Remittance Basis Charge 2026: What Non-Doms Pay After 15 Years

What Is the Remittance Basis and Who Can Claim It?

UK tax law distinguishes between residence and domicile. Your domicile is broadly the country you consider your permanent home — the place you intend to return to indefinitely. Most people acquire their domicile of origin at birth (usually following their father's domicile) and retain it unless they actively acquire a domicile of choice elsewhere.

If you are resident in the UK but not domiciled here — commonly called a non-dom — you may be able to claim the remittance basis of taxation. Under this regime, your UK-source income and gains are taxed in full each year, but your foreign income and gains are only taxed if you bring (remit) them into the UK.

This can be extremely valuable for internationally mobile individuals with significant offshore investments, foreign business income, or overseas property. It effectively lets you keep foreign earnings in offshore accounts without triggering a UK tax charge, provided you never bring those funds onshore.

However, the remittance basis is not free. The longer you remain in the UK, the more it costs — and eventually, it stops being available altogether.

The Annual Remittance Basis Charge: £30,000 and £60,000

For the first few years of UK residence, you can claim the remittance basis without any additional charge, though you lose your UK personal allowance (£12,570 in 2026/27) and your capital gains tax annual exempt amount (£3,000 in 2026/27) for the year you claim.

Once you have been UK resident for a certain number of years, HMRC requires you to pay the Remittance Basis Charge (RBC) if you wish to continue using the remittance basis:

• £30,000 per year: applies if you have been UK resident in at least 7 of the previous 9 tax years
• £60,000 per year: applies if you have been UK resident in at least 12 of the previous 14 tax years

These charges are payable in addition to any UK tax you owe on income and gains you do remit. You also continue to lose your personal allowance and CGT annual exempt amount.

Whether paying the RBC makes financial sense depends entirely on how much foreign income and gains you have sitting offshore. If your unremitted foreign income exceeds several hundred thousand pounds each year, paying £60,000 to shelter it from a 45% additional-rate charge can still represent a significant saving. For smaller amounts, the arithmetic may tip the other way.

The 15-Year Rule: Becoming Deemed Domiciled

The most consequential milestone for a long-term non-dom is the 15-year deemed domicile rule. Once you have been tax resident in the UK for 15 or more of the previous 20 tax years, HMRC deems you to be UK domiciled for the purposes of:

1. Income Tax — your worldwide income is taxed on the arising basis each year
2. Capital Gains Tax — your worldwide gains are taxed as they arise, at 24% (or 18% within the basic-rate band) for most assets in 2026/27
3. Inheritance Tax — your worldwide assets (not just UK situs assets) fall within the scope of IHT at 40% above the nil-rate band (£325,000 plus the £175,000 residence nil-rate band where applicable)

At this point, the remittance basis is simply no longer available. You cannot pay the RBC and continue sheltering offshore income — deemed domicile overrides the election entirely.

Tax Rates That Apply Once You Are Deemed Domiciled

From the year you become deemed domiciled, your foreign income and gains are taxed exactly as a UK-domiciled individual would be taxed. For 2026/27, the key rates are:

Income Tax

• Personal Allowance: £12,570 (tapers above £100,000 and disappears at £125,140)
• Basic rate (20%): £12,571 to £50,270
• Higher rate (40%): £50,271 to £125,140
• Additional rate (45%): above £125,140

Capital Gains Tax

• Annual Exempt Amount: £3,000
• Basic-rate band: 18% on most gains (24% on residential property)
• Higher/additional rate: 24% on most gains and residential property
• Business Asset Disposal Relief (BADR): 18%

Dividend Income

• Dividend Allowance: £500
• Basic rate: 8.75%; Higher rate: 33.75%; Additional rate: 39.35%

Inheritance Tax

• Nil-Rate Band: £325,000
• Residence Nil-Rate Band: £175,000 (for qualifying residential property passed to direct descendants)
• Rate above thresholds: 40%

For a non-dom with, say, £500,000 of foreign investment income per year, becoming deemed domiciled could mean an additional UK tax bill of over £200,000 annually compared to claiming the remittance basis (assuming none of that income was previously remitted).

