Non-Dom Rules and Remittance Basis User (RBU)

A non-dom is a UK resident whose permanent home—or domicile—for tax purposes is outside the UK. This is a tax status, separate from nationality, citizenship, or residency, though these factors can play a role. 

The non-dom rules only apply to non-UK income and gains (called FIG – foreign income and gains), and only if they arose after you became a UK (tax) resident. SO, you can ignore any income or gains that you made before you became a UK resident. But remember, it’s not about the moving of funds, it’s about the income or gains that arose, regardless of whether the money was transferred to you – if the income was earned in your name, or if the gain was made in your name, then it would be taxable on you in the tax year that the income was earned or the gain was made. For example, dividends were declared to you in a fund and re-invested – this is dividend income for you on the date it was declared, so relevant for the tax year in which this date falls in; or you sold shares and straight away bought new shares – if you made a gain on the sale of the shares, this will be taxable in the tax year the shares were sold. 

A UK domiciled individual is taxable on their worldwide income when it arises, no exceptions. For UK non-domiciled individuals, there have been, and still are some provisions/exemptions – they are just changing from 6 April 2025. 

We will discuss the three main changes, as we understand it, which kick in 6 April 2025, i.e.: 

1. The option to have FIG’s taxed at lower rates in the three tax years starting 6 April 2025 (called the Temporary Repatriation Facility or TFR); and 
2. A potential 4-year tax-free window for newly arrived non-doms (called the 4-year FIG regime); and 
3. An April 2017 market value option for assets sold after 5 April 2025 (called ‘rebasing’) 

Descriptions 

Arising basis – pay UK tax in the tax year the income was earned abroad 

Remittance basis – pay UK tax in the tax year income was brought into the UK (only income/gains earned in tax years since becoming a UK tax resident) 

FIG – foreign income and gains 

RBU – Remittance Basis User 

Temporary Repatriation Facility (TFR) 

The remittance basis does not apply after 5Apr’25, but transitional relief will be available for three tax years – in the 2025/26 and 2026/27 tax years the rate will be 12% and in the 2027/28 tax year the rate will increase to 15%. This is an opportunity to ‘catch up’ and bring foreign income into the UK at a lower rate of tax. 

The lower rates apply to FIG that arose since becoming a UK tax resident, and on which remittance basis was claimed in your UK tax return; 

• It does not apply to FIG that arose prior to becoming a UK resident – that is not taxable in the UK. 
• It does not apply to FIG that arose while being a UK tax resident and on which remittance basis was not claimed – if remittance basis was not claimed, then UK tax would have been paid on the income already, so no need to pay tax again on such FIG. 

Important to note that income that arose before you became a UK resident is not taxable in the UK – you can bring this into the UK and not be taxed on it (you have most likely paid tax on these earnings and gains in the country you came from) – but do keep good quality records, so if HMRC asks you about the funds you’ve transferred to the UK, you are able to prove that they arose before you became a UK tax resident. 

See this link for info on the ‘old’ remittance basis: Deciding whether to opt for the Remittance Basis 

Tax Tip: 

Depending on the numbers, tax rates and whether you qualify, it could be tax efficient for you to choose the remittance basis (for the last time) in your 24/25 tax return, and then remit the FIG in your 25/26 tax return and pay 12% tax – if your 24/25 FIG is taxed in your 24/25 tax return you’ll pay tax at the normal UK income tax rates. 

It is important to keep proper records of foreign income and gains; details of exactly what was remitted to the UK and when, and what wasn’t remitted – one way to do this is use an Excel sheet to summarise everything, and store all relevant supporting documents in the same location, starting the file name with the year the income/gain arose for easy sorting by year. For added convenience, you can upload your information to your TaxDash document section. 

4-Year FIG Regime 

The new 4-year foreign income and gains regime provides full relief on foreign income and gains for individuals newly arriving in the UK, provided they have not been UK tax residents in any of the previous 10 consecutive years – what does this mean? 

• If you have been a UK resident for more than 4 years by the 5th of April 2025 this regime will not apply to you; 
• The 4-year period starts from the date of becoming a UK resident for the first time in 10 years; 
• However, the regime only starts on 6 April 2025; 
• Part of a year = 1 of the 4 years (split year does not apply) 
• Any portion of an individual’s first 4 years being a UK resident that falls after 5 April 2025 will be eligible for complete exemption from UK tax on FIG – but will need to be disclosed in their UK SATR; 
• During the (up to) 4 years, new arrivals to the UK will not be subject to tax on their foreign income and gains – these can be brought into the UK freely without tax – but will need to be disclosed in their UK SATR;
• The 4 years are exempt from tax – anything you accrue in or bring in those (up to) 4 years, you’re not going to pay any UK tax on – but will need to be disclosed in your UK SATR;
• Once a 4-year period is over, individuals will be taxed on their worldwide income and gains, in the same way as UK-domiciled individuals do;
• In year five you are going to pay tax on whatever FIG you accrue in that year, whether you bring it in or not, just normal tax – it’s treated the same as UK income and gains;
• You don’t have to transfer the money to the UK to make a claim under the 4-year FIG regime – you can transfer the funds in a future year without paying any additional UK tax in that future year;
• If you leave the UK temporarily during the 4-year period, you can claim the 4- year FIG regime for any of the qualifying tax years remaining on your return to the UK. For example, suppose you are not UK tax resident in years 2 and 3 but become UK tax resident again for year 4. In that case, you can claim the 4-year FIG regime for year 4 – you would not be able to claim the 4-year FIG in year 5 as it would not be with a period of 4 years following a period of 10 years non-resident. 

Rebasing 

When you dispose of a non-UK asset after 5 April 2025, you can choose to use the asset’s market value at 5 April 2017, instead of the acquisition value, to calculate the capital gain. 

This would only make sense to do if assets have increased in value and the 2017 value is more than the acquisition base cost. 

More Info 

Reforming_the_taxation_of_non-UK_individuals.pdf 

“This tax tip remains relevant only until the end of this tax year.”