Non Dom Tax Planning 2025: The Gap Generation Survival Guide

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The non-dom FIG regime replaced the remittance basis on 6 April 2025. Domicile is no longer the test for income tax, capital gains tax or inheritance tax. Residence is. If you were a non-dom on 5 April 2025, the regime you planned around no longer exists.

In its place is the Foreign Income and Gains regime, known as FIG. It gives some new arrivals a four-year exemption from UK tax on overseas income and gains. For most people who used to claim the remittance basis, FIG is not available, and the default is now full UK tax on worldwide income and gains as they arise.

What you should do about this depends almost entirely on how long you have been UK resident. The right move for someone in year two is the opposite of the right move for someone in year nine. The rest of this guide is organised that way.

non-dom FIG regime

Find your cohort first

Count your UK tax years using the Statutory Residence Test, not your sense of where home is. Then pick the line that fits.

  1. Arrived in 2022/23 or later, with at least 10 tax years of non-UK residence before that you are a New Arrival.
  2. Resident for 5 to 9 tax years you are the Gap Generation.
  3. Resident for at least 10 of the last 20 tax years you are a Long Term Resident.
  4. Leaving the UK, or returning after a long absence see the Leaver and Returner section.

The old vocabulary (domicile of origin, domicile of choice, deemed domicile) still matters for a few transitional questions, but it no longer drives the headline answer.

New arrivals: under 4 years in the UK

If you became UK resident in 2022/23, 2023/24, 2024/25 or 2025/26 after 10 or more consecutive tax years of non-residence, you can claim the FIG regime for any of your first four UK tax years.

Claim it and most foreign income and most foreign gains drop out of UK tax for the year, even if you bring the money into the UK. That includes buying a UK home with overseas savings, or living off offshore investment income. There is no segregated-account discipline, no remittance tracing.

Two things bite. First, your four-year window starts when your residence started, not on 6 April 2025. Someone who arrived in 2022/23 has already burned three of the four years and can only claim FIG for 2025/26. Second, claiming FIG in a tax year costs you your income tax personal allowance and your CGT annual exempt amount for that year. For someone earning well into six figures, that is noise. For someone with a single arrival-year gain and otherwise modest UK income, it can swallow most of the benefit. Run the numbers before claiming.

Deadline: the FIG claim goes on your self-assessment return, due by 31 January in the second tax year after the one you are claiming for. For the eligibility rules, the source-by-source claim mechanic and how the regime interacts with Overseas Workday Relief, see our deep-dive on the UK FIG regime.

The Gap Generation: 5 to 9 years in the UK

This is the cohort most badly served by the Big 4 explainers, because it falls between the two clean stories. You are too far in for FIG. You are not yet a Long-Term Resident, so worldwide IHT has not switched on. From this tax year, your overseas income and gains are taxed on the arising basis like anyone else’s.

Three things to think about, ranked roughly by deadline pressure.

Foreign loss election

Now that your overseas gains arise in the UK, your overseas losses can too. But only if you elect for them. The election window is short and unforgiving: broadly, the first tax year you are taxed on the arising basis on foreign gains. Miss it and the door closes.

If you hold foreign assets sitting on real unrealised losses (the 2021 tech book is the classic example), the election turns those losses into useful UK shelter against future gains. Skip it and the losses are stranded.

The TRF for unremitted pre-2025 wealth

If you ever claimed the remittance basis, you almost certainly have offshore funds that contain pre-6 April 2025 foreign income or gains. Those funds are still caught by the old remittance rules. Bring them into the UK now without doing anything, and they are taxed at full UK rates as a remittance up to 45% on income.

The Temporary Repatriation Facility is the transitional concession. Designate the amount on your return and pay a flat 12% for 2025/26 or 2026/27, or 15% for 2027/28. After 5 April 2028 the TRF closes for good. You do not need to physically move the money during the window. Designation alone fixes the rate, and the funds can be remitted later without any further charge.

The arithmetic on meaningful sums is not subtle. 12% versus 45% on a six-figure pot pays for the planning work several times over. The question is which pots, in what order, and whether your mixed-fund position needs cleaning up first.

