The End of an Era: Why April 2025 Matters

For decades, the UK’s “non-dom” status allowed foreign income and gains to be taxed only if brought into the UK—the remittance basis. That era ended on 6 April 2025. The UK has abolished the remittance basis and replaced the concept of “domicile” with a residence-based system.

For international lawyers advising clients with UK connections—whether contemplating a move to London, owning UK property, or having historically relied on non-dom status—these changes demand immediate attention.

Five Critical Changes Every International Lawyer Should Understand

1. 1. The Remittance Basis Is Dead
      UK-resident individuals can no longer shelter foreign income and gains by keeping them offshore. All worldwide income and gains are now taxable in the UK, regardless of remittance. Assume worldwide tax exposure from day one—unless clients qualify for new exemptions.

1. 1. Last Chance: The Transitional Repatriation Facility (TRF)
      HMRC offers a temporary lifeline: the Transitional Repatriation Facility allows pre-April 2025 foreign income and gains to be brought to the UK at a flat 12% tax rate during 2025–26, 2026-27 and 2027-28. This narrow window enables clients to repatriate funds on favourable terms before new rules fully bite. Flag this immediately with UK tax counsel.

1. 1. New Four-Year Tax Holiday: The “Foreign Income & Gains” (FIG) Regime
      Individuals who move (or return) to the UK after at least 10 full tax years of non-residence receive four years of exemption from UK tax on foreign income and gains. These funds can be brought into the UK tax-free during this period. After four years, worldwide income and gains become fully taxable. Timing a client’s move and managing the year-five transition require careful UK specialist coordination.

1. 1. Inheritance Tax Overhaul: From Domicile to Residence
      The UK has replaced its “domicile” test with a residence-based test. Individuals who’ve been UK-resident for 10 out of the previous 20 tax years become “Long-Term Residents” subject to UK IHT on worldwide assets—even after leaving the UK. IHT exposure continues for up to 10 years after departure.
      This is far-reaching: clients who spent a decade in London may face UK IHT on global estates years after returning to New York, Paris, or Singapore. Any client UK-resident in the last 20 years should have IHT exposure reviewed now.

1. Excluded Property Trusts: No Longer a Safe Harbour
   Historically, non-UK domiciled individuals could place foreign assets into “excluded property trusts” remaining outside UK IHT indefinitely. This protection is being withdrawn for Long-Term Residents. Trusts established under old rules may lose excluded property status. Existing structures must be reviewed and possibly restructured.

What This Means for Your Clients

• If your client lives outside the UK: They pay UK tax only on UK-source income and gains. However, the residence-based IHT test means potential UK inheritance tax exposure if they’ve been UK-resident within the last 20 years. Planning ahead of any future UK move is critical.
• If your client is moving to (or returning to) the UK: They may qualify for the four-year FIG exemption – but only after 10 full tax years of non-residence. Pre-arrival restructuring (timing asset disposals, reviewing trust structures) can significantly reduce future liabilities.
• If your client is already UK-resident: The remittance basis is gone – worldwide income and gains are now taxable. The TRF offers limited-time 12% repatriation opportunity. Existing offshore structures need urgent review.

When to Bring in UK Specialists

Immediate referral situations:

• Client planning UK move (or departure)
• Client UK-resident at any point in the last 20 years (IHT exposure)
• Client has UK trusts or offshore structures

How to collaborate effectively:

• Early engagement: Pre-arrival planning is critical
• Shared fact-finding: Coordinate residence history, asset holdings, family situation
• Joint advice: Address multi-jurisdictional exposure simultaneously
• Ongoing coordination: UK tax compliance is year-round

Conclusion: Act Now

The UK’s domicile-to-residence shift fundamentally rewrites rules for internationally mobile wealth. Clients once enjoying tax-efficient UK residence may now face full worldwide taxation and inheritance tax exposure outlasting their UK presence. But careful planning – and close international-UK specialist collaboration – can manage risks.

The window for action is narrow. The TRF ends April 2028. Rebasing elections have deadlines. Clients moving to the UK without proper planning may lose valuable exemptions forever.

Review your client base now, identify UK exposure, and build relationships with trusted UK tax advisers. The clients who benefit most are those whose lawyers act swiftly – and collaboratively.

Julian Hay, Partner and Head of Private Client, William Sturges julian.hay@williamsturges.co.uk 

William Sturges LLP is a London-based law firm with nearly 250 years of heritage.

Our Private Client team works regularly with US and European counsel to deliver seamless, cross-border advice.