UK Non-Dom Abolition 2025: Key Legislative Milestones & Trust Unwinding Checklist

UK Non-Dom Abolition 2025: Key Legislative Milestones & Trust Unwinding Checklist
Content reflects enacted legislation (Finance Act 2025) and HMRC published guidance.

Table of Contents

1. What is changing?
2. Why 2025/26 Matters
3. Key Concepts
4. Legislative Milestones
5. Trust Unwinding Requirements
6. Jurisdiction Comparison Matrix
7. Implementation Checklist
8. Advanced Planning Considerations
9. Tools & Professional Services
10. FAQs

What is changing?

The remittance basis regime ended on 6 April 2025. HMRC guidance confirms:

1. 4-year FIG election for new arrivals (individuals not UK tax-resident in any of the 10 preceding tax years). 100 per cent relief on foreign income and gains for the first 4 UK-resident tax years; personal allowance and CGT annual exempt amount forfeited in claim years.
2. Temporary Repatriation Facility (TRF) for accumulated pre-6 April 2025 foreign income and gains: available for three tax years from 6 April 2025 to 5 April 2028, at 12 per cent for 2025/26 and 2026/27, and 15 per cent for 2027/28.
3. CGT Rebasing to 5 April 2017 market values for qualifying foreign capital assets. No statutory expiry; applies to disposals on or after 6 April 2025.
4. Trust regime overhaul: the "protected settlement" regime for income tax and CGT is abolished from 6 April 2025. Excluded Property Trusts no longer offer CGT shelter for UK-resident settlors.

Why 2025/26 Matters

Transitional Window

• TRF window: 6 April 2025 to 5 April 2028 (three tax years). The 12 per cent rate applies for the first two years.
• CGT Rebasing: no deadline, but practical benefit is greatest when combined with TRF designations in the current window.
• Global context: OECD Pillar Two 15 per cent minimum tax increases complexity for multinational structures.

Wealth Migration Data

The UK's non-dom abolition has accelerated HNWI relocations to zero- and low-tax jurisdictions including the UAE (0 per cent personal income tax), Singapore (top marginal rate 24 per cent), Italy (EUR 300,000 lump-sum substitute tax for 2026 new entrants) and jurisdictions offering the Portuguese IFICI regime.

Trust Structure Vulnerability

• From 6 April 2025: foreign income and gains arising in non-resident trusts are taxed on UK-resident settlors on the arising basis (unless the 4-year FIG regime applies).
• IHT: limited grandfathering applies to trusts funded with non-UK assets before 30 October 2024, but the relevant property regime still applies whenever the settlor is a Long-Term Resident (UK tax-resident in at least 10 of the previous 20 tax years).

Key Concepts

Statutory Residence Test (SRT)

1. Automatic overseas test to present in the UK for fewer than 16 days (if UK-resident in any of the prior 3 tax years; otherwise fewer than 46 days) = automatically non-resident.
2. Automatic UK test to present for 183 days or more = automatically UK-resident.
3. Sufficient ties test to UK accommodation, substantive UK work, family, 90-day history and country ties. Country tie applies only to "leavers."
4. Split-year treatment to available for the departure year if leaving permanently.

Trust Position from 6 April 2025

• Protected settlement regime abolished for income tax and CGT.
• Non-resident settlors remain outside s.86 TCGA 1992 (as has always been the case).
• UK-resident settlors are now taxed on arising basis on trust FIG unless within the 4-year FIG window.
• IHT: domicile-based IHT replaced by residence-based Long-Term Resident (LTR) framework. 10-of-20 tax years = LTR. After departure, a 3-to-10-year IHT "tail" applies on a sliding scale.

UK Departure Rules

The UK has no formal exit tax. However, the Temporary Non-Residence rules apply: if an individual was UK tax-resident for at least 4 of the 7 tax years before departure and resumes UK residence within 5 years, certain income and gains realised during absence are taxed in the year of return.

