Non-Dom Changes for Americans in the UK: What the End of the Remittance Basis Means

The main non-dom changes for Americans in the UK are that the remittance basis ended on 6 April 2025, UK residents are now taxed on worldwide income and gains as they arise, and inheritance tax now follows long-term UK residence rather than domicile. For US citizens the income tax change is often smaller than expected, but the inheritance tax change can be significant.

For more than two centuries, UK tax on foreign income depended partly on domicile. A resident who was not UK domiciled could claim the remittance basis and pay UK tax on foreign income and gains only when they brought the money to the UK. That regime is gone. This guide explains what replaced it, the transitional reliefs for people who used it, the new inheritance tax test, the changes to Overseas Workday Relief, and what all of this means for someone who also files a US return every year.

What changed on 6 April 2025?

From 6 April 2025 the UK replaced its domicile-based rules with a residence-based system. The government's policy paper, Reforming the taxation of non-UK domiciled individuals, published on 30 October 2024 and enacted in Finance Act 2025, set out five connected changes:

1. The remittance basis was abolished. UK residents are taxed on worldwide income and gains as they arise.
2. A four-year foreign income and gains (FIG) regime was introduced for people arriving after 10 tax years of non-UK residence.
3. A Temporary Repatriation Facility (TRF) opened for former remittance basis users, for three tax years from 2025 to 2026.
4. Capital gains rebasing to 5 April 2017 became available to certain former remittance basis users.
5. Inheritance tax moved to a long-term residence test, replacing domicile and deemed domicile for most purposes.

Overseas Workday Relief was also reshaped to sit alongside the FIG regime. Each change is covered below.

One point needs stating plainly: the old rules still bite on old money. Foreign income and gains that arose on or before 5 April 2025, while a person was taxed on the remittance basis, remain taxable at normal rates if they are brought to the UK later, unless they are designated under the TRF. Ending the remittance basis did not wipe the slate clean.

The four-year FIG regime in brief

The FIG regime lets a qualifying new resident claim relief from UK tax on foreign income and gains for their first four tax years of UK residence, provided they were not UK resident in any of the 10 tax years before arrival. Relieved income can be brought to the UK freely. The claim is made on the Self Assessment return each year and costs the personal allowance and the capital gains annual exempt amount for that year.

For most long-standing American residents the FIG regime is irrelevant, because they were already in the UK before 2025 and their four-year window, counted from their first year of residence, has passed. For new arrivals it is a live decision. Our full guide to the UK foreign income and gains regime covers the qualifying test, the claim on form SA109 and how the claim interacts with a US return.

How does the Temporary Repatriation Facility work?

The Temporary Repatriation Facility lets a former remittance basis user pay a flat charge on foreign income and gains from before 6 April 2025 and then bring that money to the UK with no further UK tax. HMRC's manual at RDRM73200 limits it to individuals who are UK resident in the tax year of designation, were subject to the remittance basis for at least one tax year before 2025 to 2026, and have "qualifying overseas capital" to designate.

The rate depends on the return in which the designation is made. According to RDRM73400:

Tax year of the designating return	TRF charge	Return due (online)
2025 to 2026	12%	31 January 2027
2026 to 2027 (the current year)	12%	31 January 2028
2027 to 2028	15%	31 January 2029

Two features matter. First, HMRC describes the TRF charge as "a charge on capital. It is not a tax on income or capital gains." Second, the designation is made in a return, so it is a year-end decision rather than something done at the bank. Remittance basis charges paid in earlier years cannot be set against the TRF charge.

The US angle on the TRF

For a US citizen, the key question is whether the income being designated has already been taxed in the US. In most cases it has: the US taxed it in the year it arose. If no UK tax was paid at that time, the US took its full share and gave no foreign tax credit. Paying the TRF charge now can clean up the UK position cheaply compared with ordinary UK rates, but because HMRC itself says the charge is not a tax on income or gains, it should not be assumed to be creditable on a US Form 1116. Model it as a UK cost with no US offset unless your adviser concludes otherwise.

