UK FIG Regime 2026/27: Non-Dom Tax Changes Explained

The abolition of the UK non-dom remittance basis regime from April 2025 marks the most significant change to the taxation of internationally mobile individuals in decades. In its place, the Foreign Income and Gains (FIG) regime offers a clean 4-year exemption for new arrivals -- no annual charge, no complex remittance tracing, and a transitional Temporary Repatriation Facility for those who built up offshore income and gains under the old rules.

Background: What the Remittance Basis Was

Under the old non-dom system, individuals who were UK resident but not UK domiciled could elect to pay tax on the arising basis (worldwide income and gains) or the remittance basis (only income and gains brought into the UK were taxed). The remittance basis was attractive because offshore income and gains left abroad were not taxed, but it came with significant complications:

• A remittance basis charge of £30,000 per year for non-doms who had been UK resident for 7 of the last 9 years, rising to £60,000 for those resident for 12 of the last 14 years
• Complex tracing rules to identify which funds constituted taxable remittances when money was brought into the UK
• Loss of the personal allowance and CGT annual exempt amount while on the remittance basis
• Extensive planning requirements around mixed funds and cleansing

The FIG regime sweeps most of this complexity away for new arrivals, replacing it with a simpler 4-year exemption structure.

Who Qualifies for the FIG Regime

The key qualifying condition is that you must not have been UK tax resident in any of the 10 tax years immediately before the tax year in which you become UK resident. In practice this means:

• New arrivals to the UK who have spent 10 or more years outside the UK as non-residents
• UK citizens returning from long periods abroad (10 or more consecutive years of non-residence)
• Foreign nationals relocating to the UK for the first time

The 10-year lookback is a bright line. If you were UK resident in any one of the 10 years before your qualifying year, you do not qualify for FIG. UK residence is determined by the Statutory Residence Test.

How the 4-Year FIG Exemption Works

Once you qualify for FIG, your foreign income and gains are exempt from UK tax for the 4 tax years starting from the year of your UK tax residence. You do not need to elect into the regime -- the exemption is automatic. You simply do not include qualifying foreign income and gains in your UK tax return for those 4 years.

Foreign income that qualifies for the exemption includes:

• Employment income attributable to duties performed outside the UK
• Overseas rental income
• Foreign dividends and interest
• Foreign capital gains on assets situated outside the UK

UK-source income and gains are always taxable in the UK from day one of UK residence, even during the FIG 4-year window. Salary from a UK employer for UK duties, UK rental income, and UK bank interest are all taxable on the arising basis regardless of FIG status.

After 4 years, FIG status ends and the individual becomes subject to the worldwide arising basis -- all income and gains wherever arising are taxed in the UK, subject to double tax relief under applicable tax treaties.

The Temporary Repatriation Facility

The Temporary Repatriation Facility (TRF) is designed for individuals who used the remittance basis under the old non-dom rules and have accumulated foreign income and gains that were never brought into the UK. Under the old remittance basis, these funds were untaxed in the UK; under the new arising basis that now applies, they remain outside the UK tax net as long as they are not remitted -- but planning around them becomes more complex.

The TRF gives former remittance basis users a time-limited opportunity to bring those accumulated funds to the UK at a preferential flat tax rate:

• 12% in 2025/26 (the 2025/26 tax year)
• 12% in 2026/27
• 15% in 2027/28
• The TRF closes after 2027/28

This is a significant opportunity for individuals who hold large offshore balances. If the standard income tax rates on those funds would be 40% or 45% in the UK, paying 12% to clean those funds and bring them onshore is highly efficient.

IHT Changes for Long-Term UK Residents

Parallel to the income and gains changes, the UK has also reformed inheritance tax treatment for non-doms. Previously, IHT applied only to UK-sited assets for non-domiciled individuals. Domicile was a complex common-law concept that often allowed individuals to remain UK resident for many years while arguing they retained a foreign domicile.

From 6 April 2025, IHT exposure is based on a long-term residence (LTR) test rather than domicile. An individual becomes an LTR taxpayer if they have been UK tax resident for 10 or more years in the last 20 years. Once an LTR taxpayer, they are subject to IHT on worldwide assets -- the same as a UK-domiciled individual.

For individuals who have been UK resident for close to 10 years, planning ahead of the 10-year LTR mark becomes important. Removing assets from the worldwide estate before becoming LTR -- through legitimate gifts or offshore trust structures entered into before the LTR trigger -- may be relevant. Conversely, the LTR test has a leaving rule: if you leave the UK, you remain LTR (and subject to worldwide IHT) for 10 years after leaving if you had been resident for 20 or more years.

Transitional Arrangements

For individuals who were already using the remittance basis before April 2025, transitional provisions apply:

Overseas workday relief (OWR) has been reformed. From April 2025, OWR is available for the first 3 years of UK residence for employees with overseas duties, independent of the broader FIG regime. It provides relief on the proportion of employment income attributable to non-UK workdays.

Protected trust status for non-resident offshore trusts has been substantially tightened. Trusts settled before April 2025 by a remittance basis user do not automatically qualify for the same protections going forward. The taxation of trust benefits under FIG versus the old remittance basis regime is a complex area requiring specialist advice.

Prior remittance basis losses. Foreign losses from years when remittance basis applied may have limited use in the post-April 2025 world. How these interact with the new arising basis needs careful review.

Planning Implications for New Arrivals

For new arrivals qualifying for FIG, the 4-year window is an opportunity:

Generate foreign capital gains within the window. Realise appreciating non-UK assets during the FIG years. Gains are exempt. Once you exit FIG and become an arising basis taxpayer, those gains would be taxable.

Structure employment contracts carefully. If you split time between UK and overseas duties, the allocation of salary between UK and foreign workdays matters. Documented employment arrangements support a clean split.

Plan pension contributions. Foreign income that is exempt under FIG does not count as relevant UK earnings for pension purposes. Ensure you have sufficient UK-source earnings to support any pension contributions you want to make during the FIG years.

The FIG regime represents a genuine simplification for new UK arrivals compared with the old remittance basis system. For long-term UK residents and former remittance basis users, the transition requires careful planning around the TRF, IHT exposure, and trust structures. Early advice is essential to make the most of the transitional opportunities before they close at the end of 2027/28.