Legislative Milestones

Trust Unwinding Requirements

Post-6 April 2025 Framework

From 6 April 2025, foreign income and gains arising in non-resident trusts are taxed on UK-resident settlors on the arising basis. The former "protected settlement" CGT shelter is abolished.

1. Settlor interest removal to amend deeds to exclude settlor as beneficiary (consider s.624 ITTOIA anti-avoidance).
2. UK-beneficiary exclusion to deed clauses preventing distributions to UK-resident beneficiaries.
3. Trust migration options to UAE, Singapore, or Crown Dependencies.

IHT Grandfathering

Limited IHT grandfathering applies to trusts funded with non-UK assets before 30 October 2024. The relevant property regime still applies whenever the settlor is a Long-Term Resident.

Distribution Strategy

Align with:

• Annual CGT allowances (GBP 3,000 as of 2025/26).
• Dividend and savings allowances.
• Beneficiary residence status in each tax year.
• TRF designations where distributions relate to pre-6 April 2025 FIG.

Jurisdiction Comparison Matrix

UAE Specifics to UAE Golden Visa: 10-year renewable, nil personal income tax, full foreign ownership.
Italy Specifics to EUR 300,000 covers foreign-source income for new entrants from 1 January 2026; 15-year cap (early exit allowed); EUR 50,000 per family member; EU banking passporting retained.

Implementation Checklist

Months 1 to 2: Foundation

• Run full SRT calculation.
• Obtain 5 April 2017 valuations for all qualifying foreign capital assets (CGT Rebasing).
• Review trust deeds for settlor-beneficiary clauses.
• Open banking relations in target jurisdiction.

Months 3 to 4: Structuring

• Execute trust migration or distribution.
• Submit residency visa application.
• Establish multi-currency platform; satisfy KYC.
• Update insurance for territorial gaps.

Months 5 to 6: Transition

• Document 183+ days presence overseas.
• Prepare split-year claim evidence.
• Crystallise gains/losses before departure.
• Transition banking: limit UK exposure.

Months 7 to 11: Optimisation

• File SA109 split-year form.
• Finalise trust accounts & minutes.
• Move residual assets offshore.
• Retain local counsel for ongoing compliance.
• Make TRF designations (12 per cent rate in 2025/26 and 2026/27).

Advanced Planning Considerations

OECD Pillar Two (15 per cent minimum tax)

• UAE holding companies: nil exposure under domestic law (DMTT applies to MNEs with EUR 750m+ consolidated revenue from FYs starting 1 January 2025).
• Singapore: substance exclusions may apply.
• Italy: 15 per cent floor with IP and substance carve-outs.

CRS & Automatic Exchange

All listed jurisdictions participate in CRS automatic exchange. Under CRS, Reporting Financial Institutions identify accounts held by non-residents and report them to the account holder's jurisdiction of tax residence. From 2027, CRS 2.0 and CARF extend reporting to crypto-assets.

Estate Planning

1. Wills to update for new-jurisdiction succession law.
2. IHT framework to from 6 April 2025, UK IHT is residence-based (Long-Term Resident = 10-of-20 tax years). After departure, a 3-to-10-year IHT "tail" applies.
3. Powers of attorney to dual UK & new-jurisdiction documents.

Tools & Professional Services

Required Team

• UK tax counsel to TRF designations, CGT Rebasing elections, SRT modelling.
• Trusts & estates to deed amendments & trustee migration.
• Immigration counsel to visas & day-count logs.
• Banking RM to multi-jurisdictional accounts & CRS.

First-Meeting Pack

1. Last three UK Self-Assessment returns.
2. Trust deeds + amendments.
3. Asset valuations (property, shares, PE) to including 5 April 2017 valuations.
4. Six months' bank statements (all currencies).
5. Property certificates & leases.

For broader context on the destination regimes compared above, see the UAE Golden Visa 2026 vs End of UK Non-Dom Regime analysis and the UK 2025 Non-Dom CGT Rebasing vs Temporary Repatriation Facility guide.