The Spring Budget 2025 marked the most significant overhaul to the United Kingdom’s tax regime in more than two decades, and its impact on non-domiciled residents — or “non-doms” — cannot be overstated. For decades, wealthy foreign nationals living in the UK benefited from the remittance basis of taxation, a system that allowed them to shield foreign income and gains from HMRC so long as those funds were not brought into the UK.

From April 2025, that privilege is coming to an end. The Chancellor’s announcement effectively dismantled the long-standing non-dom tax regime, replacing it with a residency-based system that will see many former beneficiaries paying tax on their worldwide income for the first time.

Financial analysts estimate that the average long-term non-dom could now face an additional £47,000 per year in tax liabilities — and for some, the figure could be far higher.

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What Was the Non-Dom Regime?

The non-domiciled (“non-dom”) status was a cornerstone of the UK’s appeal to global investors, entrepreneurs, and professionals. Under the previous rules, individuals who were resident in the UK but domiciled elsewhere could choose to be taxed on the remittance basis, meaning:

• They only paid UK tax on income and gains brought into the UK;

• Foreign income kept overseas remained untaxed;

• They could maintain offshore accounts, trusts, and investment structures shielded from HMRC scrutiny.

In return, long-term residents were required to pay an annual charge — £30,000 after seven years, increasing to £60,000 for those resident 12 years or more. For ultra-high-net-worth individuals, this charge was a small price to pay compared to the vast sums saved through remittance-based taxation.

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The 2025 Budget: A Complete Reversal

The Chancellor’s 2025 Budget delivered a clear message: residence, not domicile, will now determine tax liability.

The new Residence-Based Foreign Income and Gains (RBFI&G) regime will replace the old non-dom structure from 6 April 2025. Under the new rules:

1. Individuals resident in the UK for more than four tax years will be taxed on their worldwide income and gains.

2. The remittance basis will be abolished entirely.

3. Transitional reliefs will apply for a limited period to ease the shift, but they are temporary and conditional.

This change marks a philosophical shift as much as a fiscal one. The UK, once a magnet for global wealth, is repositioning itself towards fairness and transparency, aiming to close perceived loopholes that allowed some residents to pay significantly less tax than others.

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The £47,000 Impact Explained

The figure of £47,000 represents the average additional annual tax burden projected for mid- to high-income non-doms, based on analysis by independent tax advisers.

Here’s how that breaks down:

• Foreign Investment Income: Many non-doms hold dividend-paying assets offshore. Under the new rules, those dividends will now be taxed at up to 39.35% (the additional rate).

• Rental Income Abroad: Overseas property income, previously excluded from UK tax, will now be taxed at the individual’s marginal rate.

• Capital Gains: Profits from selling foreign shares or property will be taxed at up to 24% for gains on propertyand 20% for other assets.

• Loss of the Remittance Shield: Even if the funds remain offshore, they are now within HMRC’s scope.

For an individual earning £120,000 annually from foreign investments and gains, this equates to roughly £47,000 in new UK tax liability.

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Transitional Reliefs: Temporary Comfort

To prevent mass capital flight, the Treasury announced several transitional measures designed to soften the blow — but these are both short-lived and limited in scope.

1. 50% Reduction for One Year

For the 2025–26 tax year only, 50% of foreign income will be excluded from UK tax. However, this applies only to income, not capital gains, and is available for one year only.

2. Rebasing Relief

Non-doms who become deemed UK-resident in April 2025 may rebase their foreign assets to their market value as of 5 April 2019. This means only gains made since that date will be subject to UK tax upon disposal — a valuable but one-off adjustment.

3. Temporary Repatriation Facility (TRF)

Individuals can bring previously untaxed foreign income or gains into the UK during the 2025–26 and 2026–27 tax years at a reduced rate of 12%. This incentive aims to encourage the repatriation of offshore wealth but expires after two years.

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Who Is Affected?

The new regime will impact an estimated 68,000 current non-doms and several thousand more UK residents who indirectly benefited through trusts or family holdings. The groups most affected include:

• Long-term UK residents who have lived in the country for more than four years but maintained overseas accounts.

• Entrepreneurs and business owners who used offshore structures to defer UK tax.

• Wealthy retirees with foreign investment portfolios or property.

• Second-generation UK residents born to non-dom parents but now considered domiciled by default.

Notably, short-term residents — those living in the UK for fewer than four tax years — will still enjoy a limited exemption for foreign income and gains. However, this exemption vanishes from the fifth year onward, aligning their tax treatment with ordinary UK residents.

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How the Budget Redefines “Fairness”

Politically, the abolition of the non-dom regime reflects a growing demand for tax equality. Critics long argued that the remittance basis created a two-tier system — one for ordinary taxpayers and another for the global elite.

