News
The UK’s residency rules explained – Six months on from the change
05 November 2025
In April 2025, the UK’s ‘non-domicile regime’ was replaced with a new set of rules centred around an individual’s tax residency, taking in factors like an individual’s links to both the UK and other countries and trust structures they are connected to.
What was introduced?
A new four-year Foreign Income and Gains (FIG) regime has been introduced, which allows UK tax residents to be exempt from most forms of foreign income and gains from these taxes during their first four years as a UK tax resident.
The FIG regime is accessible for any individual provided they have been a non-UK tax resident for at least ten consecutive years before the first of the four-year regime kicks in.
If you do make a claim, the years you make a claim for will see you lose some tax allowances and the ability to deduct any foreign losses from taxable gains.
It’s important to note that the regime doesn’t automatically take effect, so you need to check before you apply.
You have the option to choose which of the four years to claim and all foreign income must be reported to HMRC, whether you claim the relief or not.
Have trust structures changed?
The changes announced also impact trust structures for non-UK residents, because the protected status on those trusts has been removed.
This means the scope for taxation has been increased significantly for the settlor.
While this is primarily a concern for non-UK resident trusts with living tax settlors in the UK, the extent of the exposure will be determined by several factors.
These factors include:
- The beneficial class of the trust
- The investment profile
- Whether the settlor is eligible to claim the four-year FIG regime.
Inheritance Tax (IHT) liabilities may also increase as a result.
For discretionary trusts, your residency status will determine whether IHT applies, although this will be unchanged if a settlor passes away before the rules came into effect on 6 April 2025.
If you have international connections and are unsure about the new regime, our team can help.
We can explain the new legislation and help you map out a plan to manage the changes.
Contact us if you need tax advice on the new residency rules.
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