(and why Americans might actually love the “new” rules)
-Financial planning is never ‘just about the money’. There’s the human side of managing emotions and psychology, the technical side of putting plans in place, the product element where we build the portfolio, the tax side where we optimise things and the legal side that governs what we can and can’t do.
-Over the years, we’ve found that our clients never really enjoy talking about the legal side of things, and we can’t blame them! But when we work across multiple territories, it’s an area where we absolutely have to stay on our toes.
-A few years ago, we wrote a guide explaining the UK’s old “non-dom” rules. If you have that guide saved somewhere on your computer, do me a favour: delete it. As of April 6, 2025, the UK government completely abolished the non-dom regime.
-The old system allowed non-doms to avoid UK tax on foreign income as long as they didn’t bring (or “remit”) that money into the UK. That is now ancient history. The UK has shifted to a much simpler, residence-based system.
-Here’s a simple explanation of what this new landscape looks like, and why it is surprisingly good news for our US clients.
The new 4-Year FIG Regime
-Instead of the old non-dom status, the UK introduced the Foreign Income and Gains (FIG) regime. It works like this: if you move to the UK and have not been a tax resident there in the previous 10 years, you get a four-year grace period.
-During those first four years, you get 100% relief from UK tax on your foreign income and gains. Even better? You can now freely bring that money into the UK to buy a house or fund your lifestyle without triggering a UK tax charge. The old “remittance” traps are gone.
-Once your four years are up, the transition is abrupt but transparent: you simply start paying UK tax on your worldwide income, exactly like any other UK resident. (The rules around Inheritance Tax also changed, moving to a system where worldwide assets are taxed if you have been a resident for 10 of the previous 20 tax years).
The American Anomaly (Why US expats are winning)
-For US citizens, this presents a significant strategic opening.
-Because the US taxes by citizenship, Americans abroad have always had to pay tax somewhere. The old UK non-dom regime didn’t magically eliminate US tax; it just layered incredibly complex UK remittance rules on top of it.
-Under the new FIG regime, the friction is gone. For your first four years in the UK, you can sell US investments, bring the cash into the UK, and deploy it locally without the UK taking a cut. You still pay your usual US capital gains tax, but the UK no longer penalises you for moving the money.
-And what happens after year four? You start paying UK tax on your worldwide income, but because UK tax rates are generally higher than US federal rates, you can usually offset your US liability entirely using foreign tax credits. You aren’t suddenly being double-taxed; you are simply changing the address on the cheque from Washington to London.
Getting your chickens in a row
-Cross-border tax planning is never a DIY job, especially with sweeping legislative changes now in full effect. But a simpler system means better planning opportunities.
-If you are a US citizen planning a move across the pond, or an existing expat trying to figure out what the recent reforms mean for your wealth, please reach out. Let’s get your chickens in a row so you can focus on enjoying the lifestyle.