Capital gains rebasing to 5 April 2017

Rebasing lets a qualifying former remittance basis user calculate UK capital gains on a foreign asset from its value on 5 April 2017 rather than from original cost. The conditions are in Finance Act 2025, Schedule 11. All of these must be met:

• you held the asset on 5 April 2017;
• you dispose of it on or after 6 April 2025;
• the asset was not situated in the UK at any time from 6 March 2024 to 5 April 2025;
• you were not domiciled or deemed domiciled in the UK at any time in a tax year before 2025 to 2026; and
• you made a remittance basis claim for at least one tax year from 2017 to 2018 to 2024 to 2025, other than a year in which the remittance basis applied automatically.

Rebasing applies automatically when the conditions are met, but you can make an irrevocable election, disposal by disposal, for it not to apply. That matters when the asset was worth less on 5 April 2017 than it cost, because original cost would give a smaller gain.

For an American, rebasing is a UK-only step-up. The US cost basis is unchanged, so the US gain on the same sale is still measured from the original purchase price. Rebasing can reduce the UK tax, which also reduces the UK tax available as a US foreign tax credit on that gain. If the US tax on the gain was already the larger of the two, rebasing may change little in total.

How do the non-dom changes to inheritance tax affect Americans in the UK?

From 6 April 2025, UK inheritance tax reaches the worldwide assets of a long-term UK resident, whatever their domicile. GOV.UK's guidance, Inheritance Tax if you're a long-term UK resident, defines that as someone who has been UK resident for at least 10 of the 20 tax years before the year of the transfer or death. Non-UK assets of anyone else remain outside UK inheritance tax, although UK assets are always within scope.

For many Americans in the UK this is the biggest practical change. Before April 2025, an American with a US domicile of origin who kept that domicile would usually become deemed UK domiciled only after 15 of 20 years of UK residence. The new test uses residence years under the Statutory Residence Test and bites after 10.

The tail after leaving the UK

Leaving the UK does not end exposure at once. GOV.UK sets out a tail that depends on how many years you were resident within the previous 20:

UK-resident years in the previous 20	Years you stay in scope after leaving
10 to 13	3
14	4
15	5
16 to 19	6 to 9 (one more year per extra year of residence)
20	10

Returning after 10 consecutive tax years of non-residence resets the count. HMRC's manual at IHTM47021 adds transitional rules for people who left in 2025 to 2026: someone who was neither domiciled nor deemed domiciled in the UK on 30 October 2024 and became non-resident in 2025 to 2026 is not a long-term UK resident, while someone who was deemed domiciled on that date stays in scope until the start of their fourth year of non-residence.

Where the US-UK estate and gift tax treaty fits

The US taxes its citizens' estates and gifts on a worldwide basis whatever the UK does. The two countries have a separate estate and gift tax treaty, signed in 1978 and given effect in the UK by SI 1979/1454, which decides which country has the primary right to tax and how credits work.

The treaty uses its own "fiscal domicile" rules in Article 4. Article 4(3) deems an individual who is a US national but not a UK national, and who has not been UK resident in 7 or more of the 10 income tax years ending with the relevant year, to be domiciled in the US. Article 5 then limits the other country's taxing rights over most property, and Article 9 provides credits where both countries tax. HMRC's manual at IHTM47001 confirms that domicile may remain relevant where a double taxation convention uses the concept of domicile.

How the new long-term residence test reads through a treaty drafted around domicile is a technical question, and the answer can turn on nationality, years of residence and where the assets sit. An American who is not a British national and has been in the UK for fewer than 7 years may find the treaty points to the US. A dual national, or someone past the 7-year mark, needs a proper analysis. Our estate and trust planning service reviews wills, trusts and gifting against both systems.

What changed for Overseas Workday Relief?

Overseas Workday Relief (OWR) now runs for up to four tax years, aligned with the FIG regime, and no longer needs you to keep earnings offshore. The policy paper confirms both points, and HMRC's manual at EIM43600 sets the new cap: from 6 April 2025 the relief is limited to the lower of 30% of the qualifying employment income or £300,000 a year.

Under the old rules, OWR was linked to the remittance basis and required a qualifying offshore account. Removing that link simplifies payroll and banking for internationally mobile employees. For a US citizen, OWR reduces UK tax on earnings for workdays outside the UK, but the US still taxes the whole salary. Less UK tax means fewer foreign tax credits on the US side, so the net saving is often smaller than the UK relief alone suggests.

