What Is UK Non-Dom Status? The 2025 Abolition & New Rules
- Carlos Rodriguez
The answer to “What is non-dom status in the UK?” has changed forever.
The historic regime, once a cornerstone of UK tax for international clients, is abolished from 6 April 2025.
It is being replaced by a new, stricter, residence-based system.
This article explains what the abolition means, what the new rules are, and the urgent steps you may need to take.
Introduction
“Non-dom status” was a UK tax classification for residents whose permanent home, or ‘domicile’, was considered to be in another country. It allowed eligible individuals to use the “remittance basis,” potentially shielding their foreign income and gains (FIG) from UK tax.
However, this entire regime is being abolished from 6 April 2025.
These are the most significant changes to the UK’s tax rules for international residents in a generation. The old, complex system based on ‘domicile’ is being replaced by a simpler, residence-based system.
As specialist wealth advisers, Private Client Consultancy helps high-net-worth individuals, new arrivals, and existing non-doms navigate this critical transition. This guide explains exactly what is changing, what the new rules are, and what you must do to prepare.
What You Will Learn in This Article
- The 2025 Abolition: What is changing and why.
- The New 4-Year ‘FIG’ Regime: The new system for UK arrivals.
- The Old Non-Dom Regime: What “non-dom” and “remittance basis” meant.
- Global Comparison: How the UK’s new rules compare to Spain and the USA.
- Actionable Steps: Practical guidance for individuals affected by the changes.
- Answers to the most common questions we get
The 2025 Abolition: What Is Changing for Non-Doms?
The UK government has confirmed that the historic, domicile-based non-dom regime will be abolished from 6 April 2025.
The concept of “domicile” will no longer be the relevant factor for determining tax liability on foreign income. Instead, the rules will be based on tax residency. This is a fundamental shift in UK tax policy.
The New 4-Year 'FIG' Regime for New UK Arrivals
Replacing the old system is a new, temporary regime for new arrivals, known as the Foreign Income & Gains (FIG) regime.
- Who Qualifies? Individuals who arrive in the UK after 6 April 2025 and have not been a UK tax resident for the previous 10 consecutive years.
- What Are the Benefits? Qualifying individuals will get 100% tax relief on foreign income and gains for their first four tax years of UK residency. They can bring this money to the UK without incurring a tax charge.
- What Are the Trade-offs? Claiming the four-year FIG relief means you may lose your UK personal tax allowances (like the income tax personal allowance and the capital gains tax annual exempt amount).
After these four years, you will be taxed on your worldwide income and gains, just like any other UK resident.
What Happens to Existing Non-Doms?
For individuals already in the UK and using the non-dom regime, the situation is complex. The remittance basis of taxation will no longer be available for foreign income and gains arising after 5 April 2025.
The government has proposed several transitional rules for this group, including:
- Rebasing Assets: Opportunities to “rebase” the value of capital assets to their 5 April 2019 value for capital gains tax purposes.
- Trust Protections: Changes to the tax treatment of offshore trusts.
- Inheritance Tax: A move away from a domicile-based IHT regime to a new residence-based model.
The transitional rules are complex and time-sensitive. Your existing structures may no longer be tax-efficient. Contact Private Client Consultancy today for a clear assessment of your position.
What Was the Old Non-Dom Regime?
To understand the scale of the change, it’s important to understand the old system.
In UK tax law, “non-dom” referred to individuals who were resident in the UK for tax purposes but claimed their ‘domicile’—their long-term, permanent home—was outside the UK. This concept of domicile is a broader, more permanent link than mere residence.
The Remittance Basis of Taxation Explained
Under the historic non-dom rules, individuals could elect to use the remittance basis of taxation.
This meant they were taxed in the UK on:
- All their UK-source income and gains.
- Only the foreign income and gains that they remitted (i.e., brought into) the UK.
Foreign income and gains that remained offshore and unremitted could escape UK tax. This regime made the UK highly attractive to wealthy, internationally mobile individuals.
Why Was the Non-Dom Regime Abolished?
The move to abolish the non-dom regime was driven by several motives:
- Political Criticism: The status was increasingly seen as a tax privilege for the wealthy, creating perceptions of unfairness.
- Simplicity: Shifting from complex, hard-to-prove ‘domicile’ tests to a simpler ‘residence’ test is argued to modernise the system.
- Tax Revenue: The government aims to capture more tax from globally mobile individuals who are long-term UK residents.
Unlcear About Your UK Non-Dom Status?
Global Comparison: UK's New Rules vs. Spain & USA
The abolition of the non-dom regime changes the UK’s competitive standing.
For high-net-worth individuals, choosing a jurisdiction is a key strategic decision. Here is how the UK’s new system compares to Spain and the USA.
