just because someone qualifies.

The taxpayer must make a claim for the relevant foreign income, foreign gains, or both.

HMRC confirms that someone making a FIG claim can lose important UK allowances for that tax year, including:

• The Personal Allowance.
• The Capital Gains Tax annual exempt amount.
• Blind Person’s Allowance.
• Certain married couple and transferable allowances.

Foreign losses can also be restricted where FIG relief is claimed.

The decision to claim therefore needs to consider the value of the foreign income or gains being relieved against the UK allowances being surrendered.

For someone with a relatively small amount of qualifying overseas income, losing valuable UK allowances can materially change whether making the claim produces an overall tax saving.

The decision therefore needs to be made using the taxpayer’s complete UK and overseas tax position rather than looking only at the amount of foreign income involved.

What Foreign Income and Gains Can Qualify for FIG Relief?

The FIG regime can cover a range of qualifying overseas income and gains.

Examples include:

• Dividends from non-UK companies.
• Interest from foreign bank accounts.
• Profits from an overseas property business.
• Profits from a trade carried on wholly outside the UK.
• Qualifying gains on foreign assets.

Someone holding money overseas should also consider the wider rules around foreign savings interest, particularly once they are outside the four-year FIG period.

Foreign employment income follows separate rules.

It is generally not relieved simply by making an ordinary FIG income claim, although Overseas Workday Relief may apply to qualifying employment duties performed outside the UK.

The location of the asset or bank account therefore does not itself determine whether income is tax-free.

Residence history and the type of income are critical.

Why Does FIG Relief Not Make Someone Completely Tax-Free in the UK?

FIG relief applies only to qualifying foreign income and gains.

A person using it may still have UK tax liabilities.

For example, they may need to pay tax on:

• UK employment income.
• UK rental income.
• Profits from a UK business.
• UK investment income.
• Gains that do not qualify for FIG relief.

The relief should therefore not be described as four years of complete UK tax exemption.

It is more accurately a temporary exemption for particular foreign income and gains available to qualifying new residents.

This distinction becomes particularly important where a person owns assets in several countries.

Someone disposing of an overseas home or investment property should separately consider the rules around Capital Gains Tax on foreign property, including foreign tax credits, residence status and FIG eligibility.

How Does the Temporary Repatriation Facility Work in 2026/27?

The Temporary Repatriation Facility, or TRF, is one of the most important transitional provisions for former remittance basis users.

It allows qualifying pre-6 April 2025 foreign income and gains to be designated at a reduced tax rate.

The rates are:

Tax year	TRF rate
2025/26	12%
2026/27	12%
2027/28	15%
From 2028/29	TRF no longer available

This makes 2026/27 the final tax year in which the 12% TRF rate applies. HMRC confirms that the rate rises to 15% for the final TRF year, 2027/28.

An important detail is that TRF treatment is based on designation.

A qualifying taxpayer does not necessarily have to physically remit the designated money to Britain in the same tax year in order to secure the TRF rate.

That makes the facility broader than simply a discounted tax charge imposed when cash crosses into a UK bank account.

The rules can become particularly complicated where historic foreign income and gains have been mixed with capital or held within trust structures.

Mixed Funds and TRF Capital

The TRF can also interact with mixed funds, where the same offshore account contains different categories of income, gains and capital from different tax years.

Once qualifying foreign income or gains are designated under the TRF, those amounts can become TRF capital.

HMRC has introduced specific ordering and tracing rules to determine what is treated as being remitted when only part of a mixed account is transferred to the UK.

In some circumstances, designated TRF capital can also be moved into a specially nominated overseas TRF capital account.

This can make it easier to separate amounts that have already suffered the TRF charge from other untaxed foreign income and gains, although the statutory conditions for the account need to be followed.

For people with long-standing offshore accounts, reconstructing the composition of mixed funds before making substantial transfers can therefore be as important as deciding whether to use the 12% rate itself.

Why Was the Proposed 50% Foreign Income Relief Removed?

Older articles and early government proposals referred to a transitional rule under which former remittance basis users would have paid UK tax on only 50% of their foreign income for 2025/26.

That proposal did not become part of the final regime.

The final Labour policy explicitly stated that the previously announced 50% reduction would not be introduced.

Therefore, it is incorrect in 2026 to say that taxpayers received this relief for one year and that it has now expired.

Long-term UK residents who do not qualify for FIG relief are generally taxed on their worldwide income and gains on the arising basis.

The transitional protections that actually matter include the TRF and qualifying CGT rebasing.

How Does Capital Gains Rebasing Work for Former Non-Doms?

