The remittance basis and the rules that replaced it in April 2025

The remittance basis was a way of being taxed that people who were UK resident but not domiciled in the UK could once choose. Instead of paying UK tax on all of their foreign income and gains as they arose, they paid UK tax only on what they actually brought into this country. Money that stayed abroad stayed outside UK tax. From 6 April 2025, that choice no longer exists: the remittance basis of taxation has been abolished¹.

What replaced it is a new system called the foreign income and gains regime, usually shortened to the FIG regime. On 6 April 2025 it replaced the remittance basis². The government's policy behind the change was to stop using domicile, the idea of where a person's permanent home is, as the thing that connects someone to the UK tax system, and to use tax residence instead³. The new regime gives eligible new arrivals a four-year window in which qualifying foreign income and gains can be kept outside UK tax altogether, even when brought here.

This page explains how the old remittance basis worked, who could use it and what it cost, and then sets out the rules that apply from April 2025, including the revised overseas workday relief and what happens to money from before the change. It is about how the rules work, not about what any particular person should do: tax on foreign income depends heavily on individual circumstances, and the figures here are the rules as HMRC and the government state them.

The remittance basis has been abolished

The remittance basis is not a live option on a tax return for income and gains arising from 6 April 2025 onwards. HMRC's Self Assessment helpsheet for the new regime states it plainly: from that date, the remittance basis of taxation has been abolished¹. Anyone completing a return for the 2025-26 tax year or later is working under the FIG regime instead, and the claim mechanics have moved to new forms and boxes, covered later on this page.

The abolition was the end of a long process rather than a sudden change. HMRC published guidance on changes to the remittance basis taking effect from 6 April 2012, which tightened the rules years before they were scrapped⁶. The 2024 policy statement setting out the abolition described a package of measures: replacing domicile with tax residence as the connecting factor for UK tax, introducing the four-year FIG regime for new arrivals, and replacing the domicile-based system for inheritance tax with a residence-based one³.

One point matters for anyone with an old tax position: abolition does not rewrite the past. Tax returns for years before April 2025 are still assessed under the rules that applied in those years, and money that was taxed under the remittance basis then has its own treatment now, described in the section on money from before April 2025. If you are dealing with an open enquiry or an amendment to an earlier return, the old rules still govern it.

How the remittance basis worked for non-domiciled UK residents

Under the old system, the starting point was domicile rather than residence alone. HMRC's guidance note on residence, domicile and the remittance basis explained that if you were UK resident but not domiciled in the UK, special rules might apply to your foreign income and gains, and you had a choice between two ways of being taxed: the arising basis, under which all your foreign income and gains were taxed as they arose, or the remittance basis, under which they were taxed only if you brought them to the UK².

The remittance basis therefore worked as a deferral with a condition attached. Income earned abroad and left abroad was not taxed in the UK while it stayed there. The moment it was brought into the UK, whether spent, used to pay a debt, or given to someone here, it became taxable. Capital gains followed a similar pattern: a UK resident who was not UK domiciled was liable to UK tax on gains from disposing of assets situated in the UK, but foreign gains were normally taxed only if remitted when using the remittance basis².

Domicile could be overridden by the deemed domicile rules. A policy statement from 2016 set out how people who were not domiciled in the UK could be treated as UK domiciled for tax purposes⁸, and HMRC's guidance on those rules explains the consequences, including that a formerly domiciled resident's property settled on trust when they were not domiciled in the UK is not excluded property for inheritance tax⁹. Separately, the long-term UK resident test for inheritance tax keeps someone in scope for a minimum of 3 years and a maximum of 10 years after they stop being UK resident, depending on how long they lived here¹⁰.

Residence itself is decided by the statutory residence test. Its guidance note also covers temporary non-residence rules, which list income and gains that remain chargeable when someone leaves the UK and returns within five years, including remitted foreign income for remittance basis users, distributions from closely controlled companies, chargeable event gains and capital gains¹¹. The wider rules on foreign income and UK tax are covered on the foreign income page, and the section page for money abroad collects related topics.

Choosing the remittance basis: who could use it and how

The remittance basis was a claim, not something that applied automatically. You elected for it on your Self Assessment tax return, using the residence pages. HMRC's guidance on completing the return notes that form SA109, headed "Residence, remittance basis etc", is completed by a non-UK resident or dual resident, and it was on those pages that a UK resident non-dom recorded their choice of basis¹².

The practical mechanics were set out in HMRC's helpsheet HS264, which told you how to fill in the foreign pages of the tax return, and also covered Special Withholding Tax, foreign pensions and income from land and property abroad¹³. A separate guidance page on help with foreign income on your Self Assessment return explains how to claim relief for tax paid on foreign income when a double taxation agreement is in place¹⁴. Foreign income itself is defined for these purposes as any income from outside England, Scotland, Wales and Northern Ireland¹⁴.

