International tax guide: 2026/27

UK Non-Dom FIG Regime 2026/27: 4-Year Exemption, TRF, IHT Reset

The Foreign Income and Gains (FIG) regime that replaced the UK non-dom remittance basis from 6 April 2025: 4-year tax exemption for new arrivers who have been non-UK resident for the preceding 10 years, the 3-year Temporary Repatriation Facility (TRF) at 12% / 12% / 15% for pre-2025 unremitted reserves, the new 10-of-20-years IHT long-term-resident rule replacing deemed domicile, and the structural reset for international tax planning.

Overview - the biggest UK personal-tax reform in a generation

The Foreign Income and Gains (FIG) regime replaced the long-standing UK non-dom remittance basis on 6 April 2025 under Finance (No. 2) Act 2024 schedule 5. The non-dom remittance basis - which had allowed UK-resident non-UK-domiciled individuals to elect out of UK tax on their foreign income and gains unless physically brought to the UK - was on statutory footing since 1914 and had been the foundational planning tool for high-net-worth international families resident in the UK for over a century. The Conservative government announced abolition at Spring Budget 2024 (March 2024); the Labour government finalised and modestly expanded the replacement framework at Autumn Budget 2024 (30 October 2024). The new regime is residence-based rather than domicile-based: domicile is now largely irrelevant for Income Tax and CGT purposes, though it survives in modified form for IHT through the new "long-term resident" (LTR) test.

The headline elements of the new regime are three. First, a 4-year FIG exemption for new arrivers who have been non-UK resident for each of the 10 consecutive tax years preceding their arrival. During the 4-year window all foreign income and gains are exempt from UK Income Tax and CGT regardless of remittance to the UK. Second, a 3-year Temporary Repatriation Facility (TRF) at 12% / 12% / 15% (rates for 2025/26 / 2026/27 / 2027/28 respectively) under which pre-April-2025 unremitted foreign income and gains can be designated for repatriation at a known reduced rate rather than face full UK arising-basis tax. Third, a new IHT long-term-resident (LTR) trigger based on residence: an individual becomes subject to UK IHT on worldwide assets once they have been UK-resident for 10 of the previous 20 tax years, with the LTR status persisting for 10 years after they cease to be UK-resident.

The strategic implication for internationally-mobile families is fundamental. The new regime is materially less generous than the old remittance basis for long-resident non-doms (the 4-year FIG exemption is dramatically shorter than the unlimited remittance-basis window the old regime provided), but more generous for short-term new arrivers (the FIG exemption is automatic and binary rather than requiring annual £30,000 / £60,000 Remittance Basis Charges as the old regime did once long-term residence had been established). The IHT reset is the most substantive long-term cost: previously, IHT on foreign assets required either UK domicile of origin or 15 years of UK residence to trigger; under the new rule 10 years of residence in the previous 20 triggers LTR status, and the 10-year post-departure tail means a taxpayer who leaves at year 11 remains within UK IHT until year 21. Specialist trust and IHT advice is essentially mandatory for any family with material foreign assets considering UK residence.

The 4-year FIG exemption for new arrivers

The 4-year FIG exemption is the headline benefit of the new regime and applies to anyone who qualifies as a "new arriver" under the residence-based test:

Condition	Test	Notes
New arriver definition	Non-UK resident for 10 consecutive tax years preceding arrival	Tested under SRT each year. Anyone who has been UK-resident in any of the prior 10 years does NOT qualify for the 4-year exemption.
Returning expat (10+ years away)	Same 10-year non-residence test applies	A UK national who spent 10+ years abroad and returns qualifies as a "new arriver" for FIG purposes regardless of domicile.
Exemption duration	4 consecutive tax years from year of arrival	The exemption is binary - either you qualify for all 4 years or not at all. There is no partial exemption.
Tax-exempt income	All foreign income and gains arising during the 4-year window	Foreign dividends, interest, rents, royalties, capital gains, employment income from foreign duties - all exempt from UK Income Tax and CGT regardless of remittance.
UK-source income	NOT exempt - taxed as normal	UK employment income, UK rental income, UK dividends, UK capital gains all taxed at standard UK rates throughout the 4-year window.
Election required	Annual election on Self Assessment return	The FIG exemption is opt-in via an SA election each year. Once elected for a year, the Personal Allowance and CGT AEA are forfeited for that year (mirroring the old remittance basis trade-off).

