Residence & Pre-arrival Planning

Residence & Domicile Advice

Since April 2013, UK tax residence has been governed by the Statutory Residence Test (SRT). The SRT provides legal certainty in almost all scenarios, but at the expense of considerable complexity.

Most taxpayers with international lives will need professional advice to navigate the test, plan around day counts and ties, and evidence their position. Since 6 April 2025 residence matters more than ever, as it now determines both access to the Foreign Income and Gains regime and exposure to inheritance tax.

Residence-Based Taxation (formerly Domicile)

From 6 April 2025 the remittance basis and non-domiciled status were abolished for income tax and capital gains tax, and replaced by the residence-based Foreign Income and Gains (FIG) regime. New arrivers who have not been UK resident in the previous ten tax years may claim relief on their foreign income and gains for their first four years of UK residence.

Inheritance tax moved to a residence-based system on the same date. Domicile is no longer the test: an individual becomes a long-term resident, and within scope of inheritance tax on worldwide assets, once UK resident for ten of the previous twenty tax years. On leaving the UK a tail of between three and ten years applies before worldwide assets fall outside the net. Deemed domicile and formerly domiciled resident status have been abolished.

Transitional rules — including the Temporary Repatriation Facility for foreign income and gains arising before April 2025 — mean careful planning remains essential. We advise both new arrivers and long-term residents on how the new regime applies to them.

Individuals arriving in the UK — whether foreign nationals or Britons returning after a long period abroad — should take advice before becoming UK resident, as the most valuable planning usually has to be done in advance.

Since 6 April 2025, new arrivers who have not been UK resident in the previous ten tax years may claim the four-year Foreign Income and Gains (FIG) regime on their foreign income and gains.

For internationally mobile executives, Overseas Workday Relief (OWR) can significantly reduce UK tax by reference to workdays spent outside the UK. From 6 April 2025 OWR is aligned with the FIG regime: it is available for the first four tax years of UK residence and capped at the lower of 30% of qualifying employment income or £300,000 per tax year. Relief no longer depends on the earnings being kept offshore. Temporary Workplace Relief may also provide generous relief on accommodation costs where the UK engagement is expected to last no more than two years.

In each case careful planning is required, ideally several months before the individual becomes UK tax-resident.

Consideration should also be given to realising assets carrying a large 'paper gain' before UK residence begins — subject to home-country tax rates and ordinary commercial factors — to keep the gain outside the UK tax net.