Domicile Is Gone

Domicile was a proposition about a person. It asked where a life was ultimately rooted, and it was settled on evidence of intention — where the family was buried, which house was never sold, what a person had said they meant to do at the end. It could be argued about, and frequently was.

Residence is a count. Since 6 April 2025 the count is the only thing the United Kingdom asks, and the planning question has moved with it: not where a principal belongs, but how many tax years they have been here, and how many they must be away before the arithmetic releases them.

What the statute did

Section 40 of the Finance Act 2025 removes the remittance basis for the tax year 2025-26 and every year after it. In its place, section 37 gives relief on foreign income to a qualifying new resident for an initial year and the three tax years that follow — four in total — on one condition: that the individual was not UK resident in each of the ten tax years immediately before. Section 39 does the same for foreign gains and section 38 for foreign employment income. The relief is claimed rather than automatic, and it is exhausted by time rather than by amount.

For inheritance tax, section 44 replaced the domicile test for excluded property with a residence test. Section 6A of the Inheritance Tax Act 1984 now provides that an individual is a long-term UK resident at all times in a tax year if they were UK resident for at least ten of the previous twenty tax years. Once that is true, non-UK assets are no longer excluded property, and Schedule 1 to the same Act charges the rate above the nil-rate band of £325,000 at 40 per cent.

Domicile has not been abolished. It survives in private international law and still governs questions that have nothing to do with the Revenue, among them which system's succession rules apply to an estate. What has gone is its purchase on UK tax.

Three counters, and they do not align

Four, ten, twenty. Four tax years of relief on arrival. Ten clear years of non-residence to qualify for them. Ten years of residence within twenty to acquire worldwide inheritance tax exposure.

A principal arriving here is measured on two clocks at once. The four-year relief expires long before the ten-year exposure arrives, leaving an interval in which foreign income and gains are taxed as they arise while non-UK assets stay outside the net. That interval is not a concession. It is the ordinary position of a UK resident who is not yet long-term resident, and it closes at the start of the tax year in which the ten-of-twenty test is first met.

The tail is graduated, not ten years

The shorthand in circulation is a ten-year tail. The statute does not say that. Section 6A(3) sets out a table. An individual with thirteen or fewer of the relevant tax years of residence ceases to be long-term UK resident after three consecutive non-resident years; fourteen years of residence requires four; fifteen requires five, and so on in step until twenty years of residence requires ten. Separately, the status falls away where the individual was non-UK resident for any ten consecutive tax years during the previous nineteen. Schedule 13 to the same Act adds a transitional case: an individual who was deemed domiciled on 30 October 2024 loses long-term resident status after three years of non-residence.

The length of the exit is a function of the length of the stay. Each further year of residence beyond thirteen adds a year to the tail, up to the ceiling of ten. Departure is therefore not an event. It is the beginning of a period in which a person who is no longer here is charged as though they were, on assets that were never here either.

The trusts moved with the settlor

Section 43 and Schedule 12 of the Finance Act 2025 removed the protections that had applied since 2017-18 to foreign income and gains arising within settlor-interested offshore structures. The Treasury's technical note of 23 April 2024 anticipated it, and Schedule 12 enacted it: from 6 April 2025 that protection is not available to individuals outside the four-year regime, and income and gains inside the structure are taxed on the settlor on the same footing as a UK-domiciled settlor.

The inheritance tax side is where the calendar has moved most recently, and it moved backwards. Non-UK property in a settlement is relevant property while the settlor is long-term UK resident, and a proportionate charge can arise when the settlor ceases to be. Section 73 of the Finance Act 2026 inserts subsections (8B) and (8C) into section 65 of the Inheritance Tax Act 1984 to disapply exemptions from that exit charge where a long-term residence change has occurred, and the amendment is treated as having come into force on 26 November 2025. Section 74 of the same Act runs the other way, capping the charge on property that entered a settlement before 30 October 2024 and was excluded property immediately before that date — £125,000 for each whole successive quarter in the first period, and £5 million for each ten-year period after it. That amendment is treated as in force from 6 April 2025.

One Act, two provisions, both retrospective, pointed in opposite directions. Trustees administering a settlement made a generation ago are measured against rules written after the period they apply to had closed.

The window that is already closing

Two transitional items carry hard dates. One is widely misreported.

Schedule 10 charges designated pre-April-2025 foreign income and gains at 12 per cent where the designation is made in a return for 2025-26 or 2026-27, and at 15 per cent in a return for 2027-28. There is no fourth year.

Overseas workday relief is capped at the lower of 30 per cent of relevant qualifying employment income for the year and £300,000, under section 41R of the Income Tax (Earnings and Pensions) Act 2003 as introduced by section 38 of the Finance Act 2025. The relief cap is commonly reported as arriving in April 2026, and two different measures are being run together. The cap on the relief itself has effect for the tax year 2025-26 and subsequent tax years, and HMRC's employment income manual states the same limit from 6 April 2025. What begins in April 2026 is a separate thing: an amendment to the section 690 notification process, announced at Autumn Budget 2025, capping at 30% the relief an employer may deliver in-year through payroll, for notifications for 2026-27 onwards. A restriction widely believed to be forthcoming has in fact applied to a completed tax year and is four months into a second.

What the published numbers carry

HMRC's impact note of 30 October 2024 estimated that 14,800 individuals would qualify for the four-year regime, that 10,800 employees would qualify and be able to claim overseas workday relief, and that 9,300 individuals would not qualify and would move to worldwide taxation. Those are forecasts, made before the regime existed.

Against them sit the closing figures for the old system. HMRC's statistical commentary published on 30 July 2026, covering the tax year ending 2025, records 73,400 non-domiciled taxpayers and 8,500 deemed domiciled — at least 81,900 in combination — carrying £13.6 billion in tax and national insurance liabilities, 9 per cent up on the year. Around 8,600 arrived and around 9,000 left. HMRC states that this is the final publication of the series in its current form.

The two sets of numbers do not meet. One estimates who will qualify for a relief; the other counts a status that no longer exists. Nothing yet published measures behaviour under the new regime. Departure figures circulating in commentary are not HMRC outturn, and they are not repeated here.

Why this is not a United Kingdom question

The counters are British. Almost nothing they act on is.

A person who becomes long-term UK resident acquires a 40 per cent exposure on assets sitting under other systems of law, held through vehicles formed under other statutes, passing under succession rules that domicile — the concept the Revenue has discarded — still helps to determine. A person who leaves starts a tail here on the same day a new residence starts counting elsewhere, and the two calendars were not drafted with each other in mind. A settlement can meet a UK exit charge in the same year another jurisdiction treats it as having arrived. Treaty position, pension treatment and matrimonial property each answer to a different authority again.

That is the case for reading it as one system rather than a British problem with foreign annexes. Structures are designed alongside independent counsel in each relevant territory. Nothing here is legal or tax advice, none of it describes the position of any particular person, and a principal acting on any part of it should take advice from an adviser unrelated to Privy Consul.

The architecture sits under Cross-Border Wealth Architecture and Transnational Capital Structuring; the generational question under Succession, Continuity & Legacy Governance.