Spain: The 'Beckham Law' (Inbound Expat Regime)
Spain is a popular destination for international clients. Its tax system is based on residency: you are considered a tax resident if you spend more than 183 days in the country or if your “centre of economic interests” is in Spain.
Spain’s key competitor to the UK regime is the “Beckham Law” (formally, the Régimen Especial para Trabajadores Desplazados).
- What is it? It is a special regime that allows eligible inbound workers to be taxed as non-residents for their first six years
- How it works: Instead of paying progressive income tax rates on worldwide income, you pay a flat rate (currently 24%) on your Spanish-source income only. Foreign income (except for employment income) is generally not taxed in Spain.
- UK vs. Spain: The new UK FIG regime offers a total tax exemption on FIG for four years, while Spain’s Beckham Law offers a lower flat rate for six years. The best choice depends on an individual’s specific income profile.
USA: A Worldwide Citizenship-Based System
The US system is fundamentally different and comparatively strict. The IRS taxes individuals based on citizenship and tax residency (via the Green Card test or Substantial Presence test).
- Worldwide Taxation: US citizens and resident aliens are taxed on their worldwide income, regardless of where they live.
- No “Non-Dom” Equivalent: There is no concept equivalent to the UK’s non-dom regime. You cannot avoid US tax on foreign income simply by claiming a “foreign domicile.”
- Compliance: The US also has a heavy compliance burden, with reporting requirements like FBAR and FATCA.
At-a-Glance: UK vs. Spain vs. USA for New Arrivals
| Feature | UK (New 4-Year FIG Regime) | Spain (Beckham Law) | USA |
| Basis of Tax | Residence | Residence | Citizenship & Residence |
| Main “Inbound” Regime | 4-Year FIG Regime | “Beckham Law” (6 years) | N/A |
| Tax on Foreign Income? | No (for 4 years) | No (except employment) | Yes, always. |
| Tax on Foreign Gains? | No (for 4 years) | Yes (generally) | Yes, always. |
| Inheritance Tax | Moving to 10-year residence model. | Varies by region. | Global estate is liable. |
What This Means for You: Practical Steps
These reforms require all international individuals connected to the UK to review their affairs.
If You Plan to Move to the UK (Post-April 2025)
You must assess if you qualify for the new 4-year FIG regime.
This provides a valuable, but temporary, window of opportunity. Crucially, you must also plan for the “tax cliff” after year four, when you will be taxed on your worldwide income.
If You Are an Existing UK Non-Dom
You must seek urgent advice.
Your existing structures and plans, particularly those involving offshore trusts, may become highly tax-inefficient.
You need a clear strategy to navigate the transitional rules, IHT exposure, and potential asset rebasing before the changes take effect.
If You Are Considering Leaving the UK for Spain
The “push” factor of the UK’s abolition, combined with the “pull” factor of Spain’s Beckham Law, makes this a common consideration.
We specialise in cross-border UK-Spain tax planning and can model the financial implications of such a move for you.
Frequently Asked Questions About Non-Dom Status
Is non-dom status completely scrapped in the UK?
Yes.
The historic domicile-based “non-dom status” for income and capital gains tax is abolished from 6 April 2025.
It is being replaced by a new 4-year temporary regime (FIG) for new arrivals.
How long could a non-dom stay in the UK?
Under the old rules, a person could claim non-dom status indefinitely, but they were “deemed-domiciled” for tax purposes after 15 years of residency.
At that point, they lost the tax benefits and were taxed on their worldwide income.
What is the impact on UK Inheritance Tax (IHT)?
This is a critical change. The government is moving IHT from a ‘domicile-based’ system to a ‘residence-based’ one.
The proposal is that individuals will be in scope for UK IHT on their worldwide assets once they have been resident in the UK for 10 years.
Individuals with offshore assets must review their estate planning immediately.
Can a UK citizen be non-domiciled?
Yes, but it was rare.
A UK citizen born in the UK but to a non-UK-domiciled father could, in some cases, claim their father’s domicile.
However, under the new 2025 rules, this distinction is no longer relevant for income or capital gains tax.
Conclusion: Your Next Steps with Private Client Consultancy
The 2025 abolition of the non-dom regime is the biggest change to UK tax for international clients in a generation. The landscape has shifted from a complex “domicile” system to a simpler, but stricter, “residence-based” one.
While the new 4-year FIG regime offers a valuable window for new arrivals, the planning horizon has been shortened. For existing non-doms, the need for immediate, expert review is paramount.
Navigating these changes requires specialist, forward-looking advice. Whether you are moving to the UK, are an existing non-dom, or are considering a move to Spain, our expert team can provide clarity.
Contact Private Client Consultancy today for a confidential consultation on how these rules will affect you.
