Technical amendments to the residence-based tax regime
Published 26 November 2025
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Who is likely to be affected
Individuals eligible for:
- Foreign Income and Gains relief
- Overseas Workday Relief
- the temporary repatriation facility
Individuals and trustees brought into the scope of UK Inheritance Tax (IHT) due to the removal of domicile as a relevant concept from IHT.
Employers who use HMRC’s PAYE notification process to modify the amount of tax deducted for globally mobile employees.
General description of the measure
These measures will make minor corrective amendments to the broader residence-based tax regime established in the Finance Act 2025 to ensure it operates as originally intended, without altering the underlying policy position.
Policy objective
This measure introduces minor corrections to existing legislation to ensure that the new residence-based regime — and the associated reliefs — operate as intended, creating a tax regime that is both fair and internationally competitive.
Background to the measure
A new residence-based tax regime was announced at Autumn Budget 2024 to remove the outdated concept of domicile status from the tax system and improve the international competitiveness of the UK in attracting talent and investment.
Finance Act 2025 introduced the following measures, with effect from 6 April 2025.
Foreign Income and Gains (FIG) relief
The relief provides 100% relief on FIG for new arrivals to the UK in their first 4 years of tax residence, provided they have not been UK tax resident in any of the 10 consecutive years prior to their arrival.
Overseas Workday Relief (OWR)
OWR is available to new arrivals to the UK in their first four years of tax residence provided they have not been UK tax resident in any of the 10 consecutive years prior to their arrival. The relief is subject to a financial limit on the amount of relief that can be claimed, this is the lower of £300,000 or 30% of an individual’s total employment income. The relieved income does not have to be kept offshore.
Temporary Repatriation Facility (TRF)
TRF is available for individuals who have previously claimed the remittance basis. Individuals can designate and remit FIG that arose prior to April 2025 at a reduced rate. This includes unattributed FIG held within trust structures. The TRF is available for a limited period of 3 tax years, from 2025 to 2026. The TRF rate will be 12% for the first 2 tax years and 15% in the final tax year of operation.
Residence-based Inheritance Tax (IHT)
The previous domicile-based system of IHT was replaced with a new residence-based system. This affects the scope of non-UK property brought into UK IHT for individuals and trusts. An individual is long-term resident (and in scope for IHT on their non-UK assets) when they have been resident in the UK for at least 10 out of the last 20 tax years and then remain in scope for between 3 and 10 years after leaving the UK. Subject to transitional arrangements, any non-UK assets a person put into a settlement will be subject to IHT charges at times when the settlor is long-term resident.
Improvements to the section 690 PAYE notification process
The PAYE notification process was improved so that employers and their agents no longer have to wait for HMRC to approve their application to only operate PAYE on the proportion of an employee’s employment income that relates to work carried out in the UK.
Detailed proposal
Operative date
The measure will have retrospective effect from 6 April 2025. The majority of these changes will take effect from 6 April 2025, with some changes taking effect from 6 April 2026, the date of Royal Assent or the date of announcement.
The explanatory notes accompanying the legislation will detail the amendments being made, specify the effective date of each provision, and explain the rationale for the chosen approach.
Current law
The personal tax treatment of non-UK domiciled individuals in the UK tax system is contained within the Finance Act 2025.
Proposed revisions
The legislation and explanatory notes published as part of Finance Bill 2025-26 will set out details of the proposed revisions.
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| Negligible | Negligible | Negligible | Negligible | Negligible | Negligible |
This measure is expected to have a negligible impact on the Exchequer.
Macroeconomic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure affects personal taxation due on individuals or their estates and trustees of trusts.
This measure will impact an estimated 17,000 individuals who will be eligible for the 4-year FIG regime and OWR. This measure also impacts at least 23,000 former remittance basis users who may be eligible for the TRF. These individuals will need to be aware of these minor amendments to the legislation which ensures the legislation works as intended.
This measure is not expected to impact family formation, stability, or breakdown.
This measure is expected overall to have no impact on individuals’ experience of dealing with HMRC as the changes are minor legislative fixes.
Equalities impacts
The population impacted by this measure will be a subset of the former non-domiciled population. Former non-domiciled individuals are likely to be represented in each of the groups sharing protected characteristics. Where protected groups are overrepresented the measure will have a disproportionate impact on that group.
Men (70%) are estimated to be overrepresented in the population impacted by this measure compared to their prevalence in the UK adult population (50%). Individuals aged 35 to 54 are also estimated to be overrepresented in the population impacted by this measure (55%) compared to in the UK adult population (26%).
HMRC does not hold data on any other protected characteristics for this customer group and therefore cannot determine if there are any other equality impacts. However, due to the nature of the policy there is likely to be an overrepresentation of non-UK nationals in the customer group impacted by this measure.
Administrative impact on business including civil society organisations
This measure will have a negligible impact on businesses as it concerns taxation of individuals.
Businesses that provide tax advice to individuals will need to be aware of the impact of this measure on their clients. A one-off cost will include familiarisation with the changes. It is not anticipated they will incur any continuing costs.
This measure is expected overall to have no impact on businesses’ experience of dealing with HMRC as the change is a legislative fix to ensure the policy works as intended.
This measure is not expected to disproportionately impact civil society organisations.
Operational impact (£ million) (HMRC or other)
This measure is not expected to have any operational impacts.
Other impacts
Other impacts have been considered, and none have been identified.
Monitoring and evaluation
The measure will be monitored and assessed alongside other measures in the government’s package for personal tax changes.
Further advice
If you have any questions about this change, email personaltaxinternational@hmrc.gov.uk.