Certain people who previously used the remittance basis can benefit from a special rebasing rule when disposing of qualifying foreign assets.

Subject to the detailed conditions, the asset can potentially be treated as though it were acquired at its 5 April 2017 market value.

This can reduce the amount of historic gain falling within UK Capital Gains Tax.

The rule is not a blanket reset for every foreign asset.

Conditions include factors such as:

• The individual having used the remittance basis in a qualifying earlier year.
• The asset being held on 5 April 2017.
• The asset satisfying the relevant foreign-location conditions.
• The disposal occurring after the new regime began.

The final government reform material confirms 5 April 2017 as the relevant rebasing date.

This is an area where older technical notes can cause confusion because an earlier version of the proposals referred to 5 April 2019.

Evidence for the 5 April 2017 Market Value

Because the rebasing calculation depends on what a qualifying foreign asset was worth on 5 April 2017, the quality of valuation evidence can become important when the asset is eventually sold.

Useful evidence may include professional valuation reports, market data, brokerage statements, property records or other contemporary documents capable of supporting the historic value used in the Capital Gains Tax calculation.

Where a valuation needs to be reconstructed years later, the taxpayer may need specialist evidence to demonstrate that the figure used represents a reasonable market value at the relevant date.

The rebasing relief can therefore reduce historic gains, but it also creates an additional record-keeping issue for anyone holding eligible foreign assets over the long term.

Why Have Offshore Trust Rules Become More Important?

Offshore trusts were a significant part of the historic non-dom planning landscape.

The reforms substantially reduced the protections previously available.

People who are UK resident and outside the four-year FIG regime can now face UK tax consequences from foreign income or gains arising within certain settlor-interested trust structures.

The old approach of relying on non-dom status itself to shelter future offshore trust income is therefore no longer appropriate.

Offshore Trusts and Anti-Avoidance Rules

HMRC’s current framework also interacts with longstanding anti-avoidance provisions such as:

• Transfer of Assets Abroad rules.
• Settlements legislation.
• Trust distribution matching rules.
• Rules attributing certain foreign income or gains to UK residents.

HMRC updated its Transfer of Assets Abroad guidance in September 2026 to reflect the abolition of the remittance basis.

It confirms that from 6 April 2025 affected UK residents are generally taxed on the arising basis unless they qualify for and claim FIG relief.

Historic trust income and gains can therefore remain relevant even when they arose before April 2025.

For example, a later distribution or benefit can require consideration of income or gains that accumulated within the offshore structure in earlier years.

This means the April 2025 reform date does not automatically make the trust’s historic tax records irrelevant.

Anyone with offshore trusts, private foundations or similar structures should avoid assuming that the new rules apply only to cash personally held in foreign bank accounts.

How Has Inheritance Tax Changed for Former Non-Doms?

Inheritance Tax underwent a separate but equally important shift.

From 6 April 2025, domicile stopped being the main connecting factor for deciding when an individual’s non-UK assets fall within UK IHT.

The central concept is now long-term residence.

A person will generally become a long-term UK resident for these purposes where they have been UK resident for at least:

10 of the previous 20 tax years.

When this test is met, foreign assets can fall within the UK Inheritance Tax net.

The official Inheritance Tax rules for long-term UK residents also explain that a person may remain within the residence-based IHT framework for a period after leaving Britain.

The post-departure period varies.

For example:

Previous UK residence	Potential period remaining within long-term residence rules after departure
10–13 years	3 years
14 years	4 years
15 years	5 years
Longer residence	Can progressively increase
Longest cases	Up to 10 years

This means leaving the UK does not necessarily remove foreign assets from UK IHT immediately.

The wider Inheritance Tax threshold also remains relevant when calculating potential estate liabilities, although residence determines whether foreign property is within scope in the first place.

Resetting the Residence Test After a Long Absence

The post-departure position is not permanent.

HMRC confirms that after 10 consecutive tax years of non-UK residence, the long-term residence calculation can effectively reset.

If the individual subsequently returns to the UK, earlier residence before that 10-year absence does not continue to count in the same way towards the new 10-out-of-20 test.

This can be particularly important for internationally mobile families who leave Britain for a substantial period and later return.

A shorter absence, however, may leave the individual within the continuing IHT exposure period. The number of years previously spent as a UK resident therefore remains important even after the person has moved overseas.

How Does Overseas Workday Relief Fit Into the New System?

The reforms retained and expanded Overseas Workday Relief, or OWR, for qualifying new residents.

It can apply to employment income relating to duties carried out outside the UK during qualifying years.

