UK Non-Dom Tax Status Changes in 2026: Changes & FAQs

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The U.K. has officially abolished its non-dom tax status as of April 2025. This marked the end of a long-standing tax system that had been in place for over two centuries.

Understanding how this change will affect your company’s compliance management, recruitment strategies, and payroll is important if you employ international talent or have relationships with high-net-worth individuals affiliated with the U.K.

What is a non-dom tax status?

“Non-domiciled” status applied to people living in the U.K. whose permanent home (or “domicile”) legally existed somewhere else. Think of domicile as the country you consider to be your forever home. You can be a U.K. tax resident but still claim a domicile in another country where you were born or where your family roots run deep.

The tax benefit of being non-dom was straightforward: Non-doms were taxed solely on their U.K. income and any foreign income that they remitted to the U.K. Any income that was earned abroad but remained there was exempt from U.K. taxes. The remittance basis of taxation attracted many wealthy individuals, foreign employees, and international business owners who maintained worldwide investments and income outside of British borders.

The remittance basis of taxation dates back to 1799 when income tax was introduced in the U.K. By 1915, the remittance basis was limited to only those classified as non-dom. Over the course of nearly 100 years, around 74,000 individuals claimed the remittance basis each year to help them manage their global tax liabilities while residing and working in the U.K.

When did the U.K. abolish non-dom tax status?

The U.K. government announced the end of non-dom status in the Spring Budget of 2024, and the new rules became effective in April 2025. After over 200 years as part of the U.K.’s tax policy, the concept of “non-doms” was effectively abolished within one calendar year.

The concept of “remittance basis” doesn’t exist anymore either. Instead, there will be a residence-based system in which tax obligations are determined by how long you have lived in the U.K., rather than by where you permanently reside. A four-year Foreign Income and Gains (FIG) regime, which exempts foreign income, is available to non-residents who are new to the U.K. and have been outside the country for at least 10 of the past 13 tax years.

People who claimed the non-dom status before the announcement are notably affected by the transition. Long-term U.K. residents lost their ability to shelter foreign income and gains. Those who are short-term employees or genuine newcomers go through a more streamlined process, though the window is narrow and the criteria are restrictive.

What are the rules for 2026?

This is the first full tax year under the new system. Since the remittance basis is gone, residence determines tax liability.

No new non-dom claims exist. You cannot elect or renew non-dom status for 2026 or any future tax year.
If you live in the U.K., your worldwide income is subject to tax. People who used to be non-doms and now live in the U.K. have to pay tax on all their income and capital gains as they accrue.
Only new arrivals can use the four-year FIG system. If you were not a resident of the U.K. for the last 10 tax years in a row and then became a resident, you can get full relief on foreign income and gains for up to four years. After that time period ends, taxes around the world start.
A temporary repatriation facility will be open until 2027. People who used the remittance basis can bring in foreign income and gains from before 2025 at lower rates: 12% for 2025/26 and 2026/27, and then 15% for 2027/28.
Inheritance tax is based on where you live. If you have lived in the U.K. for 10 of the last 20 tax years, your worldwide assets are subject to U.K. inheritance tax. Domicile no longer protects foreign assets.
Tax planners say you should carefully consider your residency. Advisors say you should think about where you spend your time, whether the four-year FIG rule applies to you, and if moving makes sense financially. Some people who used to be non-doms are considering moving to places like Italy, Malta, or the UAE, which offer similar tax breaks.

Do other countries have a non-dom tax status?

Many countries still offer some form of preferential tax treatment for high-net-worth individuals, though each country has its own rules and limitations.

Ireland uses a system very similar to the U.K.’s former “remittance basis.” A tax resident who remains “non-domestic” pays only on income/gains brought back into Ireland.

Italy uses a flat-tax model. Those who have lived outside of Italy for at least nine years can pay a fixed amount of $300,000 per year (increased from $200,000 in 2026), which includes all foreign-earned income/foreign-held assets for up to 15 years. Each family member will be charged an additional $50,000 per year.

