UK Deemed Domicile: The 15/20-Year Rule, the FIG Regime and Inheritance Tax

UK private-client tax has always run on two separate axes, and confusing them is the most common error in this area. Residence — decided by the Statutory Residence Test — determines the scope of income tax and capital gains tax: worldwide for residents, UK-source for non-residents. Domicile — historically a common-law concept rooted in origin and intended permanent home — determined inheritance tax exposure and access to the remittance basis.

For decades the two axes could point in different directions. A person could be UK resident for forty years yet domiciled in France at common law, paying UK tax on worldwide income as it arose (or on the remittance basis) while keeping foreign assets outside UK inheritance tax. Deemed domicile was the statute's answer to the most extreme version of that mismatch: after enough years of UK residence, the law stopped asking about your real domicile and treated you as UK domiciled for tax purposes.

From 6 April 2017 to 5 April 2025, that treatment applied for all taxes through two conditions in section 835BA of the Income Tax Act 2007 and the parallel inheritance-tax provisions. From 6 April 2025, domicile has been removed from the statute as a connecting factor altogether. The system now asks only about residence history: the FIG regime for new arrivals' foreign income and gains, and a long-term-residence test for inheritance tax. This page explains the 15/20 rule as it applied, the conditions that replaced it, and what each means for planning — because a great deal of material still online describes the system that was abolished.

From 6 April 2017, an individual not actually domiciled in the UK was deemed domiciled for all tax purposes if they met either of two conditions. Condition B — the 15/20 rule — applied where the individual had been UK resident for at least 15 of the 20 tax years immediately preceding the relevant tax year. Fifteen years of residence in the window was enough; the years did not need to be consecutive, and the count looked backwards from the year being tested.

The rule replaced a narrower inheritance-tax-only version that had required 17 out of 20 years. The Finance (No. 2) Act 2017 extended the concept across income tax, capital gains tax and inheritance tax simultaneously, which is why 2017 was the watershed year for non-dom planning: the same 15-year count that ended the remittance basis also pulled worldwide assets into inheritance tax.

Two details of the count mattered. First, residence for these purposes was decided by the ordinary residence rules of each year — the SRT for years from 2013-14. Second, there was a carve-out: Condition B was not met if the individual was non-resident in the relevant year and had no year of UK residence beginning after 5 April 2017 before it — a transitional protection for people who had already left. HMRC's example in RDRM25030 walks through the arithmetic year by year, and it repays reading, because the count is mechanical and unforgiving: the 15th year of residence in the window switched the status on, with no discretion and no warning letter.

Condition A was the faster route to deemed domicile, and it needed no years of counting. It applied where the individual was born in the UK, had a UK domicile of origin, and was UK resident in the relevant tax year. A British-born person who had acquired a foreign domicile of choice during years abroad became deemed domiciled the moment they resumed UK residence — immediately, in year one.

The policy was deliberate: someone whose birth, origins and current life were all British could not interpose a domicile of choice acquired during an expatriate spell to shelter foreign income or keep foreign assets outside inheritance tax. For inheritance tax, the parallel provision caught formerly domiciled residents who were resident in the relevant year and in at least one of the two preceding years.

The practical sting was that Condition A could not be planned around by timing. With Condition B, a family could at least count the years and act before the 15th; with Condition A, the status attached on arrival. Returning Britons who had spent decades abroad — in the Gulf, Singapore, or the US — and assumed their foreign domicile travelled home with them discovered that the statute disagreed from day one.

Under the post-April-2025 system, Condition A as such is gone with the rest of deemed domicile, but its policy survives in the residence-based tests: a returning Briton with a long prior UK residence history reaches the 10-of-20 long-term-resident threshold for inheritance tax far faster than a genuine newcomer, and cannot access the FIG regime without a full 10 consecutive years of non-residence.

The Autumn Budget 2024 announced the end of the domicile-based system, and from 6 April 2025 it is gone. For income tax and capital gains tax, domicile no longer determines the basis of taxation. For inheritance tax, domicile no longer determines whether non-UK assets are within the charge. HMRC's manuals mark the old guidance as retained for reference only.

In its place is a system built entirely on residence history. The Statutory Residence Test itself is unchanged — it still decides who is resident each year. What changed is what residence history buys you: a new arrival after a long absence gets four years of FIG relief on foreign income and gains, and a long-term resident faces inheritance tax on worldwide assets after 10 of 20 years of residence. The questions the system asks are now all of the form 'how long have you been here?' rather than 'where is your domicile?'