The election trade-off. In any year you elect FIG you forfeit the £12,570 Personal Allowance and the £3,000 CGT Annual Exempt Amount for that year. For a higher-rate taxpayer that is roughly £5,000 + £720 = £5,720 of "cost" per election year, compared with potentially hundreds of thousands of UK tax on substantial foreign income and gains. The election is annual - you can elect in years where foreign income is high and decline in years where foreign income is low to preserve the allowances. The 4-year window is fixed from year of arrival and cannot be extended or restarted.

Worked example: high-income new arriver. A trader arrives in the UK in 2026/27 after 12 years of non-residence (qualifies as new arriver). UK-source employment income £180,000, foreign dividends £400,000 (from non-UK portfolio), foreign capital gains £150,000 (from selling foreign property). Under FIG election: UK Income Tax on £180,000 employment income at standard rates ≈ £61,000, plus 2% NI ≈ £2,500 → total UK tax ≈ £63,500. The £400,000 foreign dividends and £150,000 foreign gains are entirely exempt. Cost of election: forfeited PA + AEA worth around £5,720. Net UK tax cost ≈ £63,500. Without FIG election (arising basis): UK tax on the whole £730,000 of income and gains would be approximately £270,000. FIG saves ≈ £206,000 in year one.

The Temporary Repatriation Facility (TRF)

The TRF is a 3-year transitional window (6 April 2025 to 5 April 2028) that allows pre-April-2025 unremitted foreign income and gains - the accumulated reserves built up by long-resident non-doms under the old remittance basis - to be designated for repatriation to the UK at a known reduced flat tax rate:

Tax year	TRF flat rate	Notes
2025/26	12%	First year of TRF. Lowest rate; the strongest incentive window for elective designations.
2026/27	12%	Second year. Rate held at 12% to encourage uptake during the bulk of the transitional window.
2027/28	15%	Final TRF year. Rate steps up to 15% to encourage taxpayers to crystallise designations before the facility closes.
2028/29 onwards	Facility closed	After 5 April 2028 no further TRF designations can be made. Pre-2025 unremitted foreign income and gains revert to standard UK tax treatment on remittance.

Economic logic. A long-resident non-dom with £5m of unremitted foreign dividends accumulated over 20 years pre-2025 faces, under the new arising-basis regime, UK Income Tax at 39.35% (additional-rate dividend) when those reserves are eventually remitted - approximately £1.97m of UK tax. Under the TRF at 12% the same £5m can be designated and remitted for £600,000 of UK tax - a £1.37m tax saving. The 12% rate is deliberately set significantly below the 39.35% additional-rate dividend rate, the 45% additional-rate ordinary rate and the 24% CGT higher rate to make the TRF a compelling time-limited offer. HMRC modelled around £15 billion of TRF receipts over the 3-year window in the policy impact assessment.

Designation mechanics. The taxpayer designates a specific tranche of pre-2025 unremitted FIGs via election on their Self Assessment return for the year of designation. The designation is irreversible - once a tranche is TRF-designated, it is treated as tax-paid at the flat rate and can be remitted at any future point without additional UK tax. The taxpayer does not need to remit the funds in the year of designation - the designation and the actual remittance are separate events. Designation can be made in stages across the 3-year window; not all pre-2025 reserves need to be designated in one go. The character of the underlying tranche (income vs gain, source jurisdiction, year of arising) does not affect the flat TRF rate.

Trust-held reserves. The TRF extends to unremitted reserves held inside non-dom-funded offshore trusts where the original settlement and the underlying FIGs pre-dated 6 April 2025. The mechanism is more complex - the trust trustees and the settlor must jointly elect for TRF treatment, and the designation creates the same irreversible flat-rate outcome on the designated tranche. This is one of the most operationally complex elements of the new regime and almost always requires specialist trust-tax counsel.

IHT long-term resident (LTR) rule

The pre-April-2025 concept of "deemed domicile" for IHT purposes - which caught individuals who had been UK-resident for 15 of the previous 20 tax years - was replaced from 6 April 2025 by a residence-based "long-term resident" (LTR) test:

LTR trigger: 10 of the previous 20 tax years - any individual who has been UK-resident under the Statutory Residence Test for at least 10 of the 20 tax years preceding the current year qualifies as a long-term resident.
Worldwide IHT scope - once LTR status is acquired, the individual is liable for UK IHT on their worldwide assets (not just UK-situs assets as for non-LTR non-doms).
Post-departure tail of 10 years - LTR status persists for 10 years after the individual ceases to be UK-resident. A taxpayer who leaves at year 11 of UK residence remains within UK IHT scope until year 21. The tail is longer than the 4-year tail under the old deemed-domicile regime for non-doms who had not become deemed-domiciled.
Spousal election - a non-LTR spouse can elect to be "treated as LTR" to enable spousal-exemption planning on transfers from a LTR spouse, mirroring the historical domicile-election mechanism.

