UK Non‑Domiciled Tax Rules Explained for Expats

The UK’s non-domicile (non-dom) tax regime has undergone its most significant reform in decades. Following the Spring 2024 Budget, the traditional remittance basis for non-domiciled individuals is being abolished from April 2025, replaced with a new Foreign Income and Gains (FIG) regime. For US citizens and dual nationals living in the UK, understanding these changes is critical — especially where US worldwide reporting obligations intersect with the new UK rules.

What Was the Non-Dom Remittance Basis?

Under the old regime, a UK resident who was not domiciled in the UK could elect to be taxed on the remittance basis — paying UK tax only on UK-source income and foreign income remitted (brought) to the UK. Foreign income and gains left overseas were not subject to UK tax. This was extremely attractive for wealthy international individuals.

Domicile is a complex concept under English law — broadly, it is the country you consider your permanent home or intend to return to. For US-UK dual nationals, domicile analysis could be complicated and was often contested by HMRC.

The New Foreign Income and Gains (FIG) Regime from April 2025

From 6 April 2025, the remittance basis is abolished. In its place, the FIG regime provides a four-year exemption for new arrivals to the UK:

• Individuals who have not been UK tax resident in any of the 10 consecutive tax years before their arrival are eligible
• For the first four years of UK tax residency, foreign income and gains (FIG) can be brought to the UK free of UK tax
• After four years, all worldwide income is subject to UK tax on the arising basis — regardless of domicile

Transitional Arrangements

For individuals who were using the remittance basis before April 2025, HMRC has provided several transitional reliefs:

• Temporary Repatriation Facility (TRF): For 2025-26 and 2026-27, foreign income and gains accumulated under the remittance basis can be remitted to the UK at a reduced UK tax rate of 12%
• Overseas Workday Relief (OWR): Reformed version available for the first four years of UK residency for employment income relating to overseas duties
• Rebasing of offshore assets: Capital gains on qualifying assets can be rebased to their value on 5 April 2017

What This Means for US Expats in the UK

For US citizens who also have UK non-dom status, the interaction between the US worldwide reporting regime and the new UK FIG rules creates significant planning opportunities and risks:

• US citizens must report all worldwide income to the IRS regardless of the UK FIG regime — the FIG exemption does not reduce US filing obligations
• During the FIG four-year window, foreign income may be exempt from UK tax but still taxable in the US — creating a potential one-sided tax burden
• The Foreign Tax Credit planning becomes more complex: if UK tax is not paid on certain income, the FTC cannot be used to offset US tax on the same income
• The Temporary Repatriation Facility may provide opportunities to clean up historical offshore income structures before the window closes

Planning Checklist for Affected Individuals

1. Review your domicile position and assess whether you were using the remittance basis
2. Model the impact of losing the remittance basis on your worldwide income and gains
3. Consider whether the Temporary Repatriation Facility is beneficial for historical unremitted income
4. Review offshore structures (trusts, companies, investment portfolios) in light of the new rules
5. Coordinate UK planning with US obligations — any UK restructuring must consider US tax consequences simultaneously
6. If you are a new arrival, confirm FIG eligibility and plan remittances strategically

Related: UK Self Assessment Services | Cross-Border Tax Planning | US-UK Tax Treaty Guide