This is a genuine regime change, not a relabelling. Planning structures, trust deeds and wills drafted around deemed domicile need re-examination, because the trigger events, the counting rules and the escape routes are all different. The old playbook — count to 15, use the remittance basis until then, settle an excluded property trust before the count completes — has been retired. The new playbook is about managing the residence clock itself: the 10-year qualifying absence for FIG, the 4-year relief window, and the 10-of-20 inheritance-tax threshold with its departure tail.

The change also simplified one long-standing complexity while creating another. Complexity removed: there is no longer any need to establish, defend or change a domicile of origin or choice for UK tax purposes — the expensive domicile enquiries of the past have lost their subject matter. Complexity created: residence history must now be tracked across decades with SRT precision, because every test in the new system is a backward-looking count of residence years, and a single wrongly-determined year can move a threshold by twelve months in either direction.

The Foreign Income and Gains regime is the replacement for the remittance basis, and for genuine new arrivals it is in several ways more generous than what it replaced — but much shorter-lived.

The FIG regime is available during the first four years of UK tax residence to individuals who have not been UK tax resident in any of the 10 consecutive tax years before their arrival. Residence for this purpose is decided by the SRT, and years of residence before 6 April 2025 count — so someone who arrived in 2021-22 and has been resident since cannot access it. Unlike the remittance basis, FIG is available regardless of domicile, including to UK-domiciled returners who meet the 10-year absence condition.

During the four years, foreign income and gains are fully exempt from UK tax — not merely sheltered until remittance. Relieved funds can be brought into the UK with no further tax charge, which the old system never allowed. There is no annual charge to pay, where the remittance basis charged 30,000 pounds a year after 7 of 9 years and 60,000 pounds after 12 of 14. The price of a FIG claim is the loss of the personal allowance and the capital gains annual exempt amount for the year.

The categories of qualifying income and gains broadly mirror the old remittance-basis scope, with exceptions — performance income, for example, is excluded, and foreign partnership profits qualify only in limited circumstances. After the four years end, worldwide taxation applies in full. And a Temporary Repatriation Facility offers a transitional reduced rate for bringing pre-2025 unremitted foreign income and gains into the UK — check the current rate and window, as transitional rates are the figures most likely to be misremembered.

For inheritance tax, the deemed-domicile era's 15/20 test is replaced by a long-term-residence test: an individual who has been UK resident in at least 10 of the 20 tax years preceding the chargeable event is within UK inheritance tax on worldwide assets. Ten years, not fifteen — the IHT net now closes five years earlier than deemed domicile did.

The mechanics follow the residence-based logic throughout. Once long-term-resident status is reached, non-UK assets lose the protection that non-domicile once gave them; excluded property treatment for directly held foreign assets ends. UK-sited assets were always within the charge regardless of domicile, and that has not changed.

For internationally mobile families this reframes the question entirely. Under deemed domicile, the planning horizon was the 15th year of residence and the relevant concept was domicile, which could sometimes be managed through a domicile of choice elsewhere. Under the new system the horizon is the 10th year and the only variable is the residence clock itself — years of SRT residence, counted backwards from each chargeable event. How estate, gift and inheritance taxes compare across the US, UK and EU is worth reading alongside this page, because the UK's 10-of-20 test now sits alongside very different American and European systems, and families with members in several countries face overlapping charges with limited credit relief.

One asymmetry to note: the IHT test looks at the 20 years before the event, while the FIG regime looks at the 10 years before arrival. A person can therefore be inside the IHT long-term-resident net while being well outside any FIG relief — the two clocks serve different policies and must be managed separately.

Offshore trusts were the centrepiece of non-dom planning, and April 2025 changed their tax treatment fundamentally. The honest summary is that the old protections are largely gone for new arrangements, while pre-existing ones were given defined transitional protection — the details turn on dates and on the settlor's residence history.

Before April 2025, a non-domiciled settlor could settle foreign assets into an excluded property trust and keep them outside UK inheritance tax indefinitely, even after becoming deemed domiciled. Trusts settled before April 2025 by settlors who were not yet long-term residents broadly retain that excluded property status under grandfathering provisions — this is the single most valuable transitional protection in the reform, and it is why the settlement date of existing trusts is now a critical fact.

For income and gains, the old offshore trust protections for non-dom settlors have been replaced: from April 2025, trust income and gains are generally attributed to a UK-resident settlor under the transfer-of-assets and settlements code, with the FIG regime available only to qualifying new arrivals. New trusts settled after the cut-off by long-term residents get no excluded property protection for IHT.

