The UK has long been a preferred destination for overseas investors, especially in the property market. Yet, recent tax reforms have reshaped the landscape for non-resident and returning investors alike.
Following the abolition of the non-domicile (non-dom) regime, confirmed in the Spring Budget 2024, the rules governing international tax and Capital Gains Tax (CGT) compliance have entered a period of major change. For those with UK property holdings, these adjustments carry significant implications that demand attention.
The end of non-dom status
As of 6 April 2025, the long-standing non-dom system has been replaced with a residence-based framework designed to simplify how foreign income and gains are treated.
The newly introduced Foreign Income and Gains (FIG) regime applies to individuals who have spent at least ten consecutive tax years outside the UK before becoming resident again.
It offers relief for their first four years of UK residence, exempting qualifying foreign income and gains—those previously covered under the remittance basis—from UK taxation.
Once that four-year period ends, taxpayers revert to the standard UK rules, becoming liable for tax on their worldwide income and gains on an arising basis.
There is no charge to use the FIG regime, but it is not automatic. Individuals must make a formal claim through their UK tax return within 12 months of the 31 January filing deadline for the relevant year.
The claim should set out the income and gains for which relief is sought and taxpayers may decide which sources of FIG to include.
While non-residents remain subject to UK tax on property disposals, the withdrawal of the non-dom system changes how overseas income and long-term gains are assessed.
For many investors who once relied on the remittance basis to exclude offshore earnings from UK tax, this represents a major shift in tax exposure and future planning.
Those holding UK property through offshore structures or corporate vehicles will now need to reassess their arrangements to ensure ongoing efficiency and compliance under the new regime.
The tightening of CGT rules
Even before the non-dom regime was removed, the UK had been steadily broadening the reach of its Capital Gains Tax for non-residents.
Since April 2015, profits from the sale of UK residential property by non-residents have been taxable.
This scope was expanded in 2019 to include all types of UK land and property, both residential and commercial, as well as indirect disposals involving “property-rich” companies where at least 75 per cent of value derives from UK property.
In April 2020, additional reporting rules were introduced. Any sale of UK property by a non-resident must now be reported to HMRC within 60 days of completion and the corresponding tax must be paid within the same timeframe.
Failure to report on time can result in automatic penalties and interest, even for those not otherwise within UK self-assessment.
What overseas investors should consider
The combination of stricter CGT reporting and the end of the non-dom framework has made tax planning for overseas investors far more complex. To remain compliant and efficient, non-resident individuals should:
- Reassess property-holding structures to ensure they remain suitable under the new rules
- Keep accurate and detailed records of purchase prices, improvements and disposals to support CGT calculations
- Plan ahead for the 60-day reporting and payment requirement when selling UK property
- Explore double tax treaties that may help mitigate CGT exposure
- Seek early professional advice where residence, inheritance and property planning overlap
The UK continues to attract strong overseas investment, but it is clear that tax rules are becoming more stringent.
With the non-dom regime ending earlier this year and HMRC increasing its focus on international property ownership, this is the time for non-resident investors to review their affairs carefully.
If you already hold UK assets or are considering new property investments, obtaining tailored advice is essential to avoid unexpected tax liabilities and ensure compliance in this evolving environment. Get in touch.