If you’ve recently moved to the UK — or are planning to — it’s essential to understand how your income, savings, and investments will now be taxed. From April 2025, the UK government abolished the long-standing non-domiciled (non-dom) tax regime and replaced it with a residence-based tax system.
These reforms mean that most UK residents are now taxed on their worldwide income and gains, not just what they earn in the UK. At Friendly Assist Accountancy, we help international professionals, returning expats, and EU citizens navigate these changes confidently and plan efficiently for life in the UK. We show how to achieve tax savings.
The End of Non-Dom Status
Before April 2025, non-domiciled residents could use the “remittance basis,” meaning foreign income was only taxed if brought into the UK. This option has now been removed.
The UK’s new rules apply based on residency, not domicile. If you are classed as a UK tax resident, you must now pay tax on all global income and capital gains, even if they remain offshore.
The government’s aim is fairness — taxing everyone by residence — but the impact on international residents and investors has been substantial.
Four-Year Foreign Income Exemption for New Arrivals
If you move to the UK after April 2025 and were not tax resident for the previous ten years, you can benefit from a four-year exemption on foreign income and gains.
During these four years:
- Foreign income and capital gains are not taxed in the UK, unless remitted.
- You can use this period to restructure assets and prepare for full UK taxation later.
After the four years, you’ll be taxed on your worldwide income like any other UK resident.
This exemption gives newcomers valuable time to plan — but it must be managed carefully to avoid losing relief through remittances or administrative errors.
Overseas Workday Relief (OWR)
For employees splitting their time between the UK and abroad, Overseas Workday Relief (OWR) remains a valuable benefit. It allows eligible individuals to exclude income from overseas workdays during their first three years of UK residence, as long as this income is kept offshore.
To make a successful OWR claim, you must:
- Keep precise records of days worked inside and outside the UK.
- Ensure your salary is paid and retained in an offshore account.
- Maintain copies of travel records, contracts, and payslips.
Friendly Assist Accountancy helps clients maintain these records and apply OWR correctly to avoid HMRC challenges.
Day Counting and the Statutory Residence Test
The Statutory Residence Test (SRT) determines your UK tax residency each year. It looks at the number of days you spend in the UK and your “ties” — such as work, family, or accommodation.
Accurate day counting and record-keeping are critical. Even short visits can affect your tax status. Many expats also qualify for split-year treatment, which divides a tax year between non-residency and residency when moving partway through.
Allowances, Tax Rates, and Treaties
For 2025–26, the personal allowance is £12,570, meaning you can earn this amount before income tax applies.
Income tax rates remain:
- 20% basic rate
- 40% higher rate
- 45% additional rate
The UK also maintains double taxation treaties with most EU countries and others, ensuring income is not taxed twice. Friendly Assist Accountancy can review your circumstances to ensure treaty benefits are applied correctly.
Exit Tax and the Debate on Investment
A major point of debate in 2025 is the government’s proposed “Exit Tax” for long-term UK residents who give up their residency.
The measure would impose tax on unrealised capital gains at the time of leaving the UK, aiming to prevent residents from moving abroad to avoid tax on built-up gains.
Critics, however, argue that this proposal is highly divisive. They warn it could deter wealthy individuals, entrepreneurs, and foreign investors from settling in the UK, damaging its reputation as a competitive, investment-friendly destination.
The government claims it promotes fairness, but many believe it risks driving talent and capital away — especially when competing with other major financial centres.
Friendly Assist Accountancy continues to monitor developments and advises clients planning to leave the UK to take early professional guidance.
Reporting and Compliance
Under the new system, most UK residents must report worldwide income on their tax returns, including:
- Foreign salary, dividends, and interest
- Rental income from overseas property
- Capital gains on foreign assets
Deadlines for this year:
- 31 October 2025 – Paper tax return deadline for 2024–25
- 31 January 2026 – Online filing and payment deadline
Accurate reporting and professional review can help prevent penalties and ensure you make full use of available reliefs.
How Friendly Assist Accountancy Can Help
Our international tax specialists assist EU citizens, expats, and returning UK residents with:
- Residency status assessments and tax planning
- Claiming four-year foreign income exemptions and OWR
- Managing double taxation and treaty claims
- Filing UK self-assessment returns accurately
- Planning for potential exit tax implications
We provide clear, practical advice tailored to your personal situation — ensuring you stay compliant, efficient, and confident under the UK’s new tax rules.
In Summary
The abolition of non-dom status and the shift to residence-based taxation represent one of the biggest overhauls in decades. For new arrivals and long-term expats alike, careful planning and early advice can make all the difference.
Contact Friendly Assist Accountancy today for expert guidance on UK tax for EU citizens, expats, and globally mobile professionals.
References
- HM Treasury – Spring Budget 2025: Non-Domiciled Tax Reforms (gov.uk)
- HMRC – Guidance on Residence, Domicile and the Statutory Residence Test (gov.uk)
- ICAEW – Abolition of the Non-Dom Regime: Key Implications for International Residents
- The Financial Times – UK Exit Tax Sparks Debate Among Global Investors
- OECD – Cross-Border Taxation and Double Tax Treaty Frameworks 2025