If you are an NRI living in the UK, you’ve likely heard that the Non-Dom Regime of UK changes soon. Well, it has come into effect now. The Non-Dom or the Non-Domicile status has, for almost 200 years, allowed wealthy individuals, including NRIs, to legally avoid UK taxes on foreign income and gains by not “remitting” them to the UK. But now everything is changing—dramatically.
The UK government had announced a complete overhaul of the Non-Dom tax system, replacing it with a residence-based regime from 6 April 2025. If you’re an NRI or plan to move to the UK, this blog will break down the upcoming changes, how they impact you, and what actions you should take.
What Was the UK Non-Dom Regime?
Under the old regime:
- If you are a UK resident but have your permanent home (domicile) outside the UK, you can claim Non-Dom status.
- You pay UK tax only on UK income and gains, and only on foreign income and gains if you bring (remit) them into the UK.
- High-net-worth NRIs benefited by keeping investments and earnings offshore.
- After 15 years of UK residence, you become “deemed domiciled” and lose these tax benefits.
What’s Changing from April 2025?
From 6 April 2025, the domicile-based system has been replaced by a residence-based taxation system.
Key Changes in the Non Dom Regime of UK:
- End of Remittance Basis: Foreign income and gains will be taxed based on residence, not domicile.
- 4-Year Relief for New Arrivals: New UK residents (not tax resident in the UK for 10 prior years) get 100% tax relief on foreign income and gains (FIGs) for 4 years.
- No Trust Protections: The previous sheltering of foreign income inside offshore trusts will no longer be allowed unless the individual qualifies under the 4-year relief.
- Capital Gains Rebase: For those who previously used the remittance basis, foreign assets held as of 5 April 2017 can be rebased for Capital Gains Tax (CGT) purposes.
- Temporary Repatriation Facility (TRF): For 3 years (from April 2025), you can bring foreign income and gains earned pre-April 2025 into the UK at a reduced 12% tax rate.
- Inheritance Tax (IHT): IHT will move from a domicile-based to a residence-based system. After 10 out of 20 years of residence, worldwide assets become taxable.
- Overseas Workday Relief (OWR): Extended to 4 years and simplified—no prior HMRC approval needed for partial UK salary exemptions. From 6 April 2025, OWR will be subject to a financial limit on the amount of relief that can be claimed. This limit will be the lower of £300,000 or 30% of an individual’s total employment income
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Why Is the UK Government Doing This?
The changes aim to address what the government sees as unfair advantages enjoyed by long-term UK residents who pay little or no tax on substantial foreign wealth. The reform is also expected to:
- Increase fairness in the tax system
- Raise significant revenue for the Exchequer
- Attract skilled workers with a simpler short-term tax incentive (4-year relief)
What This Means for NRIs in the UK
As an NRI, the changes in Non-Dom Regime of UK could significantly impact your tax planning and long-term financial decisions.
Scenario 1: You plan to move to the UK after April 2025
- You’re eligible for 4 years of 100% tax relief on foreign income and gains.
- After 4 years, your global income becomes taxable in the UK.
- You must plan your relocation timing and investment remittances carefully.
Scenario 2: You’re already in the UK and have used Non-Dom benefits
- After April 2025, your foreign income and gains will be taxed annually.
- Trust protections disappear, meaning distributions may become taxable.
- You can use the Temporary Repatriation Facility to bring in past foreign income at 12% tax.
Eligibility and Income Rules: What You Must Know
Who qualifies for the new 4-year regime?
To be eligible for the 4-year tax-free period:
- You must not have been a UK tax resident for the previous 10 tax years.
- You must become a UK tax resident on or after 6 April 2025.
- The relief is automatic—no need to apply.
What types of income are covered?
The following foreign income and gains (FIGs) are exempt during the 4-year window:
- Foreign salary or business income
- Dividends from overseas investments
- Interest on foreign bank accounts
- Capital gains on offshore asset sales
After the 4 years?