The government’s position is that these reforms will make the system “simpler, fairer, and harder to exploit.” The Chancellor estimated that abolishing non-dom status could generate £2.7 billion annually in additional revenue, which will be redirected towards public services and targeted tax relief for low- and middle-income earners.

However, economists warn that fairness comes at a cost. London’s attractiveness as a base for international wealth may diminish, potentially affecting investment, philanthropy, and property markets.

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The International Ripple Effect

Global tax transparency has become the new norm. The UK’s decision aligns with a broader international trend driven by the OECD’s Common Reporting Standard (CRS) and Base Erosion and Profit Shifting (BEPS) initiatives.

The message is clear: there are fewer and fewer places left for tax-advantaged income to hide. Countries such as Italy and Portugal, once havens for high-net-worth expats, have also tightened their special tax regimes. The UK’s move is, therefore, part of a wider recalibration rather than an isolated decision.

For some non-doms, this may prompt relocation to jurisdictions still offering favourable conditions — such as Monaco, Dubai, or Singapore — but many will find that the administrative and financial costs of moving outweigh the benefits.

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What Should Non-Doms Do Now?

With less than a year before the new rules take effect, time is short. Financial advisers recommend a three-step action plan:

1. Assess Global Income and Structures

Non-doms should conduct a detailed review of all foreign income, investments, and trusts. Identifying where income arises — and how it flows — is essential for determining exposure under the new rules.

2. Consider the Transitional Reliefs

Taking advantage of the one-year 50% reduction or the Temporary Repatriation Facility could significantly reduce the initial tax burden. However, both require careful timing and documentation.

3. Seek Professional Guidance

The complexity of the new rules means that even experienced investors should consult a qualified UK tax specialist. Firms such as My Tax Accountant can help navigate transitional reliefs, asset rebasing, and compliance under the upcoming RBFI&G system.

Their expertise ensures that each client’s structure — from offshore trusts to investment portfolios — is reviewed in line with the new legislation, potentially saving tens of thousands of pounds in unnecessary tax.

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The Unintended Consequences

While the government aims for fairness, some unintended side effects are already emerging:

• Capital flight risk: High-net-worth individuals may liquidate UK assets before April 2025 to avoid future taxation.

• Reduced property market activity: Foreign buyers, particularly in prime London areas, may reconsider purchases as their global income becomes taxable in the UK.

• Administrative burden: HMRC will face the challenge of processing thousands of new filings and reassessments under the new system.

• Wealth migration: Some family offices and investment firms are reportedly exploring relocation to more tax-efficient jurisdictions.

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Case Example: The £47,000 Reality

Consider a non-dom living in London since 2012 with £250,000 in annual offshore income. Under the old rules, they paid a £60,000 annual remittance charge but kept the rest untaxed.

From April 2025:

• Their entire £250,000 becomes subject to UK tax.

• Assuming an average effective rate of 38%, their liability rises to £95,000.

• After transitional relief (50% exemption in year one), they owe roughly £47,500 in new tax.

In other words, the same taxpayer who paid £60,000 under the remittance system will now pay £107,500, a net increase of nearly £47,000.

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What Happens to Non-Dom Trusts?

Offshore trusts — once a central tool for estate planning and inheritance protection — are also being drawn into the new framework. Under the 2025 rules:

• Trust income and gains will be taxed on UK-resident settlors and beneficiaries as if the assets were held personally.

• The concept of “protected trusts” (shielded from UK tax under previous regimes) will be abolished.

• New anti-avoidance measures will require transparent reporting of trust structures and distributions.

This means that even long-established family trusts may now trigger tax liabilities, requiring urgent restructuring before the new system begins.

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The Broader Message

The end of the non-dom era signals more than a policy shift — it reflects a cultural change in how the UK views tax fairness. The days when wealth alone guaranteed preferential treatment are closing.

Yet, despite the headline figures and public debate, most financial experts agree that the key lies not in panic, but preparation. Those who act now — reviewing portfolios, understanding transitional reliefs, and seeking professional advice — can still mitigate much of the financial impact.

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Final Thoughts

The abolition of the non-dom regime marks the end of an era and the beginning of a new, more transparent tax landscape. For some, it means paying tens of thousands more each year; for others, it’s a chance to regularise affairs and bring offshore finances in line with modern standards.

What is certain is that inaction will be costly. By April 2025, every non-dom living in the UK will face the same question: adapt, relocate, or pay.

Those who begin planning now, with professional guidance, stand the best chance of navigating the transition smoothly — and ensuring that while the tax laws may have changed, their financial future remains secure.

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In 2025, “Non-Dom No More” is more than a headline — it’s the new reality of UK taxation.