The 10-year IHT firebreak

Worldwide IHT switches on once you have been UK resident for 10 of the last 20 tax years. At 40% on the worldwide estate, with a tail that runs for up to a decade after you leave, this is the most expensive threshold in the new system.

If you are in year 8 or year 9 and your long-term plans are flexible, leaving before the 10-year mark is a one-time option. Ten consecutive non-resident years after departure resets the test. If you eventually return, you come back as a New Arrival, with the FIG window open again and the 10-of-20 IHT clock restarting. The old rules did not offer this kind of clean reset.

Whether to take it is a life decision, not a tax one. But the tax cost of not taking it should be on the table when you are deciding.

Long-Term Residents: 10+ years in the UK

From 6 April 2025, anyone resident for at least 10 of the previous 20 tax years is a Long-Term Resident for IHT. The label replaces deemed domicile. The headline consequence is that your worldwide estate is exposed to UK IHT at 40%.

Leaving stops being an instant fix. A tail period applies. Three years if you were resident for 10 to 13 of the previous 20, then one extra year for every additional resident year, up to a maximum of 10. Twenty years in the UK means a ten-year tail. After 10 consecutive non-resident years, the LTR status falls away and the clock resets. Our walkthrough of the new residence-based IHT rules and the IHT tail covers the tail calculation in detail.

Several planning routes still work; the menu has just got shorter.

Lifetime gifting still works

Potentially exempt transfers taper after three years and fall outside the estate at seven, regardless of LTR status. For larger estates this is the workhorse.

BPR and APR are tightening

From April 2026 the unlimited 100% relief on business and agricultural property is capped at £1m per person on death, with the value above that getting reduced relief. If qualifying business assets sit in your estate, the structure and timing of succession need revisiting.

Spousal IHT election now exists for non-LTR partners

A non-LTR spouse can elect to be treated as LTR, restoring the unlimited spouse exemption. The election lasts until 10 consecutive non-UK resident tax years have passed. For international couples planning to leave eventually, that is a long commitment.

Excluded property trusts have lost their main attraction

From 6 April 2025, the IHT treatment of trust assets follows the settlor's current LTR status, not their status when the trust was settled. A trust that looked permanently outside the UK net under the old rules pulls back into scope the moment the settlor becomes LTR. Ten-yearly periodic charges of up to 6% are then a real cost.

If you have a non-UK trust that you settled while non-dom, get the protection position checked. In a fair number of cases the structure no longer earns its keep, and winding it up before the next ten-year anniversary is cheaper than running it on.

Leavers and returners

Both groups care about the same 10-year SRT test, just from opposite directions.

Leavers need to model the IHT tail before fixing a departure date. The tail length is set by your residence history at departure and cannot be shortened later. Practical planning includes accelerating PETs while you are still resident, reviewing any settlor positions in offshore trusts, and being careful with UK days post-departure — a slip back into UK residence in a tail year resets nothing and complicates everything.

Returners are the under-noticed winners of the reform. Domicile no longer matters for FIG eligibility. A UK-born British national who left for Dubai or Singapore in 2014 and comes back in 2025/26 qualifies as a New Arrival on exactly the same terms as a Brazilian or Indian first-time arrival. Ten consecutive tax years of non-UK residence is the only condition. Under the old rules, returning Brits got nothing — the non-dom regime was structurally closed to them. That has changed. If you are planning a return and want a residence position checked under the Statutory Residence Test, our expatriates tax team handles these reviews regularly.

For globally mobile British professionals in their thirties or forties, this is the conversation worth having. The maths for a return now looks very different from the maths under the pre-2025 regime.

Five things people get wrong

These cut across cohorts. They are also the issues that tend to surface after a deadline has passed.

Treating the foreign loss election as optional

It is not optional in the sense of being safe to skip. The election has to be made in the first year the arising basis applies to your foreign gains. Once that window closes, accumulated foreign losses cannot be used in the UK at all.