Once the 4-year window ends:
- All global income and gains become taxable in the UK.
- You’ll need to report these annually in your UK self-assessment tax return.
Asset Holding, Trusts, and Repatriation: What Changes for NRIs
Can I still use offshore trusts?
From April 2025:
- Income and gains from settlor-interested trusts will be taxed annually.
- Trust protections only apply if you qualify under the 4-year regime.
Temporary Repatriation Facility (TRF):
- If you’ve previously claimed remittance basis, you can bring your pre-April 2025 FIGs into the UK at a flat 12% tax rate.
- The window is available for 3 tax years: 2025–26 to 2027–28.
- This is a major opportunity for NRIs to clean up offshore balances efficiently.
Capital Gains and Inheritance Tax (IHT)
Capital Gains:
- If you used the remittance basis before, you may rebase your foreign assets to their value as of 5 April 2019 (not 2017 as previously expected).
- This means only the gains after this date will be taxed if you sell after April 2025.
Inheritance Tax (IHT):
- IHT will apply on worldwide assets once you’ve been UK resident for 10 of the last 20 years.
- Previously, only UK assets were taxable unless you were domiciled.
Overseas Workday Relief (OWR)
For NRIs working abroad but paid through the UK:
- OWR continues to apply for 4 years.
- It now requires no HMRC pre-approval.
- Your non-UK workdays can be paid outside the UK and remain tax-free if kept offshore. From 6 April 2025, OWR will be subject to a financial limit on the amount of relief that can be claimed. This limit will be the lower of £300,000 or 30% of an individual’s total employment income
How Can SBNRI Help You?
Navigating tax reforms is complicated—especially when you have ties in multiple countries.
At SBNRI, we help NRIs like you in navigating the changes in Non-Dom Regime of UK:
- Understand UK tax residency rules and plan transitions
- Structure assets to minimise exposure to UK tax laws
- Remit foreign income using the most tax-efficient routes
- Get expert advice on trusts, IHT, and dual tax treaties
Book a Call Today
Don’t wait until it’s too late. Talk to our tax specialists to stay compliant, efficient, and in control of your wealth.
Final Thoughts
The new 2025 Non-Dom Regime of UK changes the way NRIs are going to plan their lives there! These tax reforms will end the historic benefits of Non-Dom status. If you’re an NRI in the UK or planning to move, it’s essential to plan ahead. Understand the changes, assess your risk, and seek expert help to secure your financial future.
SBNRI is here to guide you—every step of the way. Visit our blog and YouTube channel for more NRI wealth related details.
FAQs
1. What is the new 4-year regime for new arrivals?
If you’re a new UK resident (not tax-resident in the UK in the last 10 years), you won’t pay UK tax on any foreign income or gains for your first 4 years. This is automatic, no claim required.
2. What happens after the 4-year period?
After 4 years, your global income becomes taxable in the UK. You’ll be treated like any other UK resident for tax purposes.
3. Can I still use offshore trusts to protect my foreign assets?
Not really. From April 2025, income and gains from settlor-interested trusts will be taxed unless you’re within the 4-year relief window.
4. How does the Temporary Repatriation Facility work?
If you’ve used the remittance basis before, you can bring foreign income/gains earned before April 2025 into the UK at a flat 12% tax rate. This facility is open for 3 tax years starting 2025–26.
5. What happens to Inheritance Tax?
Inheritance Tax will be based on UK residence:
- If you have lived in the UK for at least 10 out of the last 20 years, your worldwide assets will be subject to IHT.
- Previously, only UK assets were taxable if you were Non-Dom.
6. I moved to the UK before April 2025—can I benefit from the 4-year relief?
No. The 4-year foreign income and gains regime applies only to new arrivals post-April 2025 who haven’t been UK tax residents in the past 10 years.
7. What should NRIs do now?
- Re-evaluate your trust structures.
- Decide if you want to remit past income under the 12% TRF window.
- Plan your return or exit strategy if long-term UK taxation doesn’t align with your goals.
