Remittance Basis and Foreign Income: What the 2025 Rule Changes Mean for You

If you’ve been living in the UK with income or investments abroad, 2026 is your year to sit up and pay attention. The remittance basis—the special tax treatment that lets some people pay UK tax only on money brought into the country—is about to get one of its biggest shake-ups in decades.

The reforms will affect non-domiciled, deemed domiciled, and some non-resident taxpayers, changing how their foreign income, capital gains, and even inheritance tax are calculated. If you’ve ever had a foreign bank account or left overseas earnings unremitted, these updates could make a noticeable dent—or saving—in your next tax bill.

In short: the UK’s approach to taxing global income is being rewritten. And while it’s not quite the end of the remittance era, it is the end of business as usual for anyone with a foot in more than one country.

What does remittance basis mean?

Until 2025, the remittance basis allowed non-domiciled individuals living in the UK to be taxed only on their UK income and on any overseas income or gains they brought—or remitted—to the UK. It was a long-standing cornerstone of the UK tax system for globally mobile professionals and wealthy expats, offering an alternative to the arising basis, where worldwide income is taxed as it’s earned.

Under the old rules, claiming the remittance basis meant:

• Your UK sources were always taxed in full.
• Your foreign income stayed untaxed as long as it remained overseas.
• You could choose this basis each year—but often paid an annual charge once you’d been UK-resident long enough.

So what counted as a “remittance”? HMRC took a broad view:

• Transferring money or assets into the UK
• Using foreign bank accounts or credit cards for UK spending
• Paying a UK bill or debt (like rent or school fees) from overseas income

From April 2025, this system disappears for most taxpayers. The government is replacing it with a new residence-based regime, meaning all UK tax residents will eventually be taxed on their worldwide income—though transitional reliefs will help long-term non-doms adjust.

📌 Pro Tip: If you’ve relied on the remittance basis for tax planning, don’t wait until next April to act. Moving funds, cleaning up mixed accounts, or seeking professional advice now could save you a serious HMRC headache later.

Who qualified for the remittance basis in the UK?

Until now, the remittance basis applied to people who lived in the UK but weren’t considered UK-domiciled for tax purposes. You could be UK resident—working here, studying here, even owning property here—but still claim non-dom status if your long-term home, or “domicile of origin,” was elsewhere.

In practice, it mainly benefited:

• Expats working in the UK for a few years
• Globally mobile professionals with investments abroad
• Civil partners or beneficiaries receiving foreign income through trusts
• Non-residents with limited UK sources but ongoing overseas income

To use the remittance basis, you’d opt in each year on your Self Assessment tax return. For long-term residents, the privilege came with a cost: a Remittance Basis Charge (RBC) of £30,000 after seven years, rising to £60,000 for those here longer.

From April 2025, however, that choice disappeared for most taxpayers. The government’s new system moved toward residence-based taxation, meaning UK residents now pay UK tax on their worldwide income and gains, regardless of domicile. Some transitional rules will soften the blow—especially for those already using the remittance basis—but the era of “keep it offshore, keep it untaxed” is ending.

📌 Pro Tip: If you currently claim the remittance basis, check whether your status shifted to deemed domiciled last year. The new rules changed how the remittance basis applies to trusts, gifts, and any income linked to a relevant person—so a quick review now could prevent a major tax surprise later.

What counts as foreign income and foreign gains?

When we talk about foreign income and foreign gains, we’re essentially talking about money earned or assets sold outside the UK—anything that doesn’t come from UK sources. Under the old remittance basis, this income was only taxed if you brought it into the UK. From 2025, however, many of these earnings will fall under UK income tax automatically.

Here’s what counts as foreign income:

• Employment income from overseas work or secondments
• Dividends and interest from non-UK companies or bank accounts
• Rental income from property abroad
• Overseas pensions or trust distributions

And here’s what qualifies as foreign gains:

• Profits from selling shares, investments, or property outside the UK
• Gains on cryptoassets held overseas
• Capital growth on foreign business interests

Unremitted foreign income simply means funds you’ve kept abroad—often in non-UK bank accounts or investment portfolios. These were previously untaxed unless remitted, but under the new regime, UK residents may now have to declare them annually for income tax or capital gains tax.

Complications arise with mixed funds—accounts containing both UK and foreign income or gains. Once you start spending or transferring from these accounts, HMRC’s ordering rules decide what’s been “remitted” first (and therefore taxed first). It’s not exactly romantic, but even civil partners sharing accounts or assets can trigger unexpected tax liabilities under these rules.

📌 Pro Tip: If you hold investments, property, or savings abroad, now’s the time to separate foreign income and capital gains into distinct accounts. With the remittance system ending, clean records will save you from messy CGT calculations—and a lot of explaining to HMRC.

How did the remittance basis work (and how did it change in 2025)?

Before the 2025 reforms, the remittance basis gave non-domiciled individuals living in the UK a unique advantage: they were only taxed on UK income and any foreign income or gains they brought into the country. Everything else—salary, rent, dividends, or interest kept abroad—remained untaxed in the UK.

Claiming it meant giving up your personal allowance and capital gains tax (CGT) exemption for that year. Long-term residents also paid a Remittance Basis Charge—£30,000 after seven years in the UK, or £60,000 after twelve. Some also used the temporary repatriation facility, allowing them to bring old untaxed income to the UK at a reduced rate during limited HMRC windows.

But from April 2025, the rules change dramatically. The remittance basis of taxation is being replaced by a new residence-based system, which taxes most UK residents on their worldwide income. The reforms include:

• The removal of the remittance basis charge and associated claims.
• Adjustments to double taxation relief and foreign tax credit rules, ensuring income isn’t taxed twice.
• The end (or major reform) of Overseas Workday Relief, meaning employment income earned abroad may now be fully taxable in the UK.
• The continuation of the annual exempt amount for CGT, but with less scope for offshore exemptions.

