Globally Speaking | March 18, 2024

Non-dom analysis: the first four years

I am a recent arriver in the UK. Will the new exemption regime apply to me?

In the 2024 Spring Budget on 6 March 2024, the Chancellor announced that the current remittance rules applying to UK resident, non-domiciled individuals (“non-doms“) will cease to apply (along with the concept of “domicile” for UK tax purposes) from 6 April 2025. In their place, there will be a new four-year residence-based tax regime (“four-year FIG regime“) for foreign income and gains (“FIGs“) for certain qualifying individuals.

A summary of what was announced is set out below, although it is important to note that these proposals remain subject to change until enacted.

What will the four-year FIG regime involve?

  • From 6 April 2025, there will be a strict four-year exemption period for FIGs, starting from the first tax year of UK residence after a consecutive ten-year period of non-UK residence, regardless of an individual’s domicile position.
  • If an individual is UK resident in only some of that four-year period, it will not be possible to extend their exemption period by carrying forward any “unused” years within that period to future tax years.
  • The UK’s Statutory Residence Test will be used to determine tax residence, ignoring years of treaty non-residence and split years (for further information, please click here).
  • To be taxed under the four-year FIG regime for a particular tax year, individuals will need to make an election in their UK self-assessment tax return, as is the case with the current remittance rules. Consequently, they will lose their income tax personal allowance and capital gains tax annual exemption for relevant tax years.
  • If an individual qualifies and elects to benefit from the four-year FIG regime, there will be a full and unconditional exemption from UK tax on their FIGs, whether they are brought into the UK or not. This is quite different to the operation of the current remittance basis, which limits UK tax to the extent of FIGs that are remitted to the UK.
  • Unlike countries such as Italy and Greece who operate a similar exemption regime for FIGs, there will be no annual or flat-rate charge to take advantage of the new four-year FIG regime.
  • Anyone can access the new regime, including those individuals born within the UK,  if all of the eligibility criteria is met.
  • If on 5 April 2025 an individual is claiming Overseas Workday Relief (which currently applies to remittance basis users in the first three years of UK residence where a proportion of their employment earnings relate to non-UK duties), the relief will continue to apply for up to three tax years, provided the individual qualifies for the four-year FIG regime. During that period there will be no restriction on whether earnings benefiting from Overseas Workday Relief may be remitted to the UK.

Will I qualify?

To be eligible for the four-year FIG regime, non-doms will need to consider their UK tax residence status over the ten tax years prior to their first tax year of UK residence.


If you became UK tax resident during the tax year 2022/23 you will need to consider your UK residence status going back to the 2012/13 tax year to determine if you are eligible to be taxed under the new four-year FIG regime in the 2025/26 tax year (which would be your fourth year of residence).

If an individual has been UK resident in any of the previous ten UK tax years, they will not be able to benefit from the four-year FIG regime, even if their current period of UK residence is less than four years. This means that even if they have successfully “re-set their domicile clock” under the current rules, they may not qualify for the four-year FIG regime.

What about trusts?

From 6 April 2025, UK resident beneficiaries of offshore trusts who qualify for the four-year FIG regime and receive trust distributions or benefits will not be taxed on them, and such distributions or benefits will not be matched with trust income and gains. This is an attractive means of passing trust funds to beneficiaries in the UK, which has previously required careful planning. As a result, however, FIGs in the structure will not be “washed out” through distributions to UK resident beneficiaries in their first four years of UK residence and so will be available for matching to future distributions.

From 6 April 2025, UK resident beneficiaries who are not eligible for the four-year FIG regime will be taxed on the arising basis on distributions or benefits received from offshore trusts that are matched with FIGs in the structure.

FIGs that arise in offshore trusts will, in any event, be attributed to UK resident settlors (subject to certain defences). Current year FIGs in the structure will not be taxable in the UK for a settlor who qualifies under the four-year FIG regime, whether remitted or not. Unremitted prior year FIGs arising before 6 April 2025 will, however, be taxable upon remittance to the UK. For further detail, please see our related article Non-dom analysis: four years onwards“.

It is also not entirely clear at present how the system of worldwide taxation of UK resident settlors who do not qualify under the four-year FIG regime will interact with the matching regime for benefits or distributions received by UK resident beneficiaries from offshore trusts.

What now?

  • If an individual is already in the UK and plans to stay on after 5 April 2025, they will need to consider if they will be eligible to elect to be taxed under the four-year FIG regime (and would benefit from doing so), for all or part of their remaining qualifying years of UK tax residence.
  • If they will not qualify for the four-year FIG regime from 6 April 2025 but plan to stay in the UK, they will need to consider their position under the transitional rules and any planning that may be possible – please see our related article “Non-dom analysis: four years onwards“.