Income tax and capital gains tax changes
Since 6 April 2025, there is no more "Remittance Basis". Instead, we have the following:
- Foreign Income and Gains (FIG) Regime: Individuals who have been non-UK tax resident for the last 10 tax years can elect to pay no UK income tax or CGT on elected FIG for the first four years of UK tax residence.
- Amended Overseas Workday Relief (OWR): FIG-qualifying individuals can elect to pay no UK income tax on remuneration attributed to non-UK work for the first four years of UK tax residence, capped at the lower of 30% of that remuneration and £300,000.
- Temporary Repatriation Facility (TRF): Individuals who previously claimed the remittance basis can opt to remit designated pre-6 April 2025 unremitted FIG at a reduced tax rate (12% for tax year 2025/26 and 2026/27 and 15% for 2027/28, compared to 45% and 24%) with no further tax payable on remittance.
- Rebasing: Individuals who were not deemed domiciled on or before 5 April 2025 and previously claimed the remittance basis, can elect to rebase disposals of qualifying non-UK assets to their 5 April 2017 value.
- Trusts: "Protected Trust" status is no longer available for offshore settlor-interested trusts, so those settlors will be taxed on trust income and gains as they arise.
Inheritance tax changes
Since 6 April 2025, the concept of "domicile" has essentially been replaced:
- "Long-Term Residents" (LTR): An individual is broadly an LTR once they have been UK tax resident for at least 10 of the previous 20 tax years. Once an LTR, they remain an LTR for inheritance tax (IHT) purposes for up to 10 more years after leaving as a non-resident (the so-called IHT "tail"). LTRs are subject to IHT on their worldwide assets. Non-LTRs broadly only pay IHT on UK assets and indirect holdings of UK residential property.
- Trusts: "Excluded Property Trust" status is no longer available for settlor-interested trusts, so trustees must track the LTR status of settlors to determine the trust's exposure to IHT.
Double tax
It is important to remember that double tax treaties and estate tax treaties may alleviate exposure to UK tax where taxpayers have dual residence and/or domicile (the concept of which generally includes LTR), and/or in respect of certain assets in certain assets and situations.