As of April 6, 2025, the United Kingdom has implemented a sweeping tax reform designed to redistribute the tax burden across residents, businesses, and holders of foreign assets. The new rules affect international investors, expatriates, trust owners, and individuals who previously relied on preferential tax treatment for foreign income. The abolition of the remittance basis, introduction of the Qualified New Resident (QNR) status, launch of the Temporary Repatriation Facility (TRF), and revision of inheritance tax regulations mark a new phase in the UK’s fiscal policy — one aimed at increasing transparency and strengthening compliance.
Abolition of the Remittance Basis
Until April 2025, foreign residents in the UK could legally avoid paying tax on overseas income as long as those funds were not brought into the country. This system — known as the remittance basis — was widely used in international tax planning, especially by high-net-worth individuals and global investors.
With the reform now in effect, the remittance basis has been abolished. This represents a significant shift, removing one of the core incentives for wealthy foreigners to relocate to the UK. Instead, the government has introduced a new tax relief mechanism — the Qualified New Resident status — with limited duration and updated conditions.
QNR: A New Regime for New Residents
The QNR status is the government’s answer to preserving the UK’s attractiveness to international newcomers in the wake of removing the remittance system. It can be granted to any individual who has not been a UK tax resident at any point during the 10 years prior to April 6, 2025.
Key benefits of QNR status include:
- Full exemption from UK tax on foreign income, including income remitted to the UK;
- 0% capital gains tax rate, provided the income is transparently declared;
- Favourable treatment of trusts, as long as the individual maintains QNR status.
However, these privileges only apply during the first four years of tax residency. After this period, foreign income and capital gains will be taxed under standard UK rules.
Temporary Repatriation Facility (TRF): A Window of Opportunity Until 2027
For those who previously benefited from the remittance basis, the government has introduced the Temporary Repatriation Facility (TRF), allowing a one-time opportunity to bring in offshore income accrued before April 6, 2025, at preferential tax rates.
Core conditions of TRF:
- 12% tax rate on qualifying income repatriated in the 2025/26 tax year;
- 15% tax rate applicable in the 2027/28 tax year;
- Favourable terms for repatriating trust distributions.
TRF acts as a form of “capital amnesty,” reducing fiscal risk for returning funds to the UK while aligning with the government’s transparency objectives.
Inheritance Tax (IHT): A New Long-Term Resident Concept
As part of the reform, inheritance tax (IHT) is no longer based on the concept of domicile. Instead, the UK now applies the status of a long-term resident. Under the new rule, any individual who has been a UK tax resident for 10 or more of the past 20 years is now liable to pay IHT on their worldwide assets — not just UK-based ones.
This tax liability continues for up to 10 years after the person ceases to be a tax resident. This is particularly critical for international businesspeople and investors living in the UK, as they remain within the UK tax net for a decade even after leaving the country.
To ease the transition, a grace period has been introduced: those who leave the UK between 2025 and 2026 can still avoid IHT on foreign assets — provided specific exit criteria are met before April 6, 2028.
Trust Structure Reform: EPTs No Longer a Universal Shelter
Excluded Property Trusts (EPTs), previously a cornerstone of international estate and tax planning, have also been affected. If the settlor of a trust has spent 10 or more years in the UK, the trust will lose its IHT exemption.
Moreover, any settlor who directly or indirectly controls the trust’s assets will now be subject to income tax and capital gains tax on those assets.
Exception: EPTs created before October 30, 2024, will retain their IHT exemptions — even if the settlor later becomes a long-term UK resident. This offers a limited-time window to restructure assets or trusts before year-end 2024.
Conclusion: A Strategic Reassessment Is Essential
The UK’s 2025 tax reform marks a decisive transformation in the taxation of foreign income, wealth, and estate structures. While it tightens fiscal oversight and closes legacy loopholes, the government has also provided transitional benefits, time-limited relief, and reduced-rate mechanisms to support compliance and encourage voluntary repatriation.
For businesses, expatriates, financial advisers, and legal firms, this is a critical juncture to reassess long-term strategies — from corporate structuring to family succession planning. The demand for bespoke tax advisory services and asset restructuring is expected to surge in the coming months.
Adaptation to the new fiscal landscape is not merely advisable — it is essential.