The UK’s proposals for non-doms and their structures (as of 10 March 2025)

The UK’s new tax

The UK’s new tax regime for internationally connected individuals and their structures (as of 25 June 2025)CriteriaTo be eligible for the 4-year FIG regime, an individual must not have been UK tax resident in any of the 10tax years preceding the four-year period.Residence is tested using the UK’s statutory residence test (explained here: An introduction to Residenceand Domicile) for tax years 2013/14 and later and a person’s status under any applicable double tax treatiesis irrelevant. “Split years” count as full UK tax years.Tax years prior to 2013/14 are tested using the pre-statutory residence test rules.Those who had been UK tax resident for fewer than 4 tax years by 6 April 2025 will be able to claim the 4-year FIG regime for whatever is left of their first 4 years of UK tax residence, provided they otherwise satisfythe criteria.Became a UK tax resident 6 April 2025Tax year10+ years ofnon-UKresidence22/23 23/24 24/25 25/26 26/27 onwardsTax statusNon-UKresidentRemittance basis taxpayer4-yearFIGregimeArising basis taxpayer(UK income tax and capital gains taxon worldwide income and gains)Three types of claim under the new regimeIn practice the “4-year FIG regime” is comprised of three distinct but related sub-regimes, each of which anindividual can opt into as they see fit:1 a regime for employment income deriving from duties performed outside of the UK (regardless of wherethe employer is);2 a regime for other forms of foreign income; and3 a regime for foreign gains.Those eligible for the 4-year FIG regime can generally make a claim for any combination of these (or none atall) in each of their first four years of UK tax residence and can change the combination each year.They can also pick and choose which of their foreign income and gains they want to relieve with any givenclaim. So, for example, an individual could choose to claim relief on foreign source dividends from oneshareholding but not on foreign source dividends from another.There are some restrictions on the types of foreign income and gain which can benefit from the 4-year FIGregime and some slight changes as compared to the types which previously benefited from the remittancebasis.4

The UK’s new tax regime for internationally connected individuals and their structures (as of 25 June 2025)The drawbacks of using the 4-year FIG regimeAlthough there is no charge for using the 4-year FIG regime, claiming it does have some downsides in anytax years for which it is claimedIn particular, making any one or more of the three possible types of claim will result in the individual losing allof the following:• their personal allowance (relevant to income tax);• their annual exempt amount (relevant to capital gains tax); and• the ability to deduct foreign losses realised in that tax year from chargeable gains (also relevant tocapital gains tax).How to make a claim for the 4-year FIG regimeClaims must be made in a tax return by 31 January two years after the end of the relevant tax year. So if anindividual wants to claim relief on foreign income arising in the 2025/26 tax year, they must make a claim by31 January 2028.That is a shorter timeframe than for most forms of UK tax relief (which can generally be claimed up to fouryears after the end of the relevant tax year) and there will be less scope than usual for making claims out oftime so filing an accurate tax return within the deadline will be critical.Effect of the 4-year FIG regimeAt a high level, the 4-year FIG regime can be described as relieving foreign income and gains from UK tax tothe extent it is claimed. For those eligible, their exposure to UK income tax and capital gains tax over timemight therefore be summarised as follows:Years of UK taxresidency1 2 3 4 5+Tax exposure tothe extent theregime isclaimedUK sourceincome andgains onlyUK sourceincome andgains onlyUK sourceincome andgains onlyUK sourceincome andgains onlyWorldwideincomeand gainsHowever, the reality is slightly more complicated and the effect will depend on which claim (or combination ofclaims) is made.• A foreign employment income claim can relieve UK income tax on up to 30% of the individual’semployment income or £300,000 of that income, whichever is lower. “Employment income” for thesepurposes will generally be the net taxable income from all employments for which at least some dutiesare performed outside of the UK (it does not matter whether the employer is in the UK or not).• A foreign income claim (used for all other types of foreign income) will provide 100% income tax reliefon all foreign income specified in the claim.• A foreign gain claim will provide 100% capital gains tax relief on all foreign gains specified in the claim.Any income and/or gains relieved by these claims can also be brought into and used in the UK withoutfurther tax (albeit that bringing the funds into the UK could expose them to IHT as they would then becomeUK situated assets).There is no need to segregate new income and gains under the 4-year FIG regime as there was under theremittance basis. However, previous remittance basis users will generally need to maintain segregation inrelation to foreign income and gains which arose under the previous regime if they wish to avoid aremittance.Lastly, the 4-year FIG regime can be used in relation to income and gains attributed to individuals (whethersettlors or beneficiaries) from trusts but the effect is complicated and can have surprising results (such ascausing the relieved income and gains to be taxable on another person instead).5