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It is officially the end of an era. For over two centuries, the non-dom status has been a cornerstone of the UK tax system, allowing eligible residents to shield foreign wealth from the Treasury. But as of 6 April 2025, that regime has been abolished. In its place stands a modern, residence-based system: the (Foreign Income and Gains) FIG Regime.
For many of our clients whether you are an expat in London, a business owner with offshore interests, or an individual planning a move to the UK this is a seismic shift. The new rules are simpler in some ways but arguably more ruthless in others.
This guide is your master resource. We will cut through the technical noise and explain exactly how the FIG regime works, who qualifies for the 4-year exemption, and how to protect your wealth during this transition.
What is the FIG Regime?
The non-dom concept relied on where your father was born or where you considered your permanent home. That complexity is gone. The new system is purely residence based. Under the FIG Regime, your tax liability is determined strictly by how long you have lived in the UK.
Old System
(Remittance Basis)
You could keep foreign income tax-free only if you kept it offshore. Bringing it to the UK triggered a tax charge.
New System
(FIG Regime)
If you qualify, you can bring foreign income and gains into the UK tax-free for a limited time. After that window closes, you pay UK tax on worldwide income as it arises.
The Arising Basis
Once your eligibility for the FIG regime ends, you move to the Arising Basis. This means you pay UK tax on your worldwide income and gains in the year they arise, regardless of whether you bring the money to the UK or leave it in a Swiss bank account.
Do You Qualify for the 4-Year Exemption?
Access to the FIG regime is determined by a single Golden Rule. The 10-Year Non-Residence Test. You are eligible for the 4-year exemption. If You have been non-UK tax resident for at least 10 consecutive tax years immediately prior to the tax year of your arrival.
- New Arrivals: Anyone moving to the UK for the first time (or after a long absence) from 6 April 2025.
- Returning Expats: Even if you were born in the UK (formerly UK domiciled). You can qualify for the FIG regime if you have been away for 10+ tax years. This is a massive win for returning Brits who were previously excluded from non dom benefits.
- Recent Arrivals (Transitional): If you arrived in the UK between 2022/23 and 2024/25. You are already partway through your 4 year window. You can claim the FIG regime for whatever time remains.
Example: If you arrived in 2023/24, you have used 2 years. You can claim FIG relief for 2025/26 and 2026/27 before the window closes.
How the 4 Year FIG Exemption Works
If you opt into the regime, the benefits are significant:
- 100% Tax Relief: You pay 0% UK tax on Foreign Income and Gains (FIG) arising during the 4 year period.
- No Remittance Cap: Unlike the old rules, you can bring this money into the UK to buy a house, invest in a business or spend on lifestyle completely tax-free.
- Simplicity: You do not need to segregate funds in complex offshore accounts to prove they are clean capital. significant:
The Trade off:
By claiming the FIG regime, you will lose your Personal Allowance (currently £12,570) and your Capital Gains Tax Annual Exemption. For most High Net Worth Individuals (HNWIs), this mathematical trade-off is overwhelmingly in favour of the FIG regime.
Transitional Rules: A Soft Landing for Existing Non-Doms
If you have been living in the UK for more than 4 years, you will not qualify for the FIG regime. You are likely moving to the worldwide tax net. However, the government has introduced two critical transitional facilities to soften the blow.
1. The Temporary Repatriation Facility (TRF)
This is a limited-time opportunity to clean up historic offshore wealth. For tax years 2025/26 and 2026/27, you can bring pre-2025 foreign income and gains into the UK at a flat tax rate of just 12%. The standard rate would be up to 45%.
Strategy: If you have mixed funds offshore that were previously trapped because bringing them in would trigger a high tax charge, this is your 2-year window to repatriate them cheaply. (Note: The rate rises to 15% in 2027/28).
For Details Read: Temporary Repatriation Facility
2. Capital Gains Rebasing
If you hold foreign assets like overseas property or shares that you plan to sell after 6 April 2025, you may be eligible to rebase their value to 5 April 2017.