Planning Strategies Before the 15-Year Threshold

The years immediately before you reach deemed domicile status are often the most critical for tax planning. Common approaches that specialist advisers consider include:

Cleansing mixed funds: Before becoming deemed domiciled, you have an opportunity (known as the "cleansing" window) to separate mixed offshore accounts into distinct pots of capital, income, and gains. This can make future remittances far more tax-efficient if you do return to the UK or remit funds later.

Offshore trusts: Non-doms who establish qualifying offshore trusts before becoming deemed domiciled can, under current rules, continue to benefit from certain protections for trust assets even after the 15-year threshold is crossed. These are complex structures requiring specialist legal advice.

Reviewing UK residence: Some individuals consider whether their level of UK presence truly meets the statutory residence test thresholds, or whether restructuring their time between countries might delay or avoid deemed domicile status. This must be approached with extreme care — inadvertent UK residence can trigger substantial unexpected tax liabilities.

Pension planning: The pension annual allowance remains £60,000 in 2026/27 (tapered for high earners). UK pension contributions may still be worth considering, as pension assets have their own IHT protections pending further legislative changes.

Remitting in low-income years: If you have flexibility over when you remit foreign funds, doing so in a year when your UK income is low — and you remain within the basic-rate band — means gains and income may be taxed at 20% or 18% rather than 45% or 24%.

What Happens If You Leave the UK?

If you leave the UK before reaching 15 years of residence, you will not become deemed domiciled. However, HMRC's statutory residence test means you may still be considered UK resident for part of a tax year in which you depart. Additionally, if you later return to the UK, the years of prior residence count towards the 15-year total (though non-resident years do not).

For inheritance tax specifically, the rules changed significantly in recent years. IHT deemed domicile previously operated on a separate 17-out-of-20-year test, but the two tests are now broadly aligned. Critically, even after you leave the UK, IHT exposure on worldwide assets does not immediately disappear — there is a tail period during which you may remain within the scope of UK IHT.

Practical Steps for Non-Doms Approaching the 15-Year Mark

If you are a non-dom who has been in the UK for 10 or more years, it is time to take stock:

1. Count your years carefully: Work through the statutory residence test year by year with an adviser. The 15-year count is based on tax years (6 April to 5 April), not calendar years.

2. Review your offshore structures: Understand what income and gains have accumulated offshore and in what form (income, capital, clean capital).

3. Assess the RBC value: Calculate whether paying the £60,000 charge still makes sense given your offshore income level in the years before deemed domicile.

4. Consider pre-deemed-domicile remittances: Bringing certain funds to the UK before the threshold can sometimes be more tax-efficient than remitting them as a deemed domiciliary.

5. Update your estate planning: Once IHT applies to your worldwide estate, your existing will and trust structures may need revisiting.

6. Keep detailed records: HMRC may scrutinise remittances and the source of funds closely. Maintaining clear records of offshore accounts from the outset is essential.

The Broader Context: Non-Dom Reform and Recent Changes

The non-dom regime has been subject to significant legislative attention in recent years. The previous government announced changes in the March 2024 Budget, and the current government has broadly continued with the direction of reform, replacing the remittance basis with a new four-year foreign income and gains (FIG) exemption for individuals who become UK resident after a period of non-residence.

Under the new FIG regime (applying from April 2025 for new arrivals), individuals who have not been UK resident in any of the 10 preceding tax years can elect to exempt their foreign income and gains from UK tax for the first four years of UK residence — without a charge and without losing their personal allowance. After those four years, the arising basis applies in full.

The existing remittance basis rules continue to apply in transitional form for those who were already using them before the reforms took effect. If you were already a long-standing non-dom, the specific rules that apply to you depend on your years of residence and the precise timing of the legislative changes. This is an area where the interaction of old and new rules is particularly complex.

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This article is for information only and does not constitute financial or tax advice. Tax rules may change. Consult a qualified adviser for your specific situation.