Part II · Jurisdictions · No. 14

United Kingdom

A major holding jurisdiction in transition. The longstanding resident non-domiciled regime and the remittance basis were abolished from 6 April 2025 and replaced with a residence-based four-year foreign income and gains (FIG) regime. London remains the global hub of the art-and-auction trade.

Why this jurisdiction matters

The UK has played a particular role in international wealth structuring through the non-dom regime — providing favorable taxation of foreign-source income and gains for non-domiciled residents on a remittance basis. The regime has been a magnet for international wealth and a recurrent political issue. The abolition was announced in the Spring Budget 2024, confirmed (in a revised form) in the Autumn Budget 2024 and enacted by the Finance Act 2025, with effect from 6 April 2025.

The relevant tax regime

• Income tax. Progressive to 45% top marginal (England, Wales and Northern Ireland; Scotland sets its own bands, to 48%).
• Capital-gains tax. Since 30 October 2024 (Autumn Budget 2024), 18% within the basic-rate band and 24% above it for all assets, including residential property.
• Inheritance tax (IHT). 40% above the nil-rate band (£325,000) and residence nil-rate band (up to £175,000, tapered away for estates above £2 million), both frozen until April 2031 (Autumn Budget 2025); seven-year gift rule. From 6 April 2026, 100% agricultural and business property relief is limited to a combined £2.5 million allowance, with 50% relief above it.
• VAT. 20% standard; an effective 5% on imports of works of art, antiques and collectors’ items; zero-rate on books.
• SDLT (Stamp Duty Land Tax). Progressive on residential transactions in England and Northern Ireland to 12%; a 5% higher-rates surcharge for additional dwellings and company buyers (since 31 October 2024) and a further 2% non-resident surcharge, so the top marginal rate can reach 19%; 17% flat rate for certain corporate purchases above £500,000.

The new four-year FIG regime

From 6 April 2025, individuals who become UK resident after at least 10 consecutive tax years of non-residence can claim relief from UK tax on foreign income and gains arising during their first four tax years of UK residence, whether or not the funds are brought to the UK. Beyond year four, worldwide taxation applies on the arising basis. Former remittance-basis users can designate pre-April-2025 foreign income and gains under the Temporary Repatriation Facility at 12% (2025–26 and 2026–27) and 15% (2027–28).

Registration or residency mechanics

UK residency determined under the Statutory Residence Test (FA 2013 Schedule 45) — day count, ties to UK, prior residency. Inheritance tax exposure historically followed domicile; from 6 April 2025 it follows a residence-based “long-term resident” test.

Reporting and disclosure

CRS participant. FATCA Model 1 IGA. Trust Registration Service. People with Significant Control (PSC) register for companies; Register of Overseas Entities for foreign owners of UK land.

The substance question

UK residency is now the dominant connecting factor. The new long-term-resident IHT test (resident for 10 of the prior 20 years) reduces the importance of domicile for IHT.

Recent changes

The Finance Act 2025 abolished the remittance basis for foreign income and gains from 6 April 2025, replacing it with the four-year FIG regime, and replaced the IHT domicile test with a residence-based test (10 of the prior 20 tax years). Capital-gains rates rose to 18%/24% from 30 October 2024; the SDLT higher-rates surcharge rose to 5% from 31 October 2024; the APR/BPR cap took effect on 6 April 2026; and unused pension funds are due to come within IHT from 6 April 2027. Figures as of October 2026.

Common asset classes parked here

• Fine art — London auction market; effective 5% import VAT on art preserved.
• Fine wine — UK bonded warehouses, in-bond trading.
• London real estate — high SDLT for foreign and additional-property buyers.
• Thoroughbred horses — Newmarket racing and Tattersalls sales.
• Trust structures using English-law instruments.

Reviewed October 2026