The choice was not always worth making, and the guidance was clear about the trade-offs. Claiming the remittance basis cost you allowances, covered in the next sections, and long-term residents faced an annual charge on top. For people with small amounts of foreign income, HMRC's older guidance, including the HMRC6 booklet on tax on foreign income, residency, domicile and the remittance basis, set out when the election made sense and when the arising basis was simpler¹⁵. The old helpsheet and guidance remain relevant only for years before April 2025.

The remittance basis charge for long-term residents

The remittance basis was cheapest in a person's early years of UK residence. HMRC's guidance stated that if you were a long-term UK resident and you chose to be taxed on the remittance basis, you may also have been liable to pay the remittance basis charge². The charge was a fixed annual amount, payable on top of the tax on what you actually remitted, and it rose the longer you had been resident. That structure meant the election made sense for a new arrival and progressively less sense for someone settled here.

The charge sat alongside the loss of allowances described in the next section, so a long-term resident weighing the election had to add together three costs: the charge itself, the tax on anything remitted, and the value of the allowances given up. Against that stood the tax deferred on foreign income and gains left abroad. Whether the election paid off depended entirely on how much foreign income a person had and whether they needed it in the UK.

The government's 2024 policy statement on the tax changes for non-UK domiciled individuals set out the replacement architecture: the four-year FIG regime for new arrivals, and a residence-based inheritance tax system³. Under that design, the question of a long-term resident charge disappears, because the new regime is time-limited to four years and after that foreign income and gains are taxed in full regardless of domicile. The old charge survives only in historical returns and in the treatment of pre-2025 money.

Claiming relief costs you your allowances

Neither the old remittance basis nor the new FIG regime was free. HMRC's helpsheet for the FIG regime lists what a claimant loses: the personal allowance, the capital gains tax annual exempt amount, the blind person's allowance, tax reductions for married couples and civil partners, the transferable tax allowance, and relief in relation to payments for life insurance¹. The same trade-off existed under the remittance basis, which is why the election was not automatic for everyone.

The personal allowance is the largest of these for most people. Most people in the UK get a personal allowance of up to £12,570, the amount of income, including interest, that is not taxed⁴. It is already withdrawn gradually at higher incomes: the allowance reduces by £1 for every £2 of income above the £100,000 limit¹⁶, and the Scottish rate bands assume individuals are in receipt of the standard UK personal allowance¹⁷. A claimant under the FIG regime loses it altogether, whatever their income level.

There is a further interaction that affects families. HMRC states that any foreign income relief is disregarded for the purpose of determining your adjusted net income, which is the measure used for tax-free childcare and the High Income Child Benefit Charge¹. So a claim can change entitlements that appear unrelated to foreign income, because the income still counts for those purposes even though it is not taxed.

For non-UK residents with UK income, the allowance works differently: if you are eligible for a personal allowance you pay income tax on your income above that amount, and otherwise you pay tax on all your income¹⁸. The rules on eligibility for the allowance when you live abroad are on the tax when you live abroad pages of the international section.

The foreign income and gains regime that replaced it

The FIG regime is the system that applies from 6 April 2025. HMRC's guidance states that the foreign income and gains regime replaced the remittance basis, and that if you make a claim for relief under the regime, you will not pay tax on your eligible foreign income and gains¹⁹. The helpsheet adds the point that mattered most to people who used the old basis: you will not pay tax on your qualifying foreign income and gains on which you have made a claim for relief, and no tax liability arises if that money is brought to the UK¹. Unlike the remittance basis, the FIG regime is not about where the money goes; it is about when you arrived.

Eligibility is residence-based and time-limited. The government described it as a new four-year foreign income and gains regime for new arrivals who have not been UK tax resident in the previous 10 years³. So the position of a person in their first years in the UK is broadly similar to what the remittance basis offered a new arrival, but the clock runs on residence rather than domicile, and after four years foreign income and gains are taxed in full.

UK residents returning from abroad are also within the general rule: they pay UK tax on their UK income and gains and on any foreign income and gains, although they may not have to if they can claim FIG relief²⁰. The claim is made on the return: HMRC's helpsheet directs you to complete the "Residence and foreign income and gains (FIG) regime etc" pages, form SA109, and to claim relief on the relevant supplementary pages, using box 28 for foreign income, box 29 for foreign gains and box 30 for UK income or gains deemed foreign under the QAHC rules¹.

The wider reform also changed inheritance tax, moving from a domicile-based system to a residence-based one³, and the long-term UK resident test keeps former residents in scope for inheritance tax for between 3 and 10 years depending on how long they were here¹⁰. The legislation underpinning the new system also amends business property relief in the Inheritance Tax Act 1984²¹, so anyone with a family business or trust should take advice on the inheritance tax side separately from income tax.

