The end of the UK non-dom regime: what replaced it and what it means for Americans

For decades a UK resident who was not domiciled in the UK could choose the remittance basis and pay UK tax on foreign income and gains only if they brought the money into the UK. That ended on 6 April 2025.

What the remittance basis was

Domicile, broadly the country of your permanent home, decided whether the remittance basis was available. Foreign income left offshore escaped UK tax; a charge applied for long-term users. The concept was contested and the regime was criticised for favouring wealthy arrivals.

What replaced it

The foreign income and gains (FIG) regime. If you were not UK resident in any of the ten tax years before you arrive, you can claim relief from UK tax on foreign income and gains for your first four years of UK residence, and bring that money to the UK free of UK tax. After four years you are taxed on worldwide income on the arising basis, whatever your domicile. The claim is made on the Self Assessment return each year, and claiming it forfeits the personal allowance and the capital gains annual exempt amount for that year.

Transitional measures for former remittance-basis users. The Temporary Repatriation Facility lets pre-April 2025 foreign income and gains be designated and taxed at 12% in 2025/26 and 2026/27 and 15% in 2027/28, after which remittances are taxed at full rates. Qualifying assets held personally can be rebased to their 5 April 2017 value for capital gains purposes, subject to conditions. Overseas Workday Relief was reformed and extended to four years with an annual cap.

Inheritance tax also moved to a residence basis: long-term UK residents (ten of the previous twenty years) are within UK inheritance tax on worldwide assets, with a tail after leaving.

What it means for US citizens

Nothing in the UK changes reduces what you report to the IRS. During a FIG year, foreign income that escapes UK tax is still fully taxable in the US, with no UK tax to credit. So the FIG claim often moves tax from HMRC to the IRS rather than saving it, and in some cases costs more because the personal allowance and CGT exemption are given up. The decision needs both returns modelled together.

The Temporary Repatriation Facility can be useful for US persons with historic unremitted income, but designated amounts should be reconciled to what was already reported on US returns in the years the income arose.

Checklist

1. Establish whether you were a remittance-basis user and what unremitted income and gains exist.
2. If newly arrived, confirm ten years of prior non-residence and model the FIG claim against the US return.
3. Decide on TRF designations before the windows close.
4. Review any offshore trusts or companies: the protections for settlors changed from April 2025.
5. Keep every UK decision consistent with the US treatment of the same income.