From April 2025, the relief can potentially apply during the same four-year qualifying period used for FIG eligibility.

However, an annual financial cap applies.

The maximum relief is the lower of:

• 30% of qualifying employment income, or
• £300,000.

HMRC’s updated 2026 guidance confirms these limits.

For globally mobile employees, this means foreign investment income and overseas employment earnings should not automatically be placed in the same tax category.

Someone whose residence or overseas employment position changes may also encounter separate PAYE issues, including circumstances where an NT tax code is relevant.

What Does the New System Mean for Long-Term UK Residents?

A former non-dom who has already been UK resident for many years is in a very different position from a new arrival.

A simplified comparison is:

Situation	Likely 2026/27 position
New resident after 10+ years abroad	May qualify for FIG
Second year of UK residence after 10+ years abroad	May still qualify
Fifth UK-resident year	FIG normally unavailable
Long-term resident former remittance basis user	Worldwide income and gains generally taxed as they arise
Former remittance basis user with pre-2025 FIG	TRF may be available
Long-term resident for IHT	Foreign estate may fall within UK IHT
Qualifying internationally mobile employee	OWR may apply to foreign workdays

This is why the expression “non-dom tax” is now potentially misleading.

The correct tax result depends far more heavily on residence history, timing and the source of the income or gain than on a person’s historic domicile status.

How Should Foreign Bank Interest Be Treated After the Reform?

For long-term UK residents outside the FIG regime, foreign bank interest is generally part of worldwide income taxed on the arising basis.

The money does not need to be transferred to the UK before a liability can arise.

This is a major change from the way many former remittance basis users previously organised offshore accounts.

New arrivals making a valid FIG claim may obtain relief on qualifying foreign bank interest during the four-year period.

After the FIG window closes, normal worldwide taxation generally applies.

Accurate records should therefore distinguish:

• Pre-6 April 2025 income.
• Post-6 April 2025 income.
• FIG-relieved amounts.
• TRF-designated amounts.
• Capital rather than income.
• Amounts already taxed overseas.

Mixing historic and new funds without records can make later tax calculations considerably more difficult.

How Should a FIG Claim Be Reported to HMRC?

FIG relief is claimed through Self Assessment.

HMRC says a taxpayer may need the appropriate foreign income, capital gains and residence supplementary pages depending on what relief is being claimed.

Someone dealing with the regime should therefore understand the wider Self Assessment tax return process rather than assuming HMRC will automatically exempt qualifying foreign income.

Matching Claims to the Correct Foreign Sources

A FIG claim is made for a particular tax year and can relate to qualifying foreign income, foreign gains, or both.

That means record keeping should identify which overseas income and gains have actually been included in the claim rather than simply labelling an entire foreign account “FIG exempt”.

For example, an account may contain foreign interest qualifying for relief alongside capital, historic income or another amount with a different tax treatment.

Matching individual sources to the relevant annual claim can therefore make later remittances, tax-return amendments and HMRC enquiries easier to reconcile.

HMRC also confirms that relief needs to be claimed for each tax year in which the taxpayer wants it to apply; qualification alone does not automatically exempt the foreign income or gains.

The relevant records may include:

• UK residence dates.
• Previous non-residence history.
• Foreign bank statements.
• Dividend statements.
• Property accounts.
• Asset purchase and sale records.
• Historic remittance basis claims.
• TRF designations.
• Trust distributions.
• Foreign tax paid.

Where Self Assessment creates an amount due, the taxpayer should also confirm the correct method and deadline to pay Self Assessment tax.

Missing a claim or reporting foreign income incorrectly can produce a very different tax result from simply calculating the foreign income itself.

What Should Former Non-Doms Review During 2026/27?

The current tax year is particularly important because several transitional rules are still available.

Someone affected should consider reviewing:

1. Residence history: Establish exactly when UK tax residence began and whether the 10-year non-residence condition was met.
2. FIG eligibility: Identify which of the four possible qualifying years remain.
3. Pre-2025 foreign income and gains: Separate historic amounts from income and gains arising after 5 April 2025.
4. TRF eligibility: Decide whether designation at the current 12% rate is appropriate before the rate increases to 15% in 2027/28.
5. Foreign assets: Check whether 5 April 2017 rebasing could apply to a future or recent disposal.
6. Offshore trusts: Review distributions, benefits and retained income or gains.
7. Inheritance Tax exposure: Determine whether the 10-out-of-20 long-term residence test has been reached.
8. Foreign employment: Consider whether Overseas Workday Relief applies.
9. Tax returns: Ensure FIG and TRF elections or claims are made through the correct reporting process.