Assuming protected trust status survived

It did not, for most. Unless the settlor is currently a Qualifying New Resident claiming FIG, protected trust status fell away on 6 April 2025. UK resident settlors of non-resident trusts are now taxed on the trust’s income and gains on the arising basis as if they were their own. Settlements that worked beautifully under the old non-dom rules are now leaking tax.

The spousal IHT election is now a real commitment

Under the old rules, the spouse election to be treated as deemed domiciled was relatively easy to reverse. The new version lasts until 10 consecutive non-UK resident tax years have passed. For couples planning a return abroad in the next five years, that needs thinking about before electing.

OWR cap interaction with FIG

Overseas Workday Relief is now available for up to four UK tax years (extended from three) where you qualify for the non-dom FIG regime. The relief is also capped at the lower of £300,000 and 30% of qualifying employment income per year. For senior executives whose overseas workday earnings used to fully escape UK tax, this cap is the real change. Employees who were claiming OWR before 6 April 2025 under the old rules may be able to continue without the cap under the transitional position, but it depends on the facts.

Personal allowance loss when claiming FIG

Claiming FIG in any tax year, even on a single source, forfeits your income tax personal allowance and your CGT annual exempt amount for that year. The forfeit applies whether the claim covers income, gains, or only employment income under OWR. Model the claim properly. Do not assume.

What to do before 31 January

  1. Confirm your UK tax year count using the SRT. Anecdote is not good enough.
  2. If you arrived in 2022/23 or later, work out which FIG years remain and whether each one is net beneficial after losing your allowances.
  3. Quantify your pre-2025 unremitted offshore wealth and decide what to designate under the TRF before the 12% rate runs out on 5 April 2027.
  4. File the foreign loss election if you have foreign losses and the arising basis now applies to your gains.
  5. Review every non-UK trust you settled, or that you benefit from. Protected status is largely gone.
  6. If you are within 12 months of becoming an LTR and you have flexibility on staying, run the firebreak calculation now, not next year.
  7. If you are an LTR considering departure, get the tail length modelled before you book the flight.

Where to start

The cohort you sit in detede before year 10 whether to stay. Long-Term Residents need to look hard at any historic trust strrmines almost everything. New arrivals and long-absent returners get a four-year window worth claiming. The Gap Generation should price up the TRF, file the foreign loss election, and deciuctures and at the April 2026 BPR and APR changes.

If you want a second view on a TRF designation, a foreign loss election, or whether your trust structure still works under the non-dom FIG regime, IBISS & CO’s non-dom and non-resident tax team handles these reviews regularly.

Book a FIG Readiness Review

Common questions

What replaced the UK non-dom regime?

The Foreign Income and Gains regime, from 6 April 2025. UK residents are now taxed on worldwide income and gains as they arise unless they qualify for the four-year FIG relief or a specific transitional measure.

Anyone who becomes UK tax resident after at least 10 consecutive tax years of non-UK residence. Domicile is irrelevant. UK-born returnees qualify on the same terms as anyone else. The full eligibility test is set out in HMRC’s guidance on the 4-year foreign income and gains regime.

Only if your UK residence began in 2022/23 or later, you had 10 consecutive non-resident tax years before that, and you still have unused years in your four-year window. Resident for five years or more on a continuous basis? FIG is not available.

No. It went with the remittance basis. The FIG regime has no equivalent annual charge.

A three-year window for former remittance basis users to bring pre-6 April 2025 offshore income and gains to the UK at a flat charge: 12% for designations in 2025/26 and 2026/27, 15% in 2027/28. Designations go on the self-assessment return. The facility closes on 5 April 2028. HMRC’s collection on changes to the taxation of non-UK domiciled individuals has the full set of guidance.

From the tax year you have been UK resident for at least 10 of the previous 20 tax years. You stay in scope for a tail of three to ten years after leaving, depending on how long you were resident. Ten consecutive non-resident years resets both.

Yes. A FIG claim forfeits the income tax personal allowance and the CGT annual exempt amount for that year. The forfeit applies even where the claim only covers part of your foreign sources.