Under the FIG regime transition, you only pay Capital Gains Tax on the growth in value after April 2017, rather than the historic gain. To qualify, you must have claimed the remittance basis in at least one year between 2017 and 2025 and must not have been deemed domiciled before the new regime began. This is a vital tool for wiping out years of accrued gains on personally held offshore assets.
Learn more About CGT Rebasing
The Inheritance Tax (IHT) Earthquake
While income tax changes are significant, the Inheritance Tax changes are arguably more critical for long-term wealth preservation. The shift is, again, from Domicile to Residence.
The 10-Year Residence Rule
From 6 April 2025, your worldwide estate becomes subject to UK Inheritance Tax (at 40%) once you have been a UK resident for 10 years out of the previous 20.
The Tail Provision: If you leave the UK after becoming a Long-Term Resident (10+ years), you remain on the hook for UK IHT for a period of time known as the tail.
- Resident for 10-13 years: The tail is 3 years.
- Resident for 20+ years: The tail is 10 years.
Warning for Trusts: Excluded Property Trusts (EPTs) settled by non-doms before 2025 formerly offered permanent IHT protection. Under the new rules, this protection falls away if the settlor becomes a Long-Term Resident.
Strategic Planning: Winners vs. Losers
Who stands to benefit from the new FIG regime, and who needs to take immediate action?
| Profile | Verdict | Action Plan |
|---|---|---|
| The New Arrival (Nomads, Tech Talent) |
Winner | Enjoy 4 years of tax-free living. Bring funds in freely to buy UK property. |
| The Returning Brit (Away 10+ Years) |
Winner | You now get the same tax breaks as a foreigner. Use the 4 years to resettle tax-efficiently. |
| The Long-Term Resident (>4 Years) |
Loser | You lose the remittance basis. Urgent review of the TRF (12% rate) and rebasing is needed. |
| The Gap Generation | Mixed | If you have been here 4-9 years, you face worldwide income tax but are not yet liable for worldwide IHT. Plan carefully. |
Frequently Asked Questions
The residence-based regime is the new system replacing the old non-dom rules as of April 6, 2025. Instead of your tax status depending on your domicile (where your father was born). It now depends entirely on how long you have lived in the UK.
- Income Tax & CGT: New arrivals can be exempt from tax on foreign income and gains for their first 4 years of residence (the FIG Regime).
- Inheritance Tax: Your worldwide estate becomes liable to UK IHT once you have been resident for 10 years.
The 5 year rule generally refers to the Temporary Non Residence anti avoidance legislation. If you leave the UK to become non-resident but return within 5 years, you may be taxed on certain income and gains you realized while you were away.
Note: Do not confuse this with the new 10-year rule for FIG eligibility. To qualify for the 4-year tax exemption, you must have been non-resident for 10 consecutive years not just 5.
Yes. Unlike the old non-dom rules, citizenship and domicile are irrelevant. If you are a British citizen who has been non-resident for 10 consecutive years, you qualify for the 4-year exemption upon return.
No, not easily. Once your 4-year window starts, it runs continuously. You cannot "pause" it by leaving for a year. To get a new 4-year window, you would need to leave the UK for another full 10 years.
This is complex. Income and gains within the trust may now be attributed to you if you are UK resident (after the 4-year window). Furthermore, the trust assets may fall into the UK IHT net if you meet the 10-year residence rule.
Yes. The annual charges (formerly £30k or £60k) for long-term non-doms are abolished along with the remittance basis itself.
Conclusion
The Rules Have Changed. Have You?
The UK remains an attractive destination for global talent and wealth, but the free ride of indefinite non-dom status is over. The FIG regime offers a generous, simplified welcome mat for 4 years but requires strict planning thereafter.
Whether you need to calculate your exposure under the 12% TRF window, assess your IHT tail risk, or simply file your first return under the new rules, clarity is your most valuable asset.
Unsure if you qualify for the 4-year exemption or worried about the new IHT rules? Don’t guess with your wealth. Book a FIG Readiness Review with the specialist tax team at IBISS & CO today.
