17 January 2025
From 6 April 2025, the concept of domicile for UK tax purposes will be abolished.
This will be of significance to employers with a globally mobile workforce, as the new regime may be a key factor in any employee accepting or continuing an assignment to the UK.
Abolition of non-domicile status and the remittance basis
Historically, non-UK domiciled individuals have been able to elect that their overseas income and gains are not subject to UK taxation provided that certain conditions are met, the main one being that the income and gains concerned are never brought into the UK.
UK tax residents will now be taxable on their global income and gains regardless of their domicile status. Credit may be given for foreign taxes paid, but many individuals previously taxed as non-UK domiciled are likely to see their UK tax liabilities rise.
Individuals who have been UK tax resident for 10 or more of the previous 20 tax years will also become liable to UK inheritance tax on their global assets.
A new regime to promote the UK for international assignees
New arrivals to the UK may be eligible for a new tax relief covering foreign income and gains (FIG). On making a claim in their self-assessment tax return, certain foreign income (eg rental income and most investments) and gains arising in the first four UK tax years from an individual becoming UK tax resident will qualify for 100% tax relief. No UK tax will be payable on these amounts, even if they are brought to the UK. However, the individual can only make the claim if they were non-UK resident for the 10 tax years prior to their arrival in the UK.
Individuals who qualify for the FIG regime may also be able to claim relief from UK tax on their employment income from overseas workdays for the first four tax years from becoming UK tax resident. There is a cap on the amount of relief available, however, being the lower of 30% of their qualifying employment income or £300,000 per tax year.
Employees who are already tax resident in the UK may benefit from the new rules if they are still within their first four years of UK tax residence and they were not UK tax resident in any of the 10 tax years prior to their arrival.
Currently, certain expenses for non-UK domiciled employees travelling between their home country and the UK, and vice versa, can be paid or reimbursed tax free in the UK for the first five years after their date of arrival. This relief will match the new FIG rules from 6 April 2025, with individuals only being eligible for relief for the first four tax years of UK residence provided they were not UK tax resident in the 10 years prior to becoming UK resident. The relief will still be available for non-UK residents.
The impact of the FIG rules on employers
The new rules will be a key consideration for individuals deciding whether to come to the UK on assignment or to remain on an existing assignment to the UK.
- Where an employee qualifies for the new regime and the assignment will last less than four UK tax years, the ability to exclude overseas income and gains without the need to consider complex banking arrangements may be a valuable incentive.
- However, for those individuals who do not qualify for the FIG regime, becoming taxable in the UK on their worldwide income and gains may be too much of a drawback for some to accept or continue an assignment.
- Where employers ‘tax-protect’ or ‘equalise’ employees on assignment, the policy should be reviewed and a position taken on non-employment income and gains.
- Employers should review their existing assignment populations and consider issuing a briefing note to impacted employees.
- Upcoming assignments should be reviewed to take account of the changes to the rules.
For more information, please get in touch with Joanne Webber, Ian Jones, or your usual RSM contact.