Effective non dom tax planning 2025 is now the top priority for international residents in the UK. The 2025 tax reforms have created clear winners and losers. New arrivals 0-4 years benefit from the new FIG Regime, while long-term residents 10+ years face worldwide Inheritance Tax. But there is a third group the Gap Generation who need specific non-dom tax planning 2025 strategies to survive the transition.

If you have been UK resident for between 5 and 9 years, you are in this gap. You have lost the old Remittance Basis (so your worldwide income is now taxable), but you do not yet qualify for the new FIG exemption. However, you are not yet liable for worldwide Inheritance Tax.

This guide outlines the essential non dom tax planning 2025/26 steps you must take to protect your wealth during this unique window.

Are You in the Gap?

You fall into this category if:

  1. If you are a UK resident for the current tax year.
  2. You have been resident for more than 4 years (so you are ineligible for the FIG Regime).
  3. If you have been resident for less than 10 years (so you are not yet a Long-Term Resident for IHT).

The Immediate Hit Worldwide Income Tax

As of 6 April 2025, the old Non-Dom status for income tax is abolished.

Old World

You only paid tax on money you brought to the UK.

New World

You pay UK tax on all your global income and gains as they arise.

For those in the gap, non-dom tax planning 2025 is no longer about avoiding tax completely, but about managing the rate you pay and protecting your capital from Inheritance Tax.

Strategy 1

The Foreign Loss Election

Since you are now being taxed on your worldwide gains, a key part of your non-dom tax planning 2025 should be claiming your worldwide losses. Many Gap Generation clients have underwater foreign assets (e.g., tech stocks bought in 2021 that are currently down).

  • The Move: Make a Foreign Loss Election.
  • The Benefit: If you sell these loss-making assets now, you can utilise the losses to offset your taxable gains from other investments (even UK gains).
  • Deadline Warning: You typically have 4 years from your first year on the Arising Basis to make this election. If you miss this, your losses are wasted.

Strategy 2

Clean Capital Sprint

You likely have historical foreign income that hasn’t been taxed in the UK yet. Smart non-dom tax planning 2025 involves accessing this cash efficiently.

  • Tool: Use the Temporary Repatriation Facility (TRF).
  • Action: Designate your pre-2025 foreign income now and pay the flat 12% tax rate (available until April 2027).
  • Goal: This converts dirty offshore cash into clean capital. You can then use this pot to fund your UK lifestyle tax-free, avoiding the need to remit new (highly taxed) foreign income.

Strategy 3

The IHT Firebreak

This is the most powerful card you hold. Because you have not yet reached 10 years of residence, you are not liable for UK Inheritance Tax on your worldwide assets. However, the clock is ticking. Once you hit Year 10, your global estate faces a 40% IHT risk.

Leave the UK before you hit the 10-year mark.

  • Rule: If you leave and stay non-resident for 10 consecutive years, you reset your clock.
  • Benefit: When you return, you qualify as a New Arrival again, potentially accessing a new 4-year exemption window.

Strategy 4

Excluded Property Trust Trap

Be careful with outdated advice here. Historically, non-dom tax planning relied on Excluded Property Trusts (EPTs). Under the new rules:

  • If you set up a trust NOW: It works temporarily (while you are in the 5-9 year gap).
  • Trap: As soon as you hit Year 10, you become a Long-Term Resident. The trust assets fall into the UK tax net (facing 6% periodic charges), unless you leave the UK before that date.
Read More:

Conclusion

Watch the Clock

The Gap Generation faces the highest complexity. You are dealing with the full weight of Income Tax, while racing against the Inheritance Tax clock. Effective non-dom tax planning 2025 requires a precise timeline.

Your Priority List:

  1. Calculate Run the numbers on the 12% TRF.
  2. Review File your Foreign Loss Election.
  3. Decide Are you staying past Year 10? If yes, you need urgent IHT planning.

Approaching the 10-Year Danger Zone? Contact IBISS & CO to finalise your non-dom tax planning 2025 strategy and ensure you don’t sleepwalk into a 40% tax liability.