As of 6 April 2025, a wave of major changes officially came into force in the UK tax system. While none of it was a surprise — the government gave everyone plenty of notice — now that the new rules are in effect, it’s important to understand what’s changed and how it might affect you, especially if you live in the UK or have financial ties to it.
The Big Shift: The End of the “Non-Dom” Era
Until April 2025, many foreign nationals living in the UK benefited from a special regime known as the Remittance Basis (commonly called “non-dom”). It allowed them to avoid paying UK tax on foreign income — as long as they didn’t bring that money into the country.
Starting with the new tax year, that’s no longer the case. Most UK tax residents are now taxed on their worldwide income, regardless of where it’s earned — from a business in London to an account in Geneva.
There is one major exception: new arrivals to the UK can benefit from a 4-year foreign income exemption (also known as FIG). But if you’ve already spent years living in Britain or have returned after a previous period of residency, this doesn’t apply.
What You Could Do Before April — and What You Can Still Do
1. Lock in the old rules for past income
Before the April deadline, residents could designate foreign income earned before that date as Foreign Unremitted Income and Gains — meaning it wouldn’t be taxed if it stayed abroad. With careful planning, these funds can still be used overseas or even brought into the UK tax-free under certain conditions.
Important: If someone like your adult child or ex-spouse spends this money in the UK on your behalf — even without your knowledge — you may still be taxed on it. That’s why tax advisers strongly recommend using only clean capital for UK-based spending.
2. Take advantage of the Temporary Repatriation Facility (TRF)
From April 2025, the UK introduced a limited-time scheme allowing people to bring previously untaxed foreign income into the UK at a reduced flat rate: 12% (2025–27) or 15% (2027–28). Often described as a “tax amnesty,” this is ideal for those who’ve been living off untaxed foreign earnings but plan to stay in the UK long term.
3. Gifting assets or adjusting their tax base
If you wanted to gift a valuable asset (like a business share or property) that had appreciated significantly, you needed to do it before April. Why? Because after that date, such gifts may trigger a capital gains tax event in the UK — even if the asset is located abroad.
There were also legal workarounds available — like “rebasing” an asset’s value to its 2017 market price or selling and re-purchasing assets to increase their cost base — but those options are now more limited under the new regime.
What About Income Earned After April 2025?
This is where things get stricter. If you don’t qualify for the new 4-year FIG exemption, all foreign income is now taxed by default. That includes dividends, rental income, consulting fees, capital gains, and more.
Your remaining options include:
— Leaving the UK and becoming a non-resident
If you move abroad and stay away for at least 6 tax years, you can avoid UK tax on foreign income earned during that time. After 10 years of non-residency, you may even “reset” your status and regain access to the 4-year tax exemption — if the rules remain the same.
— Deferring income
Another common strategy: simply avoid triggering taxable events. Don’t withdraw dividends, don’t sell foreign investments, don’t take on foreign work. This works well for people who plan to leave the UK in a few years — for example, after getting citizenship or waiting for their children to enter university.
What If You Have Investments?
This is where it gets trickier. Even if you’re not actively drawing income, UK tax may still apply, especially if:
- You receive foreign investment income (interest, dividends);
- You hold shares in foreign companies;
- Your funds sit in tax-transparent entities like trusts or partnerships.
There are still some options available:
- Offshore funds not registered with HMRC may allow you to defer tax — though exit taxes can be steep (up to 45%);
- Offshore bonds, which let you delay taxes until a triggering event;
- Family investment companies (FICs) with separate share classes for control and ownership, useful for tax deferral and estate planning.
Offshore Bonds: A Flexible Tax Deferral Tool
Offshore investment bonds remain a popular and legal way to defer UK tax. Here’s how it works:
- You invest, say, £100,000 in an offshore bond;
- Each year, you can withdraw up to 5% tax-free (treated as a return of capital);
- This can continue for up to 20 years;
- No tax is due unless you exceed the 5% or fully cash in the bond.
This setup is ideal for high earners nearing retirement: they can delay withdrawals and take them in low-income years at a reduced tax rate. It’s also handy for those planning to emigrate — you can cash in the bond abroad and avoid UK tax altogether.
What About Foreign Company Owners?
Here comes the hard part. Starting April 2025, owning or controlling a foreign company from within the UK may trigger UK tax.
Even if your company is based in Cyprus or Dubai, if management and control happen from your London office or kitchen table, HMRC might classify it as a UK-resident company, meaning:
- Corporation tax applies;
- Dividends and director fees become UK taxable income;
- Disclosure requirements increase significantly.
Even worse: if you transferred income-generating assets abroad but still benefit from them, UK tax law treats the income as yours under the Transfer of Assets Abroad (TOAA) rules — even if the transfer happened before you moved to Britain.
So, What’s the Game Plan?
If you’re…
- New to the UK: Make the most of your 4-year FIG exemption;
- A long-term resident: Consider how to defer income or reduce residency;
- Running a foreign business: Review your structures urgently;
- Planning to stay: Explore TRF and other ways to regularise offshore assets.
The message is clear: the rules have changed, and ignoring them could be costly. Smart tax planning is no longer just for the wealthy — it’s a necessity for anyone with cross-border ties.