The UK just killed the Non-Dom status—and with it, a 200-year-old tax break used by the world’s wealthiest. What does it mean for you? In this article, we break down the new tax rules, the FIG regime, and why billionaires are packing their bags for Italy and the UAE.
What does the end of the NON-DOM regime mean for you?
This year, the UK introduced major changes to its tax system—most notably, a significant overhaul of the non-dom regime. And the impact is anything but minor.
By “killing” the NON-DOM status, the UK is taking away all the benefits that residents had on their overseas income and assets until April 2025.
Residing in the UK means now being in a “resident-based” taxation under the UK laws.
The changes are:
- The end of remittance basis
- The Introduction of the Foreign Income and Gains (FIG) Regime
- Transitional Reliefs for Existing Non-Doms
- Shift to Residence-Based Inheritance Tax (IHT)
- Changes to Trust Taxation
In this article, we’ll walk you through the first four key points shortly, setting aside the topic of trusts for now.
But first, a quick look back
Until April 2025, the UK tax system distinguished between “domiciled” and “non-domiciled” residents.
If you were domiciled, you were taxed on your worldwide income and assets.
Non-domiciled individuals, on the other hand, were taxed only on UK-based income and gains—unless they brought foreign income into the UK.
However, after residing in the UK for more than 15 of the past 20 years, a non-dom was treated as domiciled for tax purposes, triggering worldwide taxation.
The UK’s non-dom status has been in place for over two centuries—originally introduced in 1799 during the Napoleonic Wars.
It allowed UK residents with a permanent home abroad to avoid UK taxes on foreign income and capital gains, provided those funds weren’t brought into the UK.
This principle became known as the “remittance basis.” Under this system, only income generated within the UK was subject to tax—foreign earnings remained untouched unless remitted.
Over the past few decades, this regime proved especially attractive to individuals relocating from high-tax countries such as France, Spain, and Belgium, …
The appeal was clear: expats could legally avoid UK tax on their offshore income, as long as they didn’t transfer it into the country.
But, not only expats coming to the UK: even Akshata Murty, wife of former Prime Minister Rishi Sunak, held non-dom status. This fact became, actually, a subject of such public scrutiny that she had to renounce to her tax benefits (principally consequent dividends received from India).
In effect, the non-dom regime offered a hybrid of two major tax philosophies:
– Territorial taxation, like in Panama, Paraguay, or Georgia, where only local income is taxed, and foreign income is ignored;
– And residence-based taxation, where global income is taxed purely based on where you live—often a much heavier burden, unless the local tax rates are low, as in Bulgaria, Poland, or Romania.
Of course, there are exceptions—particularly in cases where double tax treaties apply. However, we won’t delve into that topic today.
The non-dom status was undeniably generous. Not only could foreign income legally escape UK taxation unless remitted, but offshore assets were also excluded from the scope of UK taxes. Inheritance tax, for example, applied only to assets located within the UK.
It’s no surprise, then, that many wealthy individuals choosed the UK as their base. The opportunity to earn and hold wealth abroad—completely tax-free under UK law—was incredibly appealing.
And most importantly, it was entirely legal.
Domiciled residents, in contrast, didn’t benefit from such exemptions. Their worldwide income and assets were fully taxable under the UK’s residence-based system—similar to what you’d find in many other countries.
But now, as mentioned earlier, all of that is changing. The non-dom status has come to an end.
A better understanding of the "old" NON-DOM status
People who were not born in the UK, (and neither their father), are considered having a native home out side the UK. They can apply to HMRC for this status, which is not automatically given.
Non-dom UK residents don’t pay taxes on their overseas income/assets for a normal duration of 6 years.
After living in the UK for a minimum of 7 years out of 9 years, they are no longer entitled to claim free non-dom status; they have to pay an annual levy of £30,000 to the Government for these privilege.
After 12 years out of previous 14 taxable years, they must pay £60,000.
Over 15 years of the previous 20 years taxation is on global earnings (identical to “domiciled”)
So, what’s actually changing this tax year?
1- End of the Remittance Basis
The remittance basis has been abolished as of tax year 2025/26. This marks a fundamental shift: all UK tax residents—regardless of their previous non-dom status—will now be treated as domiciled for tax purposes. That means worldwide income and assets are now subject to UK taxation.
It is therefore crucial to identify the potential double taxations that may arise, if you have other countries involved in your earnings.
BanTheTax can help you in this matter, should you need any advice.
2- Introduction of FIG (Foreign Income & Gains) taxation
Now let’s talk about the remplacement of the non-dom regime that has been abolished.
