The Remittance Basis Charge Explained: A Complete Guide for Non-Doms

What Is the Remittance Basis?

The remittance basis is a special way of calculating your UK tax liability that has historically been available to individuals who are resident in the UK but not domiciled here. Under normal UK tax rules (the "arising basis"), you pay tax on your worldwide income and capital gains as they arise, regardless of whether the money comes to the UK. The remittance basis flips this: you only pay UK tax on your foreign income and gains if and when you remit them — that is, bring them into the UK.

For decades, this was one of the most attractive features of the UK tax system for internationally mobile individuals. If you had substantial overseas investments, business interests, or rental income, you could live in the UK and only pay UK tax on whatever portion of that foreign wealth you chose to bring here. Income and gains left offshore remained outside the UK tax net entirely.

It is worth noting that the remittance basis only applies to foreign income and gains. Any income arising in the UK — such as a UK salary, UK rental income, or gains on UK assets — is always taxed in the UK regardless of your domicile status.

Who Qualifies for the Remittance Basis?

To claim the remittance basis, you must be UK resident but not UK domiciled (or "deemed domiciled"). Your domicile is broadly the country you consider your permanent home — the place you intend to return to eventually. It is determined by a mix of factors including your father's domicile at your birth, where you grew up, and your long-term intentions.

Domicile is not the same as nationality, residence, or citizenship. You can live in the UK for many years and still retain a foreign domicile, provided you intend to eventually leave and have not abandoned your domicile of origin.

However, the UK introduced the concept of deemed domicile from April 2017. If you have been UK resident in at least 15 of the previous 20 tax years, you are treated as domiciled in the UK for all tax purposes — even if your true domicile is elsewhere. Once deemed domiciled, you can no longer claim the remittance basis, and you are taxed on worldwide income and gains just like any other UK-domiciled individual.

The Remittance Basis Charge: £30,000 and £60,000

Claiming the remittance basis is not always free. If you have been UK resident for a significant period, HMRC requires you to pay an annual charge for the privilege. The charges are as follows:

The charge is paid on top of any UK tax you owe on your UK-source income. Think of it as an annual fee for the right to keep your foreign income and gains outside the UK tax net. For individuals with substantial overseas wealth, the charge can represent excellent value. For those with more modest foreign income, it may not be worth paying — which is why the decision needs careful analysis each year.

How to Claim the Remittance Basis

The remittance basis is claimed through your Self Assessment tax return. It is not automatic — you must actively elect to be taxed on the remittance basis each year. This is done by completing the relevant sections of the SA109 (Residence, remittance basis etc.) supplementary pages.

If your unremitted foreign income and gains are less than £2,000 in a tax year, you can use the remittance basis without making a formal claim and without paying the charge. This is sometimes called the "automatic" remittance basis, though it still results in the loss of your personal allowance if you have any unremitted foreign income.

When claiming, you must nominate specific amounts of foreign income or gains against which the remittance basis charge is set. You do not need to report the full details of all your foreign income — only the income and gains you are remitting to the UK need to be disclosed in full. However, you must keep comprehensive records of all foreign income and gains, as HMRC can enquire into your affairs.

Advantages and Disadvantages of the Remittance Basis

Advantages

• Foreign income and gains are only taxed when brought to the UK — potentially saving significant amounts of tax
• Flexibility to manage your tax position by controlling the timing and amount of remittances
• Overseas investments can grow free of UK tax until remitted
• For those with substantial foreign wealth, the £30k or £60k charge may be far less than the arising basis tax bill

Disadvantages

• You lose your income tax personal allowance (£12,570) and CGT annual exempt amount
• The £30,000 or £60,000 charge applies regardless of how much foreign income you have
• Complex record-keeping requirements — you must track the source and nature of all overseas funds
• Risk of "accidental remittances" — the rules on what constitutes a remittance are extremely broad
• Mixed fund rules make it difficult to separate clean capital from taxable income in overseas accounts
• Increasingly unfavourable political environment — the regime is being dismantled

Arising Basis vs Remittance Basis: A Comparison

Choosing between the arising and remittance basis is one of the most important annual tax decisions for non-doms. Here is a simplified comparison:

The right choice depends on the quantum of your foreign income, how long you have been UK resident, whether you need to bring money into the UK, and — increasingly — the transitional rules under the new regime.

