The UK government’s new non-dom tax changes are some of the most significant in decades, and they could mean no Inheritance Tax (IHT) for long-term non-UK residents from 6 April 2025. Alongside this, the introduction of the four-year rule on foreign income and gains will completely reshape how returning residents are taxed when they move back to the UK. Together, these reforms redefine how wealth, inheritance, and cross-border assets are treated for millions of UK nationals living overseas.

If you’ve lived abroad for several years, or you’re considering returning to the UK, it’s vital to understand how the 10-year residency rule and four-year foreign income rule could affect your estate and long-term financial planning.

Watch the full video now to understand the key updates, see the 10-year residency rule explained in plain English, and hear real client scenarios showing how families are rethinking their estate planning under the new system. 

How Do the Non-Dom Tax Changes Remove IHT for Long-Term Residents?

Effective 6 April 2025, the UK will replace its long-standing domicile-based system with a residency-based tax framework. From that date, domicile will no longer determine an individual’s liability for UK Income Tax, Capital Gains Tax, or Inheritance Tax.

Under the new system, tax exposure will depend on residency history. A person will be considered a long-term resident if they have been a UK resident for at least ten of the previous twenty tax years.

During their first nine years of UK residency, individuals will be liable for IHT only on UK-based assets. From the tenth year onward, their worldwide assets will also fall within UK IHT scope.

For those who later leave the UK, an IHT “tail” applies, meaning they could remain subject to UK IHT on their global estate for up to ten years after departure. However, if they were resident for between ten and nineteen years, this period will be shortened proportionally.

Why Are These Non-Dom Tax Changes So Important?

Historically, the key factor for IHT was domicile. This meant that even long-term expats, those living in Dubai, Spain, or the US for decades, often found their worldwide estates still tied to the UK for tax purposes.

With the upcoming changes, this will no longer automatically be the case. Instead, residency becomes the main driver. This is good news for those who have already established themselves abroad, as the 10-out-of-20 rule provides greater clarity and potential relief from UK IHT on overseas assets.

Who Benefits Most from this New Rule?

The winners under the Non Dom Tax Changes are those who have already established long-term residency outside the UK.

Let’s take an example. If you own:

• A £1m property in the UK
  
• A £1m property in the U.S.
  
• A £1m property in Dubai
  

Before these reforms, all three properties could have been assessed for UK IHT because the individual was deemed UK-domiciled.

Under the new system, provided they’ve been non-resident for at least ten of the last twenty tax years, only their UK assets would be taxable — the overseas properties would fall outside UK IHT scope.

This change provides a compelling reason for many to maintain non-UK residency, particularly for those holding significant international wealth.

What Is the 4 Year Rule on Foreign Income and Gains?

Alongside the ten-year IHT reform, the UK is also introducing a four-year rule on foreign income and gains. If you move back to the UK, you will have a four-year window during which foreign income and capital gains are not immediately subject to UK tax.

This transitional period is designed to encourage individuals to return without facing instant taxation on existing overseas earnings or investments. In short, it’s a grace period that gives returning residents time to adjust their finances, rather than being taxed from day one of arrival.

Should You Seek Professional Advice Now? 

Absolutely, and sooner rather than later. The Non-Dom Tax Changes represent a fundamental shift in how UK residents and non-residents are assessed for income tax, capital gains, and inheritance tax. These reforms directly affect cross-border financial planning, and understanding how they apply to your personal situation is essential before making any major decisions.

At Cameron James, we specialise in cross-border pension and wealth management for globally mobile clients. While we are not tax advisers, we work closely with a trusted network of regulated international tax specialists across the UK, European Union, United States, and the Middle East. This collaboration ensures that every element of your financial plan, from investment strategy to estate structure, aligns with local and international tax requirements.

Our team helps clients to:

• Understand how the new rules impact their UK pensions, investments, trusts, and estate planning.
• Coordinate directly with qualified tax experts in relevant jurisdictions to ensure full compliance and accurate tax positioning.
• Develop integrated, tax-efficient strategies that protect their assets while remaining aligned with FCA regulations and best global practices.
• Plan proactively, whether you intend to remain abroad, relocate, or eventually return to the UK, so you avoid unexpected tax exposure under the new ten-year and four-year residency rules.

With these changes approaching in April 2025, seeking professional advice is not just recommended, it’s vital. The earlier you align your financial planning with the new system, the more flexibility and protection you’ll retain over your global estate.