Overseas workday relief: pay for work done abroad

Overseas workday relief is the part of the old system that survived the abolition, in revised form. Under the rules described in HMRC's guidance, if the conditions were met and the overseas earnings were not remitted to the UK in the tax year you received them, they were not taxable in the UK in that tax year². In other words, pay for days worked outside the UK could be kept out of UK tax provided it was actually kept abroad, which made it a remittance-basis style relief tied to employment income.

From 6 April 2026 the mechanics change for employees paid through PAYE. The government's Budget 2025 tax overview sets out a requirement for employers submitting a PAYE notification form to HMRC on behalf of employees eligible for overseas workday relief, with a maximum of a 30% portion of income excluded from PAYE⁵. That cap applies to how much of a person's pay can be delivered without UK tax deducted at source, not to the relief itself: the underlying position on whether the earnings are taxable still depends on the conditions and on whether the money is brought to the UK.

The relief interacts with the statutory residence test, whose guidance note covers how working days are counted and what counts as a significant break, defined as at least 31 days going by with not one day where you work for more than 3 hours overseas, including days not worked due to annual, sick or parenting leave¹¹. Anyone claiming the relief needs records of which days were worked where.

Related reliefs exist for employment income earned abroad in other forms. HMRC's guidance notes that full relief is available for lump sums from overseas employer-financed retirement benefits schemes for rights accrued after 5 April 2011 for periods of service outside the UK when you were not UK resident². And where foreign tax has already been paid on foreign investment income, relief is given up to the amount of UK tax payable, with documentary evidence required². The general rules on being taxed in two countries are on the double taxation page.

Money from before April 2025

Abolition created an obvious question: what happens to foreign income and gains that arose before 6 April 2025 and were never taxed in the UK because they were left abroad under the remittance basis? The government's answer was a Temporary Repatriation Facility, described in the 2024 policy statement as allowing individuals previously taxed on the remittance basis to remit pre-6 April 2025 foreign income and gains using the new facility³. Its purpose is to let people regularise old money and bring it to the UK under a defined arrangement rather than under the old remittance rules.

Business investment relief, which under the old system allowed foreign income and gains to be brought to the UK and invested in a business without triggering a remittance charge, was carried forward in a limited form. New investments under business investment relief using pre-6 April 2025 foreign income and gains can be made until 5 April 2028, after which the window closes. Anyone holding untaxed foreign income and gains from before the change and considering an investment should check the exact conditions before committing, because the relief depends on when the funds arose and when the investment is made.

The legislative picture around inherited wealth also shifted. The Finance Act 2026 amends section 104 of the Inheritance Tax Act 1984, the business property relief provision²¹, and the long-term UK resident test keeps people in scope for inheritance tax for 3 to 10 years after leaving, depending on how long they resided here¹⁰. These changes matter most to people with trusts, family businesses or assets abroad, and they are separate from the income tax rules: a person can be outside the FIG regime and still caught by the inheritance tax changes.

Where to get help with foreign income and gains

Foreign income is normally reported through Self Assessment. HMRC's guidance states that if you are UK resident, you will normally pay tax on your foreign income, and you usually report it in a Self Assessment tax return²². If you are not UK resident, you will not have to pay UK tax on your foreign income, though UK-source income is different²². The claim for FIG relief is made on the SA109 pages and the relevant supplementary pages, with boxes 28, 29 and 30 for the different categories¹.

Double taxation is the most common complication. You may be able to claim tax relief if you are taxed in more than one country²², and HMRC's guidance explains how to claim relief for tax paid on foreign income when a double taxation agreement is in place¹⁴. If you have already claimed relief under a double taxation agreement, you do not need to report the income to HMRC¹⁸. The double taxation page sets this out in full, and the Common Reporting Standard page explains why banks abroad ask where you pay tax.

The steps in practice run in order:

1. Establish your residence position for the tax year, using the statutory residence test¹¹.
2. Work out whether you qualify for FIG relief, which depends on not having been UK tax resident in the previous 10 years³.
3. Complete the SA109 residence and FIG regime pages and the supplementary pages for your income types¹.
4. Claim relief for foreign tax paid where a double taxation agreement applies¹⁴.
5. Keep evidence: HMRC requires documentary evidence for claims to relief for foreign tax paid².

HMRC's helpsheet HS266 for the FIG regime is the reference document for the current system¹, and the older helpsheet HS264 still applies to returns for years before the change¹³. Because the rules turn on residence history, domicile and the date money arose, this is an area where paid professional advice is often worthwhile, and free general guidance is available through the personal tax section of this site.