The UK's Non-Dom Replacement: Understanding the 4-Year FIG Regime

The non-dom regime is gone. We explain the 4-year FIG rules for new arrivers, the transition for former non-doms, and the move to residence-based IHT.

The remittance basis of taxation defined the UK as a destination for internationally mobile wealth for more than two centuries. As at 2026 it no longer exists. In its place sits a regime built on residence rather than domicile, and it changes the calculus for anyone weighing a move to Britain, anyone already here under the old rules, and anyone whose estate planning rested on the concept of a foreign domicile.

We have spent the months since the change advising clients through the practical reality of it, and the picture is more nuanced than the headlines suggested. For genuinely new arrivers the first years can be remarkably clean. For long-standing residents the transition is where the real planning lies. And for inheritance tax, the shift to a residence test has consequences that reach well beyond income.

This guide sets out what the new regime allows, what it excludes, and where the opportunities and the traps sit.

From domicile to residence

The old system asked where a person was domiciled, a concept rooted in permanence and intention that often bore little resemblance to where someone actually lived. The new system asks a simpler question: how long have you been UK resident?

That single change has wide reach. Domicile no longer determines how foreign income and gains are taxed, and as we set out below it no longer determines exposure to inheritance tax either. The familiar planning vocabulary of deemed domicile, remittances and offshore mixed funds has largely fallen away. In its place is a time-based framework that is, in principle, easier to understand and harder to game.

We say "in principle" deliberately. The interaction between the new rules, existing trust structures and the transitional provisions is anything but simple, and early decisions are easy to get wrong.

The 4-year FIG regime for new arrivers

The headline relief is the foreign income and gains regime, generally referred to as the FIG regime. A qualifying new arriver who has not been UK tax resident in a defined run of prior years can, for their first four years of UK residence, claim relief on foreign income and foreign gains.

Two features make this materially more generous than the old remittance basis in its early form. First, there is no annual charge to access it during those years. Second, and more importantly, qualifying amounts can be brought into the UK and spent here without triggering a UK charge. The old anxiety about remittance, where bringing offshore money onshore created a tax event, does not apply to FIG amounts claimed in the qualifying window.

That makes the first four years genuinely attractive for someone arriving with foreign income streams or sitting on unrealised gains they may wish to crystallise.

The relief is not automatic. It is claimed, and claiming it has consequences. In a year a person claims FIG relief, certain UK allowances are typically forfeited, so the arithmetic has to be run year by year rather than assumed. The window is also strict. The four-year clock runs from the point of UK residence, and it does not pause if circumstances change. Someone who delays realising a large gain until year five has missed the relief entirely.

We generally advise prospective arrivers to map their foreign income and likely disposals against the four-year horizon before they set foot in the UK, because the most valuable planning happens before residence begins, not after.

What the regime excludes

The FIG regime covers foreign income and foreign gains. It does not shelter UK-source income or UK gains, which remain taxable in the ordinary way from day one. An arriver who takes up UK employment, draws UK rental income or disposes of UK assets is taxed on those amounts regardless of FIG status.

Nor does the regime extend indefinitely. After four years of residence, worldwide income and gains fall fully within the UK net on the arising basis. This is the point many underestimate. The regime is a generous on-ramp, not a permanent shelter, and a client who builds a UK life around the assumption of continued relief will face a sharp change in year five.

Employment income earned for duties performed abroad sits in its own category with its own conditions, and pension and certain trust receipts each have their own treatment. We treat these as separate questions rather than assuming the FIG label covers everything foreign.

The transition for former non-doms

For those already resident under the old remittance basis, the legislation includes transitional measures designed to ease the move. The detail matters and the reliefs are time-limited, so this is where we spend most of our advisory effort.

Two themes recur. The first is the treatment of historic foreign income and gains that were never remitted under the old rules. There has been a temporary facility allowing previously unremitted amounts to be brought into the UK at a reduced rate during a defined transitional period. For clients sitting on substantial offshore funds accumulated over years of remittance-basis living, this can be the single most valuable opportunity in the whole reform, and it has a closing date.

The second is the rebasing of certain foreign assets for capital gains purposes, which can reset the base cost used to calculate a future gain. Eligibility is conditioned and the relevant date is fixed in legislation, so the benefit depends heavily on individual history.

We would caution against treating any of these as standing offers. Transitional reliefs are, by design, doors that close. The clients who benefit most are those who quantified their offshore position early and acted within the window rather than waiting for certainty that never quite arrives.

Inheritance tax moves to a residence basis

Perhaps the most far-reaching change sits in inheritance tax. Exposure to IHT no longer turns on domicile. It now turns on a residence test, broadly bringing worldwide assets within the UK net once a person has been resident for a long enough run of years, and keeping them within the net for a period after departure.

This reshapes long-term planning in two directions. For new arrivers, there is a meaningful window before worldwide assets become exposed, and that window is an opportunity to settle structures or arrange affairs while only UK assets are in scope. For long-standing residents who had relied on a foreign domicile to keep offshore wealth outside IHT, that protection has gone, and offshore assets they assumed were safe may now be fully exposed.

The treatment of existing excluded property trusts is especially sensitive. Many were established precisely because settlor domicile placed the trust assets outside IHT. The move to a residence basis disturbs that logic, and the protection such trusts offer now depends on the settlor's residence position rather than domicile. Each structure needs to be reviewed on its own facts; there is no blanket answer.

A further point that catches people is the tail. Because the residence test can keep someone within the IHT net for a period after they cease to be UK resident, simply leaving does not produce an immediate clean break. Departure planning has to account for that trailing exposure.

Structuring opportunities and traps

The reform rewards early, deliberate planning and punishes drift. The clearest opportunity is the pre-arrival window: decisions taken before UK residence begins, around the timing of disposals, the structuring of income and the location of assets, carry more value than anything done afterwards.

The clearest trap is treating the four-year FIG window as a steady state. We see arrivers build spending patterns and asset arrangements around relief that expires, then face an abrupt step-up in liability they had not budgeted for. The right approach treats year five as the planning baseline and the FIG years as a finite advantage.

Trusts deserve particular care. Structures that were efficient under a domicile-based system are not automatically efficient under a residence-based one, and some now carry exposure their settlors never intended. Equally, unwinding a trust in haste can crystallise charges that patient restructuring would avoid. The answer is rarely to act fast; it is to act on a clear reading of the specific structure.

Finally, every figure and date in this area is set by legislation that continues to be refined, and individual outcomes depend on facts we cannot generalise. We treat the principles here as the map and the individual case as the territory. Before any decision, the position should be confirmed against the rules in force and modelled against a client's own circumstances. That is the work we do, and it is where the value of getting this right is realised.