Comparison with old regime. A non-dom arriving in 2010 and remaining UK-resident through 2024 became deemed-domiciled in 2024 under the old 15-of-20 rule. Under the new LTR rule the same taxpayer would have triggered LTR status in 2019 (year 10) - five years earlier. This is the principal "tightening" element of the new regime and the reason long-resident non-doms have generally found the post-2025 reforms materially less favourable than the pre-2025 regime even with the headline FIG and TRF benefits. New arrivers benefit more from the residence-based clarity (no domicile-of-origin complications) but face the same 10-year LTR clock and 10-year tail.

Strategic planning implications

The new regime restructures international tax planning into three distinct windows for any UK-resident individual:

Year 1 to 4 (FIG window): exempt from UK Income Tax and CGT on foreign income and gains. Optimal window to crystallise foreign capital gains, receive foreign dividend yields tax-free, vest foreign employment-related securities, and structure pre-arrival wealth into "clean capital" pools that can be remitted tax-free post-FIG. The 4-year window is too short for many long-term residence plans but is meaningful for shorter-term assignments and for new arrivers who use it to clean up pre-arrival foreign-asset complexity.
Year 5 to 10 (pre-LTR): foreign income and gains taxed in full on the arising basis at standard UK rates. No remittance-basis option. IHT scope limited to UK-situs assets. This is the cash-flow window where the new regime is most punitive vs the old (under the old regime, pre-deemed-domicile non-doms could continue claiming remittance basis with annual RBC of £30,000-£60,000; under the new regime no such option exists).
Year 11+ (LTR window): foreign income and gains taxed in full. IHT applies to worldwide assets. Spousal election available for non-LTR spouses. This is the long-term residence window where structuring focus shifts to UK-style estate planning (Family Investment Companies, BR-qualifying portfolios, gift-and-survive-7-years PETs, life assurance gift trusts).

The structural change is that the old "indefinitely deferred" remittance basis is replaced by a "use it or lose it" 4-year window followed by full arising-basis tax. Families planning long-term UK residence should weigh whether the 4-year window is meaningful relative to their total UK tenure (it is materially valuable for short-term residence of 5 to 8 years; less significant for long-term residence of 15+ years where the LTR clock dominates the analysis).

Frequently asked questions

What is the FIG regime and when did it start?

The Foreign Income and Gains (FIG) regime replaced the long-standing UK non-dom remittance basis on 6 April 2025. It was announced at Spring Budget 2024 by the Conservative government and substantially expanded at the Autumn Budget 2024 by the Labour government, then legislated in Finance (No. 2) Act 2024 schedule 5. The FIG regime is residence-based, not domicile-based: any individual who has been non-UK resident for the 10 consecutive tax years preceding their arrival in the UK qualifies for a 4-year exemption from UK Income Tax and CGT on all foreign income and gains arising during that 4-year window. After 4 years (or for taxpayers who do not qualify because of prior UK residence), foreign income and gains are taxed in full on the arising basis with no remittance-basis option. The change is the most significant restructuring of UK personal tax for international taxpayers since the remittance basis was put on statutory footing in 1914.

Who qualifies for the 4-year FIG exemption?

Any new arriver to the UK who has been non-UK resident (tested under the Statutory Residence Test) for each of the 10 consecutive tax years preceding the year of arrival. The test is objective and binary: either you have been non-resident in each of the preceding 10 years (qualify), or you have been UK-resident in any of them (do not qualify). The test does not depend on domicile status - a UK national returning after 10+ years abroad qualifies on the same basis as a non-UK national arriving for the first time. The exemption applies to foreign source income and gains only; UK-source income and gains are taxed as normal throughout the 4-year window. The exemption is opt-in via annual election on the Self Assessment return, with the cost being forfeiture of the Personal Allowance and CGT Annual Exempt Amount for any year the election is made (mirroring the trade-off under the old remittance basis).

What is the Temporary Repatriation Facility (TRF)?