There are two temporary options
Firstly, there is a new Four Year exemption on foreign income called FIG
This regime is only available for New Arrivals
It gives full exemption on foreign income and gains for up to 4 tax years—provided you have not been UK tax resident in the previous 10 years.
Secondly, a Transitional Relief for Existing Non-Doms (see below)
3- Transitional Relief for Existing Non-Doms
For current UK residents who don’t qualify for the 4-year FIG tax exemption, there is a one-year transitional relief available for this tax year 2025–2026. This relief offers a 50% percent reduction in the tax due on foreign income and gains.
Therefore, these two temporary reductions/exemptions are, on the one hand, for new residents and, on the other hand, for existing non-doms.
These changes are significant—especially for individuals with substantial overseas wealth. Unsurprisingly, some of the UK’s wealthiest residents are already beginning to relocate.
Watch our detailed video on the end of UK NON-DOM status.
4- Shift in Inheritance Tax (IHT): From Domicile to Residency
Another major change concerns the Inheritance Tax.
The system now moves away from the “domicile” concept and adopts a residence-based test:
If you’ve lived in the UK for at least 10 of the past 20 years, you’ll be considered within the scope of UK Inheritance Tax.
There’s also a “tail provision” , meaning that, even after you leave the UK, your estate could remain subject to IHT for a further 3 to 10 years, depending on your past residency history.
Let’s break it down with an example:
Imagine you’ve been a UK resident since 2009—that’s 16 years of residency until 2025.
Now, in 2025, you decide to relocate and become a tax resident in Italy. Why Italy ? In inheritance matters, Italy offers tax exemption on 1,000,000 € for each direct family member (Spouse and Direct Descendants such as Children, Grandchildren, Parents)! Beyond this value, it’s only a 4% tax. This makes Italy one of the best countries for inheritance.
Here’s how UK inheritance tax would apply from now on:
- You’re automatically subject to IHT for 3 years (2025–2028)
- Then, one extra year is added for each year of UK residency beyond 10 years, up to a cap of 10 years total.
In this example, you’ve been a UK resident for 6 years more than the 10-year minimum, so IHT will continue to apply for a total of 6 years after departure—that is, until the 2031–32 tax year.
On the other hand, if you’ve lived in the UK for less than 10 years (say, since after 2015 until this year), you can avoid this extended IHT exposure entirely.
Now, what can you do ?
As you may see, many changes will be applied starting this tax year 2025/26.
That’s why it’s crucial to act quickly if your UK residency is approaching the 10-year threshold. The decisions you make now could have a major impact on your estate planning down the line.
What can you do ?
You should start looking where to go and minimize the 10 years minimal stay over the previous 20 years, if it’s not too late.
You might consider reducing your days of presence in the UK by adhering to the Statutory Residence Test (SRT) criteria, ensuring you qualify as a non-resident.
This approach differs from the previous “domiciled” or “non-dom” status, where individuals could be considered resident under either classification. The current focus is solely on determining residency status—either you are a resident or you are not. Do you see the distinction?
That will at least benefit for your levels of UK taxation.
Some countries offer flat-tax regimes based on residency—for example, Bulgaria applies a 10% flat income tax.
If you are really wealthy, you may benefit from special tax programs for HNWIs, where a fixed annual lump-sum tax is applied to offshore income.
Italy, for instance, offers such a regime with a flat €200,000 yearly tax on foreign-sourced revenue.
Malta and Cyprus continue to offer non-dom regimes, making them strong contenders if you’re looking to maintain that status elsewhere.
Ultimately, the UK tax reforms have prompted many ultra-high-net-worth individuals to give up their UK residency and relocate to jurisdictions with more favorable tax environments—most notably the UAE, where there is no personal income tax.
Just this week, the Financial Times reported other billionaires—Richard Gnodde, a top Goldman Sachs executive, Egyptian billionaire Nassef Sawiris, have chosen to move to Italy, or UAE, joining the growing trend of high-profile exits.
Conclusion
In summary, you have several strategic options:
You can pursue another non-dom arrangement to continue benefiting from exemptions on foreign income;
You might consider countries with territorial taxation systems—like Panama, Paraguay, or Georgia—where only local income is taxed.
Or, you could opt for true tax havens such as the UAE, which imposes no personal income tax at all.
We hope this article (and our video with link above) have provided some clarity—or at the very least, raised important questions—about your UK residency status.
If you’re exploring ways to minimize your tax burden, BanTheTax is here to guide you.
And if leaving the UK isn’t an option, we can help you understand how to reduce your taxes while staying compliant.
Send us an email at info@banthetax.com.
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