The UK’s 2025 Tax Overhaul: What It Means for Australians in the UK now that the “Non-Dom” Regime Is Gone

For about two centuries, the United Kingdom ran one of the world’s most famous tax perks: “non-dom” status. If your permanent home (your “domicile”) was considered to be outside the UK, you could live there for years and keep your foreign income and gains largely out of the UK tax net unless you brought the money in. For a lot of Australians in London, it quietly shaped how they held their money back home.

Here’s the headline, and it’s a big one: that whole system has been abolished. From 6 April 2025 the UK largely removed domicile as the key connecting factor for income tax, capital gains tax and inheritance tax, and replaced the old non-dom framework with residence-based rules. The fine print, naturally, still contains transitional and legacy rules where old domicile concepts can matter, because tax reform rarely cleans the whole kitchen. But if your understanding of UK tax is built on the old non-dom rules (the “15 of the last 20 years,” the remittance basis, the offshore structure holding your assets), that mental model is now out of date. Let’s walk through what actually applies today, and crucially, where the Australian side fits in, because that’s our lane and it hasn’t gone anywhere.

What actually changed

The old regime taxed you by reference to domicile, an old common-law concept about where your permanent home really was. The new regime largely moves away from domicile and asks a more practical question: how long have you been UK tax resident? Two big consequences flow from that.

First, the remittance basis is gone. Under the old rules, a non-dom could choose to be taxed on UK income as normal but on foreign income and gains only when those funds were brought (remitted) into the UK. From 6 April 2025, that option ended. UK residents are now generally taxed on their worldwide income and gains as they arise, in the same way as everyone else, subject to the new four-year relief below and some transitional measures.

Second, inheritance tax moved from a domicile test to a residence test. This is the part that matters most for long-term wealth, and we will come to it, because it is where Australians with assets back home need to pay attention.

The new four-year FIG regime (the one bit of good news for new arrivals)

The replacement for the non-dom perk is the four-year foreign income and gains regime, usually shortened to the FIG regime. The idea is a soft landing for genuine new arrivals. If you become UK tax resident after at least 10 consecutive tax years of non-UK residence, you may be able to claim 100% relief on your eligible foreign income and gains arising during your first four UK tax years. Those relieved amounts can then be brought into the UK without an additional UK tax charge. One important transition point for those already here: if your first four UK-resident years started before 6 April 2025, you may still be able to use the FIG regime from 2025/26 for whatever is left of that four-year window. You don’t get to restart the clock, because HMRC is many things, but Santa is not one of them.

Notice the word “eligible,” because it is doing real work. The FIG regime does not bless every offshore receipt with holy water: some income is excluded, foreign employment income has its own Overseas Workday Relief rules, and the relief must be claimed properly through UK Self Assessment for each year you want it. This is a concession, not a hammock.

And claiming comes at a price. In a year you claim FIG relief, you generally lose your UK income tax personal allowance and your capital gains tax annual exempt amount; other allowances and reliefs can be affected too, and foreign income losses or foreign capital losses for that year may be unusable. After the four years are up, if you remain UK tax resident and no other relief applies, you are taxed on your worldwide income and gains like any other UK resident. The 10-year clean break is also a real condition: it suits genuine new arrivals and Australians returning to the UK after a long stint away, but not someone who has been bouncing in and out. There is also an extended Overseas Workday Relief for employment income relating to duties performed outside the UK; it can now run up to four years for eligible new arrivals, but it is capped, broadly at the lower of £300,000 or 30% of qualifying employment income for the qualifying year, subject to transitional rules. That is one for a UK adviser to model properly; the cap is not decorative.

The big one: inheritance tax is now about residence, not domicile

This is where the old advice does the most damage if you still believe it, so read carefully. UK inheritance tax, commonly charged at 40% on death above the available thresholds, used to hinge on domicile. It now hinges much more on how long you have been UK resident. (Other inheritance tax charges, such as those on certain trusts, can work differently, so 40% is the headline death-estate rate rather than a single rate for everything.)

Under the new “long-term resident” test, once you have been UK tax resident for at least 10 of the previous 20 tax years, your worldwide estate (including your Australian assets) comes within the scope of UK inheritance tax. UK-situated assets, like a UK property, are within the UK inheritance tax net regardless of your residence status; that has not changed. What is new is that your non-UK assets are pulled in based purely on that 10-out-of-20-years residence test, with domicile no longer offering a way around it.

There is also a “tail” when you leave. If you have become a long-term resident and then move away, you do not drop out of the UK inheritance tax net immediately. The tail runs from three years (for someone resident 10 to 13 of the last 20 years) up to a maximum of 10 years (for someone resident 20 years or more). So leaving the UK does not instantly switch off UK inheritance tax exposure on your worldwide estate; it winds down over a period that depends on how long you were there.

What this means for those old offshore structures

The source of this article’s original anxiety, offshore structures and trusts used to keep UK inheritance tax off non-UK assets, deserves a clear-eyed update. Those “excluded property” trusts historically gave non-doms long-term protection from UK inheritance tax on offshore assets. The post-2025 position is more conditional and far more residence-driven. Broadly, non-UK assets in a trust can come within the UK inheritance tax net where the settlor is a long-term UK resident at the relevant time, and trust-level periodic or exit charges may need to be considered. But there are transitional rules and legacy protections for some pre-2025 trust assets, so this is genuinely not a one-sentence answer. Separately, the protected-trust treatment for income and gains has also been cut back for those who do not qualify for, or do not claim, the FIG regime.

