What is non-dom status and how have the rules changed?

Non-domicile (non-dom) status was a unique feature of the United Kingdom’s tax system—one that sparked debate around fairness, transparency, and global talent mobility. It offered tax advantages to individuals whose long-term home, or domicile, was outside the U.K.

For decades, non-dom status shaped international hiring and relocation decisions for businesses and individuals alike. But that chapter has come to a close. In April 2025, the U.K. government abolished the non-dom regime, ushering in a more uniform, residence-based approach to taxation.

Read on to explore what non-dom status was, how the rules have changed, and what businesses and globally mobile individuals need to know to stay compliant and competitive.

What is a non-dom?

What is non-dom tax status? Non-dom status referred to a unique U.K. tax classification for individuals who were United Kingdom residents with domiciles in another country. This designation didn’t reflect a person’s citizenship, nationality, or immigration status. Instead, it was based on where the person considered their long-term home for taxation purposes. 

Under the former rules, U.K. tax residents had to pay tax on worldwide income. However, individuals with non-dom status can claim the remittance basis of taxation. This means they only needed to pay U.K. tax on U.K. income and any foreign income or gains they brought (remitted) into the country. 

With non-dom status, individuals with significant earnings, assets, or investments abroad could save considerable money—especially when that income stayed outside the United Kingdom. It’s one of the reasons why non-dom rules attracted attention from high-net-worth individuals and policymakers.

According to recent data from His Majesty’s Revenue & Customs (HMRC), the U.K.’s national tax authority, approximately 74,000 individuals claimed non-dom status in the United Kingdom recently. That figure highlights just how many globally mobile individuals and their employers relied on this system to navigate international tax and residence rules. 

Non-dom tax changes 

The U.K.’s decision to abolish non-dom status marked one of the most significant shifts in the country’s taxation policy in recent decades. Historically, the non-dom regime allowed particular U.K. residents to shelter foreign income and assets held abroad from U.K. income tax. According to critics, this system disproportionately benefited the wealthy. 

Both major political parties recently proposed reforms to non-dom status in response to increasing pressure. The U.K. government ultimately confirmed that non-dom tax status is abolished as of April 2025, replacing it with a residence-based system. 

Under the new regime, individuals who become U.K. residents for the first time will receive a four-year grace period. During this period, they will not pay tax on foreign income or gains, even if that income is remitted to the U.K. After this period, they’ll be taxed on a worldwide basis, just like long-term U.K. residents. Meanwhile, existing non-doms have a three-year transitional window to encourage repatriation of overseas wealth, which can be brought into the U.K. tax system. 

While the government expects these changes to raise billions of pounds over the coming years, the impact may have started well before the official policy shift. In 2024 alone, over 10,000 millionaires left the United Kingdom—a 157% year-over-year increase—driven in part by growing uncertainty around proposed tax reforms and the future of non-dom status.

These reforms aim to close long-standing tax gaps, but they’ve also sparked new challenges for individuals, companies, and global employers navigating shifting residence status and cross-border compliance. 

Current rules for non-dom status

Before the new non-dom rules took effect in April 2025, the U.K. tax system offered a special status for residents who met certain criteria. This remittance basis of taxation allowed them to avoid paying U.K. income tax on foreign income or gains not brought into the country. While it provided tax advantages, it also came with specific limitations and annual charges.

Key features the former non-dom regime included: 

Remittance charges

Individuals who chose to be taxed under the remittance basis had to pay an annual charge if they’d been a U.K. resident for a certain number of tax years:

• £30,000 if the person had lived in the U.K. for at least seven out of the last nine tax years 
• £60,000 if the person had lived in the U.K. for at least 12 out of the last 14 tax years 

2017 rule changes

As of 2017, individuals were treated as domiciled in the U.K. for tax purposes if they’ve been a resident for 15 out of the past 20 tax years. This rule clarifies how long a non-dom can stay in the U.K. before losing access to the remittance basis and having to pay full U.K. tax on worldwide income and gains.

Even if someone claimed to be non-domiciled, they automatically lost non-dom status if all the following applied: 

• They were born in the U.K.
• Their domicile of origin was in the U.K.
• They had been a U.K. resident for at least one year since 2017

Low-income threshold

Individuals who earn less than £2,000 in foreign income per year—and not remitting it to the U.K.—did not need to make a formal claim or take action. In these cases, their income remained exempt from U.K. income tax under the old rules.

How does it impact existing non-doms?

The shift away from non-dom status has significant consequences for individuals who were already U.K. tax residents and previously relied on the remittance basis of taxation. As of April 2025, the government began implementing new rules that gradually align existing non-doms with the broader U.K. tax framework. These individuals can no longer shield their foreign income and gains from U.K. income tax, and many must now revisit their financial strategies.

Fortunately, some transitional relief is available. Depending on when a person became a U.K. resident, they may qualify for the new Foreign Income and Gains (FIG) regime, which offers partial relief for a limited time. For the 2025/26 tax year, qualifying individuals can opt to be taxed on just 50% of their foreign income, providing a window to adjust to the new system. They may also be able to rebase the value of certain overseas assets to their April 2019 market value, reducing potential capital gains exposure.

To ease the transition further, the government introduced a temporary repatriation facility. This allows individuals to bring historical foreign income into the U.K. at a reduced tax rate of 12% for the 2025–2026 and 2026–2027 tax years. The goal is to encourage the flow of previously untaxed wealth into the U.K. tax system and help taxpayers avoid steep penalties under the new basis of taxation.

The new rules also expand the scope of U.K. inheritance tax, which now applies to worldwide assets after 10 years of U.K. residence.

Understanding the impact on employment

The end of non-dom status in April 2025 has brought significant consequences for both global employers and workers. As the U.K. shifts to a residence-based basis of taxation, companies that rely on international talent must prepare for new compliance and mobility planning challenges. 

Here’s some additional information to keep in mind: 

• Short-term assignments still benefit: Employees who relocate to the U.K. and qualify for the new FIG regime (meaning they haven’t been resident in the U.K. for the past 10 tax years) can receive favorable tax treatment for up to four tax years. During this period, they aren’t required to pay U.K. tax on foreign income—even if it’s remitted.
• Assignments beyond four years face full exposure: Employees who don’t qualify for FIG or stay beyond the four-year window must pay full U.K. income tax on their worldwide income. For employers, that could make longer assignments less appealing and potentially more costly to support.
• Relocation policies may need revision: Businesses may need to reassess their relocation packages to remain competitive, especially for high-value hires with significant foreign income or overseas assets. 
• Tax planning and compliance may get more complex: Employers hiring internationally must now navigate the elimination of remittance-based taxation. Without updated internal policies, companies risk falling short of regulatory expectations—and exposing themselves or their employees to unintended tax liabilities. 
• Talent attraction strategies may shift: For companies based outside the U.K. or expanding into it, understanding how these changes affect hires like independent contractors, short-term assignees, remote workers, and permanent transfers is critical. 

Minimize risks in international hiring with Oyster

The end of non-dom status is reshaping how companies attract, relocate, and retain global talent in the U.K. Employers may need to revisit compensation strategies—especially for hires who no longer qualify for foreign income exemptions and now face full U.K. tax exposure.

Oyster makes it easier to hire across borders with confidence. From expert tax guidance to flexible compensation tools and real-time compliance updates, we help companies maintain compliance and stay agile in an evolving regulatory landscape.

When the rules change, the right partner keeps you moving forward. Oyster’s strategic partnership and global compliance solutions help you stay compliant, competitive, and ready for what’s next. Book a demo to learn more.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

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