Whether a trust or foundation helps or hurts under the new rules depends on when it was settled, what it holds, and the residence history of the settlor and beneficiaries — the analysis is now residence-driven rather than domicile-driven. Structures created under the old assumptions should be reviewed rather than assumed effective: a trust that was perfect in 2020 can be a liability in 2026 if its protections depended on a domicile concept the statute no longer recognises.

Leaving the UK no longer ends inheritance-tax exposure the way leaving once ended deemed domicile. Under the new system, a long-term resident who ceases UK residence remains within UK inheritance tax on worldwide assets for a tail period — and the tail lengthens with the length of prior residence, from a minimum of three years up to a maximum of ten years for those who were UK resident for 20 years or more.

This is the mirror of the old three-year rule that once applied after losing a UK domicile, but longer and explicitly scaled. Someone who was UK resident for 10 to 13 years faces a shorter tail than someone resident for two decades. The tail applies to worldwide assets, not just UK-sited ones, which means departure planning must now model the years after leaving, not just the year of departure.

The interaction with the SRT matters here: the tail runs from the cessation of UK residence as determined year by year, so split-year treatment in the year of departure and the leaver-versus-arriver classification in subsequent years all feed into when the tail starts and how long it runs. Temporary non-residence rules can separately pull income and gains realised during a short absence back into UK tax on return. The departure year is therefore the worst year to improvise: the residence position, the trust positions, and the IHT tail should be modelled together, before the move, with the actual dates the statute will apply.

Families sometimes assume that acquiring a new domicile elsewhere accelerates the end of UK exposure. Under the residence-based system it does not: the tail is a function of UK residence years alone, and no foreign domicile — however genuinely acquired — shortens it. Conversely, the tail does eventually end, which the old deemed-domicile system also provided for leavers through its own falling-away rules; the discipline is the same, only the clock is different.

The residence-based era rewards one thing above all: managing the residence clock deliberately. The planning that works now is structural and early, not clever and late.

First, know your counts. The 10-year FIG qualifying absence, the 4-year relief window, and the 10-of-20 IHT threshold are all mechanical counts of SRT residence years. A family that tracks these the way it tracks a tax filing deadline can time arrivals, departures and asset disposals; a family that discovers them at year nine has few options left.

Second, use the FIG window as intended. Four years of full exemption with free remittance is genuinely valuable for a new arrival — funding UK expenditure from foreign income without a tax charge was impossible under the old system. The window should be used for the restructuring that the post-window worldwide basis makes expensive: realising gains, reorganising holdings, funding.

Third, review every structure settled before April 2025 against the new rules rather than assuming continuity. Excluded property trusts with grandfathered status need their terms and the settlor's ongoing residence position monitored; the protection is valuable precisely because it cannot be recreated after the cut-off.

Fourth, consider how a family office structures long-term residence planning: centralising the residence tracking, the trust administration and the cross-border reporting in one function prevents the left-hand-right-hand failures — a trustee distributing in a year the settlor's count tips over the IHT threshold — that generate most of the real-world tax disasters in this area.

None of this is avoidance. It is the ordinary work of arranging genuine affairs — where to live, when to move, what to hold — with the statute's clocks in view. General information, not advice — confirm with a qualified advisor in the relevant country before acting.

The single most useful habit in this area is to treat residence history as a balance-sheet item: counted, documented and reviewed annually. The SRT determines each year's residence; those determinations compound into the 10-year FIG absence test, the 4-year window, and the 10-of-20 IHT test with its tail. A missing or wrong year in the chain corrupts every calculation downstream.

Keep the SRT records — day counts by midnight, work diaries, home availability dates — for every year, not just the current one, because the new tests look backwards across decades. Keep the domicile evidence too, for the pre-April-2025 years when domicile still mattered: it remains relevant to the transitional provisions and to any enquiry into those years.

Watch the thresholds as they approach rather than as they arrive. The FIG window's end, the 10th year of residence for IHT, and the departure-tail start are all foreseeable years in advance; each has planning that only works if done beforehand. And because the reform is recent, check the current HMRC manuals before relying on any summary — including this page. The RDRM and IHTM manuals are updated as practice develops, and in a regime this new, practice is still developing.

Finally, remember that the UK is only one side of the picture. Residence-based taxation at home does not remove the tax claims of other countries where you hold assets, earn income or have family — treaty tie-breakers, foreign succession law and other countries' exit charges all continue to operate alongside the UK rules. A UK residence review that ignores the other jurisdictions involved is only half a review.