Major 2025/2026 Non-Dom Tax Reforms

The biggest change to non-dom taxation in a generation is now underway. The UK Government announced in Autumn 2024 that the remittance basis would be abolished from 6 April 2025, and this has now taken effect. For a full timeline and planning checklist, read our analysis of the 2026 non-dom tax changes. Here is what has changed:

The New 4-Year FIG Regime

The remittance basis has been replaced by the Foreign Income and Gains (FIG) regime. Under FIG, individuals who arrive in the UK after a period of at least 10 consecutive tax years of non-UK residence can claim an exemption from UK tax on their foreign income and gains for their first four tax years of UK residence. After that four-year window closes, all worldwide income and gains are taxed on the arising basis — full stop.

Unlike the old remittance basis, there is no charge for claiming FIG relief during the four-year window, and there is no restriction on remitting the income to the UK — it is simply exempt. However, the window is much shorter than the old regime, which could effectively shelter foreign income for up to 15 years.

Temporary Repatriation Facility (TRF)

To ease the transition, the Government introduced the Temporary Repatriation Facility. This allows individuals who previously used the remittance basis to bring historic foreign income and gains (pre-April 2025) to the UK at a reduced tax rate. The TRF rate is 12% for the 2025/26 and 2026/27 tax years, rising to 15% for 2027/28. After that, the facility closes and any remaining unremitted income brought to the UK will be taxed at full income tax or CGT rates.

Changes to Inheritance Tax

The reforms also extend to inheritance tax (IHT). Previously, non-doms were only subject to UK IHT on their UK-situated assets. From April 2025, the Government is moving to a residence-based IHT regime. After 10 years of UK residence, your worldwide assets will be within the scope of UK IHT — and this "tail" continues for up to 10 years after you leave the UK. This is a seismic change for non-doms with significant overseas wealth.

Impact on Existing Non-Doms

If you have been using the remittance basis, these reforms affect you directly. The key impacts include:

• Loss of the remittance basis from April 2025. You can no longer shelter foreign income simply by keeping it offshore. All worldwide income and gains are now taxable as they arise (unless you qualify for the new FIG regime).
• Potential FIG eligibility. If you have been UK resident for fewer than four years and were non-resident for the previous 10 years, you may qualify for the FIG regime. This effectively gives you a continuation of tax-free foreign income — but only until your four-year window expires.
• Long-term UK residents face the biggest change. If you have been UK resident for 7+ years and were relying on the remittance basis to shelter substantial foreign income, you now face an arising basis charge on all of it. The Temporary Repatriation Facility provides some relief for bringing historic income to the UK, but going forward, there is no shelter.
• IHT exposure is increasing. The move to residence-based IHT means non-doms who have been here for 10+ years now have their worldwide estate within the UK IHT net. Combined with the recent changes to IHT thresholds and reliefs, this demands urgent estate planning.

What Should Non-Doms Do Now?

The pace of change means that doing nothing is probably the worst option. Here is a practical checklist:

1. Review your domicile status. Confirm whether you are treated as non-domiciled or deemed domiciled. This determines which rules apply to you.
2. Assess your FIG eligibility. If you arrived in the UK recently (within the last four years) after a 10-year absence, you may qualify for the new regime.
3. Consider the Temporary Repatriation Facility. If you have significant unremitted foreign income from previous years, the 12% TRF rate is substantially lower than standard tax rates. Work with your advisor to model the cost-benefit of repatriating funds now.
4. Review your estate plan. The IHT changes are profound. If you have overseas assets that were previously outside UK IHT, you need to reassess your trust structures, will arrangements, and succession planning.
5. Consider your long-term plans. For some non-doms, the UK may no longer be the most tax-efficient place to live. If you are considering relocating, the timing matters — particularly for the IHT "tail" provisions.
6. Seek specialist advice. This is not an area for DIY tax planning. The interaction between domicile, residence, the FIG regime, IHT, and any double tax treaties is extremely complex.