Here is where we have to be honest about our lane. Whether an existing trust or company structure still does anything useful for you, and what (if anything) to do about it, is UK inheritance tax and UK structuring territory, administered under UK law. That is a question for a UK tax adviser or solicitor who specialises in exactly this, not something to action off the back of a blog, and certainly not something to unwind in a panic. We are Australian registered tax agents; we are not UK advisers, and nothing here is a recommendation to set up, keep or unwind any structure. What we can tell you plainly is that the old “set up an offshore structure and forget about it” assumption no longer holds, and structures built for the pre-2025 world need a proper UK review.

The transitional reliefs (if you were a non-dom before)

If you actually used the old remittance basis before it ended, there are time-limited transitional measures worth knowing exist, so you can ask a UK adviser about them before the windows close. The Temporary Repatriation Facility lets people who previously claimed the remittance basis designate and bring pre-6 April 2025 foreign income and gains into the UK at reduced rates (12% in the 2025/26 and 2026/27 tax years, 15% in 2027/28) rather than at full rates. And a capital gains tax rebasing can let qualifying former remittance-basis users rebase certain personally-held foreign assets to their 5 April 2017 value on a later disposal, so only the growth since then is taxed. Both come with eligibility conditions, asset conditions and deadlines; they are not a general “old non-dom discount card,” which is precisely why they are worth raising with a UK specialist sooner rather than later, before the windows close.

Where the Australian side fits in (our actual job)

Here is the bit the UK-focused commentary always leaves out, and it is the bit we handle. Your UK position is only half the picture. Whatever HMRC is doing, you also have an Australian tax position to get right, and the two interact.

It starts, as ever, with your Australian tax residency, which is decided by Australia’s own tests and is entirely separate from your UK status. You can be UK tax resident and still be an Australian tax resident too, in which case both countries’ rules are in play and the Australia-UK tax treaty acts as referee, allocating taxing rights and, through its tie-breaker, deciding which country you are treated as resident of for treaty purposes. One technical note worth getting right: the Australia-UK treaty’s residency tie-breaker looks first at your permanent home, then at your centre of vital interests (where your personal and economic relations are closer), then at nationality, and finally at mutual agreement between the two tax authorities. Notably, it has no “habitual abode” step, which means it does not work like the generic OECD-style order or like some other treaties, so don’t borrow the tie-breaker from another country and hope for the best. Where the same income is taxed on both sides, relief usually comes through the relevant credit system: Australia’s foreign income tax offset on the Australian side, and UK foreign tax credit relief on the UK side. Helpful, but credits have limits, timing quirks and character mismatches; the treaty is a referee, not a refund machine.

There are also two Australian traps worth checking before the UK planning soaks up all the attention. First, CGT event I1 can treat you as having disposed of many of your non-taxable-Australian-property CGT assets (shares, ETFs, crypto, foreign assets, founder equity) at market value when you cease Australian tax residency. You may be able to choose to disregard the deemed gain or loss, but that keeps the relevant assets inside the Australian CGT net until a later disposal or a return to Australian residency; in plain English, Australia may let you park the bill, but it keeps the keys. Second, your Australian home can become a quiet tax grenade: if you keep it and later sell under a contract entered into after 30 June 2020 while you are a foreign resident, the main residence exemption is generally denied unless the narrow life events test applies. The six-year absence rule can still help in the right case if you sell while Australian resident, but it is not the force field many expats assume. The contract date, and your residency on that date, drive the outcome.

So the practical job, and what we do, is make the Australian side line up with your UK reality: getting your Australian residency call right, handling any Australian-source income (that Australian rental property does not stop being taxable here just because you have moved), and coordinating the timing and the credits so you are not taxed twice or caught out by one system while focused on the other. We work alongside a UK adviser, who handles the UK return and the UK inheritance tax and structuring questions, while we keep the Australian side straight. For more on the UK move generally, see our guide for Australians moving to the UK, and start any plan with the Australian residency essentials.

The bottom line

The non-dom regime that shaped a generation of expat tax planning is gone, replaced from 6 April 2025 by a residence-based system: a four-year FIG relief for qualifying new arrivals, arising-basis taxation after that, and a UK inheritance tax net that can close around your worldwide estate once you become a long-term UK resident (with a tail when you leave). If your UK tax thinking is still running on the old domicile model, it needs a full reset.

But do not panic, and do not rip apart old structures on a Sunday afternoon with a glass of red and a spreadsheet. Existing trusts, pre-2025 foreign income and gains, the TRF, CGT rebasing, your UK inheritance tax exposure and your Australian tax residency all need coordinated advice. The right move is calm and boring, which is usually where the money is: get a UK adviser for the UK side, get us to handle the Australian residency, CGT, Australian-source income and foreign income tax offset side, and then make decisions with both systems on the table. These changes are significant and they do affect your bank balance, so this genuinely is worth a proper look rather than a wait-and-see.

Australians in the UK: not sure where you stand?

This is exactly what we do on the Australian side. We help Australians in the UK get their Australian residency and returns right, handle their Australian-source income, and coordinate with their UK adviser so the two systems line up rather than collide. We work remotely with expats all over the world, and our fee is always an upfront quote.

Book an appointment with our specialist team today. Far cheaper than learning it the hard way.

General information only. This article doesn’t consider your personal circumstances and isn’t tax, financial or legal advice, and nothing in it is a recommendation to establish, retain or unwind any structure, trust or arrangement. We’re Australian registered tax agents, not UK tax advisers or solicitors; the UK rules described (including the FIG regime, the residence-based inheritance tax rules and the transitional reliefs) are administered by HMRC under UK law, are complex and subject to change, and should be confirmed with a qualified UK adviser. Your Australian outcome depends on your residency and circumstances. Speak to our specialist expatriate tax team today, or to another registered tax agent, before acting.