The NHR program in Portugal made foreign-earned income tax-free for 10 years. If the income came from Portugal, it was taxed at 20%. As of January 1, 2024, this program is no longer accepting new applications. People who are currently applying will keep their NHR benefits.

Switzerland lets wealthy foreigners who don’t work in Switzerland use a lump sum tax calculation with their local government. Tax rates vary significantly from one Canton to another, but they’re usually between $250,000 and $300,000 a year.

The U.K.’s system was unique compared to other options. The U.K. didn’t require a minimum annual flat tax for the first seven years and allowed complete exemption on foreign-earned income that remained offshore. Most programs require an upfront payment or limit the program’s time frame.

Recent global trends indicate increased pressure for transparency regarding international tax planning. Over 135 countries are participating in the OECD’s efforts to eliminate tax evasion through the closing of tax loopholes and enhanced cross-border sharing of financial information. The trend toward residence-based taxation is evident as countries increasingly tighten the rules and share tax information.

What this means for hiring and managing international talent

Non-dom status is officially gone. The U.K. eliminated it in April 2025, and there doesn’t appear to be a political reversal.

This change affects your talent strategy if you hire people from other countries or move employees to the U.K. London was once a popular destination for wealthy professionals and executives because they could avoid paying taxes on their foreign income. That incentive has since disappeared. About 10,800 millionaires left the U.K. in 2024 alone, which is a 157% increase from the year before. Early numbers show that the exodus could double in 2026.

Your compensation packages may need to change. People who used to plan their finances around non-dom benefits now have to pay taxes in the U.K. and around the world. Some people will want higher pay or tax help to make up for the loss. Short-term assignments of less than four years may still be eligible for the FIG regime, but the window is small, and the rules are strict.

Expect candidates to weigh their options. The UAE, Switzerland, Italy, and Ireland all have different tax systems that attract people who can work anywhere in the world. If you want to hire someone who has options in more than one country, the U.K. tax burden now works against you.

Communicate with your team early. If you have complicated offshore holdings, foreign trusts, or inheritance tax issues, you should talk to a tax advisor before you file your taxes in 2026. Planning keeps your team focused on the critical work and prevents costly surprises.

FAQs

Here are the questions we hear most from HR teams and employers navigating the post-non-dom landscape.

How does this affect my current U.K.-based employees who were non-doms?

Any employee who claimed non-dom status now pays U.K. tax on their worldwide income and capital gains. They can no longer shelter foreign earnings by keeping them offshore. Employees with complex foreign assets, trusts, or inheritance concerns should consult a tax advisor before filing 2026 returns.

Should we adjust compensation packages for employees affected by non-dom changes?

It depends on your talent retention priorities and what competitors offer. Some high-net-worth employees who lose the non-dom benefit may expect salary increases or tax equalization to offset their higher tax burden. Others might consider relocating to countries with more favorable tax regimes if their total compensation becomes less competitive.

What’s the four-year FIG regime, and does it apply to our relocating employees?

The FIG regime offers four years of full relief on foreign income and gains for new U.K. residents. To qualify, the employee must have been a non-resident for the previous 10 consecutive tax years. After four years, worldwide taxation applies regardless of where income is earned.

Are there transition deadlines in 2026 that our employees need to know about?

The temporary repatriation facility lets former non-doms bring pre-2025 foreign income into the U.K. at reduced tax rates through 2027/28. For 2025/26 and 2026/27, the rate is 12%, rising to 15% for 2027/28. Employees with offshore funds should evaluate this window with their tax advisors before it closes.

Additional resources

Official U.K. government guidance:

Explore alternative tax-friendly countries:

Need help with global hiring and tax compliance?

Navigating international tax changes and building compliant global teams often demands expert guidance. Pebl helps companies hire, manage, and pay workers and contractors from other countries while keeping up with changing taxation regulations. Get in touch with our experts in global mobility and compliance to talk about what you need.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.