Why did the remittance basis often matter less for US citizens?

The remittance basis often mattered less for US citizens because the US taxes its citizens on worldwide income every year, whatever the UK does. The IRS page on US citizens and resident aliens abroad is clear on this point. Keeping income offshore deferred the UK tax but never the US tax.

Three features of the old regime made it a weaker tool for Americans than for other non-doms:

• No UK tax meant no US credit. The US foreign tax credit is given for foreign tax paid or accrued. Unremitted income carried no UK tax, so the US charged its full rate in the year the income arose.
• Mismatched timing. If the income was remitted years later, the UK taxed it then. IRS Publication 514 allows excess foreign tax to be carried back one year and forward ten, but UK tax arriving long after the US tax could be hard to match against the original income.
• Much "foreign" income was US-source. For an American, foreign income usually meant US dividends, interest, rent and gains. On the arising basis, the UK would often credit US tax on that income under the treaty, leaving only a small UK top-up. The remittance basis mostly deferred that top-up, and could cost UK allowances in the process.

The remittance basis could still help Americans with large third-country income, UK-sheltered structures or significant gains taxed more heavily in the UK than in the US. But for many US citizens, the abolition moves them to the arising basis they may already have been close to in practice.

Illustrative example: an American in London who has lived in the UK since 2014 claimed the remittance basis for several years and left US brokerage dividends and gains in a US account. The US taxed that income each year. From 6 April 2025 she is taxed on the arising basis. Her unremitted pre-2025 income would be taxed at normal UK rates if brought in, so she considers designating it under the TRF at 12% in her 2026 to 2027 return, while recognising the charge may not be creditable in the US. Having been UK resident for more than 10 of the last 20 tax years, she is also now a long-term UK resident for inheritance tax, so her US assets are within scope subject to the treaty. This is a simplified illustration, not advice.

What US citizens who used the remittance basis should do now

A former remittance basis user with US citizenship should work through these steps before the TRF window closes after 2027 to 2028:

1. Map unremitted funds. Identify foreign income and gains from pre-6 April 2025 remittance basis years still held offshore, and any mixed accounts.
2. Check TRF eligibility and timing. Confirm UK residence in the designation year and compare the 12% rate for 2025 to 2026 and 2026 to 2027 with the 15% rate for 2027 to 2028.
3. Test rebasing. List foreign assets held on 5 April 2017 and check each Schedule 11 condition before any sale, including whether to elect out.
4. Count residence years for inheritance tax. Work out how many of the previous 20 tax years you were UK resident, and what tail would apply if you left.
5. Review the estate plan against both systems. Wills, trusts, lifetime gifts and spousal transfers need to work under US estate and gift tax, UK inheritance tax and the treaty together.
6. Re-model foreign tax credits. Moving to the arising basis changes the timing of UK tax and so the credits on your US return. Our guide to US-UK double taxation relief explains the ordering.

Americans with larger estates will also find our guide to high-net-worth US-UK tax planning useful, and our overview of tax obligations for Americans living in the UK covers the US filings that continue regardless.

What people get wrong about the end of non-dom status

• Assuming old money is now free. Pre-2025 remittance basis income is still taxed if brought in, unless designated under the TRF.
• Treating domicile as irrelevant. It still matters for events before 6 April 2025 and can matter under treaties.
• Forgetting the inheritance tax tail. Leaving the UK does not remove worldwide assets from UK inheritance tax straight away.
• Assuming rebasing flows through to the US. The US cost basis does not change.
• Treating the TRF charge as a US credit. HMRC describes it as a charge on capital, not an income tax.

The bottom line

The end of the remittance basis puts Americans in the UK on the same arising basis as everyone else, which for many US citizens changes the paperwork more than the total tax. The real decisions are about old money and estates: whether to use the TRF before the rate rises, whether rebasing helps, and how the long-term residence test and the 1978 treaty apply to your assets. US/UK Cross Border Tax, US CPAs and UK tax advisers working as one team in London, Manchester, New York and San Francisco, works through these on both returns at once. See our work on non-dom changes for Americans in the UK, our support for high-net-worth families, or contact us to review your position.