For UK-domiciled, deemed domiciled, and even long-term non-resident taxpayers, these updates reshape how HMRC views the source of income and whether it’s taxed in the UK. If you have overseas assets, non-UK bank accounts, or worldwide income, your old strategy may no longer fit the new rules.

📌 Pro Tip: If you’ve been claiming the remittance basis for years, review your structure now. Cleaning up offshore accounts or using available double taxation relief before the new rules bite could make a meaningful difference to your 2025 tax bill.

How do you report foreign income and remittances?

Reporting foreign income has always been tricky—but with the 2025 rule changes, accuracy is more important than ever. Whether you’re declaring income from overseas assets, mixed funds, or funds brought into the UK, HMRC now expects full transparency on how and when money moves.

Start with the basics: you’ll need to declare all foreign income, capital gains, and any remittances on your Self Assessment tax return.

• Use the SA106 pages to report foreign income and gains.
• Complete SA109 (Residence, Remittance Basis, etc.) if you’ve claimed non-dom status or had split-year treatment.
• Include all relevant information through GOV.uk’s online submission or paper forms.

So what exactly counts as a remittance? Under HM Revenue & Customs rules, it’s broader than most realise:

• Transferring money or assets from overseas to a UK bank account.
• Paying a UK credit card bill using foreign funds.
• Bringing physical assets—like artwork, jewellery, or even property—into the UK.
• Sending funds to a relevant person (a spouse, civil partner, or close family member) who then spends or transfers it in the UK.

For 2025, record-keeping has become even more crucial. Maintain detailed logs of:

• Unremitted foreign income and where it’s held.
• Any split-year treatment that affects your UK residence status.
• Evidence for Overseas Workday Relief or foreign tax credit claims.

Deadlines haven’t changed—31 January for online filing and 31 October for paper returns—but penalties have become more aggressively enforced for errors involving offshore income. HMRC’s updated guidance on gov.uk now emphasises real-time reporting, cleaner data, and stronger proof of where income originates.

📌 Pro Tip: Keep a running spreadsheet (or use your provider’s portal) to log every transfer, conversion, or credit card payment linked to your foreign funds. The cleaner your records, the easier it is to defend your case if HMRC ever comes calling.

How will these changes affect your UK tax liability?

For years, claiming the remittance basis meant you could keep foreign income and gains offshore, untaxed by HMRC. From April 2025, that line in the sand disappears. Most UK residents—even those previously classed as non-domiciled—will now be taxed on their worldwide income and capital gains, no matter where the money sits.

Here’s how your tax liability shifts under the new rules:

• Income tax: Foreign salary, dividends, or rental income will now fall under UK income tax bands, even if left abroad. The personal allowance will once again apply, but the remittance basis charge disappears.
• Capital gains tax (CGT): The annual exempt amount remains, but you’ll now pay CGT on global assets, not just UK ones. Relief for overseas assets will depend on new double taxation agreements.
• Inheritance tax (IHT): Deemed domicile rules remain in play. Once you’ve been UK-resident for 15 of the past 20 years, your worldwide estate is within IHT scope—regardless of where assets are held.

The foreign tax credit and double taxation relief systems will continue, ensuring you don’t pay tax twice on the same income, but the process will be more formalised and evidence-heavy. Expect to provide clear documentation of when and where each income source was taxed abroad.

For relevant persons—such as civil partners, dependants, or beneficiaries—the new system removes much of the old remittance nuance. Any overseas income they receive will be taxed in the same way as UK income, simplifying the rules but widening the net.

📌 Pro Tip: Compare your past three tax years to model the change. For many former non-doms, the new system means higher annual tax bills—but also fewer administrative hoops, no remittance tracking, and cleaner eligibility for personal allowances.

What should you do next?

If your financial life spans more than one country, 2026 is not the year to wing it. The new remittance rules mean your UK tax position may look very different come January—and a little early prep now can save a lot of stress later.

Start with the essentials:

• Review your domicile and residency status. Make sure you know whether you’re UK-domiciled, deemed domiciled, or non-resident for tax purposes.
• Track all foreign income. Keep separate records for overseas salaries, dividends, property income, and unremitted foreign income.
• Update your mixed funds and UK bank accounts. Clearly label the origin of funds and avoid mingling clean capital with income or gains—HMRC will care.

For anyone with split-year treatment, temporary repatriation, or multiple overseas bank accounts, this is prime time to get a second opinion. A specialist tax adviser can help you clarify your exposure, claim any double taxation relief, and make sure your Self Assessment ticks every box.

Reliable help is easy to find:

• The latest rules and forms are on gov.uk, under “Foreign Income and the Remittance Basis.”
• HMRC’s helpline can confirm which supplementary pages you need.
• And if your situation involves high-value assets, trusts, or family members abroad, consider an international tax adviser before filing.

📌 Pro Tip: Treat this tax year as a reset. Clean up old records, separate mixed funds, and document everything clearly. When the rules change, being organised isn’t just helpful—it’s profitable.

Ready for the new rules?

The remittance basis has long been a maze of acronyms, mixed funds, and midnight spreadsheet panic—but 2025 marks a fresh start. With the lifetime allowance gone and global income rules tightening, the best move now is a smart one: clarity over confusion.

Whether you’re juggling property in Portugal or dividends in Delhi, the right strategy can turn compliance into confidence. Review your records, get expert help if needed, and make sure HMRC’s new framework works for you, not against you.

If you’re unsure how the changes affect your tax bill, now’s the time to book a free consultation through Unbiased. A qualified adviser can walk you through your options, ensure you’re not overpaying, and help you stay one step ahead of 2025’s tax curve.

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