The TRF is a 3-year transitional window (6 April 2025 to 5 April 2028) that allows pre-April-2025 unremitted foreign income and gains (FIGs accumulated under the old remittance basis) to be designated for repatriation to the UK at a reduced flat tax rate: 12% in 2025/26 and 2026/27, then 15% in 2027/28. The TRF is designed to encourage long-resident non-doms to bring decades of accumulated offshore reserves into the UK at a known, time-limited rate rather than face full UK income tax (potentially at 45% on dividends or 45% additional rate on rental income) when those reserves are eventually remitted under the new regime. Designation is irreversible - once you elect for the TRF rate on a specific tranche, that tranche is treated as taxed at the designated rate for all future UK tax purposes and can be freely remitted thereafter without additional tax. The expectation is significant uptake: HMRC modelled around £15 billion of TRF receipts over the 3-year window.

How does the new IHT residence-based rule work?

From 6 April 2025 the historical concept of "deemed domicile" for IHT purposes was replaced with a residence-based rule: an individual becomes a "long-term resident" (LTR) - and therefore subject to UK IHT on their worldwide assets - once they have been UK-resident for 10 of the previous 20 tax years. Once LTR status is acquired, it persists for 10 years after the individual ceases to be UK-resident (a "tail" period), meaning a long-resident non-dom who leaves the UK at age 60 remains within UK IHT scope until age 70 even if they live in a tax-neutral jurisdiction during that decade. The 10-of-20 rule replaces the "15 of 20 years" deemed-domicile test that applied pre-April-2025. The new test catches individuals slightly earlier - 10 years rather than 15 - but the post-departure tail is shorter than the equivalent under the old deemed-domicile regime. Spouses can elect for "treated as LTR" status to enable spouse-exemption planning for non-LTR spouses receiving gifts from LTR spouses.

What happens to existing non-doms with offshore trusts?

The IHT protection that pre-April-2025 settlor-funded non-dom offshore trusts enjoyed has been substantially eroded. Under the new regime, an offshore trust settled by a person who becomes UK-resident is treated as in the UK IHT net once the settlor becomes a long-term resident (10 of 20 years). The transitional rules grandfather some pre-existing structures but only to a limited extent. New arrivers in the 4-year FIG window can still benefit from offshore-trust planning while inside the exemption, but post-FIG (year 5 onwards) the trust enters full UK trust tax treatment. Pre-existing non-dom trusts already in the UK net under the deemed-domicile regime have transitional protection extended for a further 10 years from 6 April 2025 - so a trust settled by a non-dom who was deemed-domiciled in 2024 remains in the old regime until 2035. This is one of the most operationally complex transitional rules and requires specialist trust-tax advice.

What is the cost-benefit of electing the FIG exemption?

For high-earning new arrivers with substantial foreign income or gains, the FIG election is overwhelmingly worthwhile. A trader with £500,000 of foreign dividends and £200,000 of foreign capital gains in their first UK year would face UK tax of roughly £200,000 (45% on dividends above £37,700, 24% CGT above PA) on the arising basis. Electing FIG eliminates this entire £200,000 tax bill at a cost of the £12,570 Personal Allowance (worth around £5,028 at 40% marginal rate) and the £3,000 CGT AEA (worth around £720 at 24% marginal) - net saving of around £194,250 in year one. The election is worthwhile whenever the marginal tax cost of forfeiting the PA and AEA is less than the tax that would otherwise apply to the foreign income and gains. For low-income new arrivers (£25,000 to £50,000 of UK-source income, modest foreign income) the trade-off can flip: the £5,000 of forfeited allowances may exceed the £2,000 to £4,000 of foreign-income tax saved. Always model both routes.

How does FIG interact with employment income from foreign duties?

Foreign employment income performed entirely outside the UK is exempt under FIG for the 4-year window - including where the employer is a UK company and pays the salary into a UK bank account, provided the duties are performed abroad. This is the FIG-era replacement of the old "Overseas Workdays Relief" (OWR) that pre-April-2025 non-doms could use on a remittance basis. For mixed-duties roles (some UK days, some overseas days), the standard apportionment by working day applies and only the overseas-duty fraction is exempt. The 4-year window also covers employment-related securities (RSUs, stock options) granted by foreign employers, provided the vesting period falls within the FIG window. Travel and accommodation costs while on overseas duties are typically deductible from the UK-taxable fraction. The OWR rules survived in modified form within FIG but are simpler than the pre-2025 mechanism.

Can I use the FIG window for tax-efficient structuring?