Large offshore portfolios, mixed funds and trust structures can require detailed tracing, so historic documentation remains particularly valuable.

Has the Non-Dom Reform Caused Wealthy People to Leave the UK?

The reform has generated considerable debate about competitiveness and the mobility of wealthy taxpayers.

Some advisers, politicians and wealth-industry reports have argued that higher exposure to worldwide taxation and Inheritance Tax has encouraged some high-net-worth residents to consider jurisdictions such as Italy, Switzerland, Monaco and the UAE.

However, estimates of wealthy people leaving Britain should be treated cautiously.

A person’s decision to relocate can involve:

• Tax.
• Family.
• Business ownership.
• Immigration rights.
• Lifestyle.
• Education.
• Investment opportunities.

It is therefore difficult to establish from headline migration figures alone how many departures were caused specifically by the non-dom reforms.

The policy debate has two competing considerations: raising revenue and creating equal treatment for long-term residents, while maintaining the UK’s attractiveness to internationally mobile investors and entrepreneurs.

For individual taxpayers, the practical rules matter more than predicting the wider economic effect.

What Are the Biggest Differences Between the Old and New Non-Dom Rules?

The change can be summarised as follows:

Issue	Before 6 April 2025	From 6 April 2025
Core concept	Domicile	Residence
Remittance basis	Available to qualifying non-doms	Abolished
Remittance basis charge	Could reach £30,000 or £60,000	Abolished
Foreign income for long-term residents	Could remain outside UK tax until remitted in qualifying cases	Generally taxed as it arises
New-arrival relief	Remittance basis	Four-year FIG regime
Minimum prior non-residence for FIG	Not applicable	10 consecutive tax years
Bringing FIG-relieved income to UK	Could previously trigger remittance issues	No extra charge on validly relieved FIG
IHT foreign asset test	Domicile/deemed domicile	Long-term residence
Transitional repatriation relief	None	TRF for 2025/26–2027/28
Eligible CGT rebasing	Old rules varied	Special 5 April 2017 rebasing for qualifying former remittance basis users

The new system is therefore not simply the old non-dom system with higher tax rates.

It is a different residence-based framework.

Conclusion

The UK’s historic non-dom tax regime has been replaced by a residence-based system. From 6 April 2025, most UK residents are taxed on worldwide income and gains, while qualifying new arrivals can use the four-year FIG regime.

In 2026/27, the TRF remains available at 12%, eligible foreign assets may qualify for 5 April 2017 rebasing, and long-term residence now drives Inheritance Tax exposure.

Residence history, offshore structures and pre-2025 funds now determine the practical tax outcome for affected taxpayers today.

Frequently Asked Questions

Does non-dom tax still exist in the UK?

The old domicile-based remittance regime ended on 6 April 2025. The expression “non-dom” is still commonly used, but the current system is primarily residence-based.

What replaced non-dom status for foreign income and gains?

The four-year FIG regime replaced the remittance basis for qualifying new UK residents.

Who qualifies for the four-year FIG regime?

A person generally needs to be within their first four UK-resident tax years after at least 10 consecutive tax years of non-UK residence.

Can FIG-relieved money be brought into the UK?

Yes. Qualifying foreign income and gains that have received FIG relief can be remitted without an additional tax charge arising simply because they are brought to the UK.

What is the TRF rate in 2026/27?

The Temporary Repatriation Facility rate is 12% for 2026/27. It rises to 15% for 2027/28.

Did former non-doms receive the proposed 50% foreign income exemption?

No. The proposed 50% transitional reduction was not introduced in the final regime.

What date applies for non-dom CGT rebasing?

Qualifying former remittance basis users may potentially rebase eligible foreign assets to their 5 April 2017 market value, subject to the conditions.

When can foreign assets become liable to UK Inheritance Tax?

A person can generally become a long-term UK resident for IHT after being UK resident for at least 10 of the previous 20 tax years.

Does leaving the UK immediately end worldwide IHT exposure?

Not necessarily. A former long-term resident can remain within the residence-based IHT rules for between three and ten tax years after leaving, depending on their residence history.

Is professional tax advice necessary?

It can be particularly important where large pre-2025 offshore funds, trusts, foreign businesses, multiple residences or significant foreign assets are involved.

Tax information disclaimer: This article provides general information about the UK residence-based tax regime. It is not personalised tax, legal or investment advice. Individual liabilities depend on residence history, asset ownership, trusts, foreign taxes and elections or claims made to HMRC.