It’s been over six months since the UK’s ‘non-domicile regime’ came into effect. These new set of regulations focus on an individual’s tax residency and account for an individual’s links to the UK, countries and any trusts they are associated with.
What changed in April 2025?
In April 2025, a new four-year Foreign Income and Gains (FIG) regime was introduced.
Under the new regulations, UK tax residents can be exempt from most forms of foreign income and gains from these taxes during their first four years as a UK tax resident.
The new FIG regime can be accessed by any individual who has been a non-UK tax resident for at least ten consecutive years. This will only apply, though, if these years were accumulated before the first of the four-year regime.
However, it is important to clarify they if you do claim for any of the years, you will lose some of your tax allowances and the ability to deduct any losses from foreign entities from taxable gains.
The regime doesn’t apply automatically, meaning you will need to check to see if you’re eligible to apply.
You can choose which of the four years to apply for, but any foreign income you make needs to be accounted for and reported to HMRC, whether a claim is made or not.
What trust structure changes have been introduced?
Non-UK residents should also be aware of the changes to trust structures because protected status on these types of trusts has been removed, significantly increasing the scope of taxation for the settlor.
This will mainly be a worry for non-UK resident trusts with living tax settlors in the UK and several factors will determine the exposure, including:
If you are associated with discretionary trusts, your residency status will clarify whether IHT applies. However, this will be unchanged if a settlor passes away prior to the new regulations taking effect in April 2025.
If you have built connections internationally and are unsure about the latest changes, our team can advise and support you.
Get in touch with our team for more information on the new residency rules.