Yes - the 4-year window is a meaningful planning opportunity but requires upfront design. The most common moves: (1) realise foreign capital gains during the window to crystallise them tax-free, especially for taxpayers carrying substantial accumulated foreign-asset gains from pre-arrival years; (2) elect FIG in years where foreign income spikes (e.g. year of a foreign-rental sale, year of foreign bonus crystallisation) and arising-basis in years where foreign income is low to preserve the PA and AEA; (3) sequence foreign-trust distributions during the window to receive them tax-free; (4) structure pre-arrival accumulated wealth into clean-capital pools that can be remitted tax-free post-FIG without triggering arising-basis tax on later income; (5) hold employment-related securities until after vest dates fall within the FIG window for tax-free vest treatment. Each requires specialist advice and depends on the specific jurisdiction of origin and double-tax treaty position.

What if I leave the UK during the 4-year FIG window?

The 4-year window is fixed from year of arrival regardless of whether you remain UK-resident throughout. If you leave the UK in year 3, the unused year 4 of the FIG window is lost - it does not extend beyond the original 4-year period. Returning to the UK after a short non-residence break (less than the 10-year requirement to re-qualify as a new arriver) does NOT restart the FIG window - once you have used some or all of the 4-year window, you cannot claim a second 4-year window unless you genuinely become non-UK resident for 10 consecutive tax years. The IHT long-term-resident "tail" (10 years post-departure) operates independently of the FIG window: a taxpayer who triggers LTR status during the FIG period remains within UK IHT for 10 years after departure even if they used only part of the FIG window.

How does the TRF designation work mechanically?

You designate a specific tranche of pre-April-2025 unremitted foreign income or gains via election on your Self Assessment return for the year of designation. The designated tranche is reported, the TRF flat rate (12% or 15% depending on year) is calculated and added to the year tax liability, and the designated tranche is thereafter treated as tax-paid - it can be remitted to the UK at any future point without additional UK tax. The designation is irreversible. Each tranche of pre-2025 reserves can be designated separately - you do not have to designate the entire pre-2025 pool in one go and can choose to designate the most-likely-to-be-remitted reserves while leaving more permanent capital outside the TRF. The TRF can also cover unremitted gains held inside non-dom offshore trusts where the original settlement and the underlying gains pre-dated 6 April 2025. Designation requires careful identification of the specific tranche (origin, date, character of income vs capital) and is operationally complex - specialist advice is essentially mandatory for any sizeable TRF election.

Will the FIG regime survive future political changes?

Political risk is meaningful but the regime was deliberately legislated with significant transitional provisions and cross-party design input. The Conservative Spring Budget 2024 announcement and the Labour Autumn Budget 2024 finalisation produced a regime that both major parties have publicly endorsed, which materially reduces near-term legislative risk. The TRF was added by Labour specifically to demonstrate stability and encourage uptake by pre-2025 non-doms - reversing it would damage the credibility of UK tax-policy continuity. However, several specific features could be tightened: (1) the 4-year exemption could be shortened to 2 or 3 years, (2) the qualifying-period test could be raised from 10 to 15 years of prior non-residence, (3) the IHT LTR trigger could be lowered from 10-of-20 years to a shorter qualifying window. Specialist advisors recommend treating the 4-year window as the headline benefit and the IHT 10-year tail as the binding long-term cost; the TRF should be used decisively rather than spread across the 3-year window in case Year-3 (15%) is removed.

How does FIG interact with double-tax treaty relief?

Double-tax treaties remain available to FIG-electing taxpayers, but the interaction is technically complex because the FIG election eliminates UK tax on the foreign income at the source level - which means there is no UK tax to credit against and no treaty relief to claim. Where the foreign jurisdiction imposes withholding tax on the income (e.g. 15% on US dividends under the UK-US treaty), that withholding tax is the final tax cost - the FIG-electing taxpayer cannot reclaim or credit it against UK tax. For some treaty positions this may make non-election (and standard arising-basis treatment) the better outcome, because the arising basis allows the foreign tax credit to be applied against the UK tax. The trade-off is fact-specific and depends on the specific jurisdiction, the treaty article in force, and the income type. Always model both FIG and arising-basis routes with the treaty position factored in.

UK residence (SRT) guide - day-counting rules under the Statutory Residence Test.
UK Inheritance Tax rules guide - NRB, RNRB, BPR/APR April 2026 cap, pension IHT April 2027.
UK Capital Gains Tax rules guide - 18% / 24% rates, BADR schedule, exemptions.
UK digital nomad tax guide - SRT for digital nomads, voluntary NI continuity.
UK vs US dual-filer tax guide - treaty interaction with FIG.
UK vs EU tax comparison - context for cross-border arrivers.
Family Investment Companies (FIC) guide - post-FIG-window wealth-planning vehicle.
UK trust tax guide - offshore trust treatment under the new regime.