---
title: "Deemed Domicile Status Abolished: The 2026 UK & NZ Tax Guide"
description: "For decades, the concept of deemed domicile status governed how the UK taxed long-term residents of foreign origin. However, the Finance Act 2025 completely abolished deemed domicile status, moving the United Kingdom to a strictly residence-based taxation system from 6…"
url: "https://www.accountingfirms.co.uk/knowledge-bank/deemed-domicile-status-abolished/"
updated: "2026-08-11"
category: "Expat & Non-Resident Tax"
---

# Deemed Domicile Status Abolished: The 2026 UK & NZ Tax Guide

For decades, the concept of deemed domicile status governed how the UK taxed long-term residents of foreign origin. However, the Finance Act 2025 completely abolished deemed domicile status, moving the United Kingdom to a strictly residence-based taxation system from 6 April 2025.

This guide explores the legislative overhaul, the new rules replacing deemed domicile, and how these changes align the UK with systems like New Zealand's permanent place of abode test.

## The Abolition of Deemed Domicile Status

Historically, under section 835BA of the [Income Tax](https://www.accountingfirms.co.uk/blog/hmrc-payment-niers/) Act 2007, an individual became deemed domiciled in the UK if they were resident for at least 15 of the 20 immediately preceding tax years.  This status subjected them to UK tax on their worldwide income and gains, ending their ability to claim the [remittance basis](https://www.accountingfirms.co.uk/blog/remittance-basis/).

The Finance Act 2025 formally repealed these rules. The legislation repealed section 267 of the [Inheritance Tax](https://www.accountingfirms.co.uk/blog/building-trust/) Act 1984 (IHTA 1984), definitively abolishing deemed domicile for UK tax purposes.

> "The repeal of section 267 of IHTA 1984 (persons treated as domiciled in United Kingdom) by paragraph 23 is to be disregarded in determining for the purposes of that Act any question as to where a person was domiciled at any time before 6 April 2025."

## What Replaces Deemed Domicile for Inheritance Tax (IHT)?

With deemed domicile status gone, the UK introduced the "long-term UK resident" test for Inheritance Tax. Under section 6A of IHTA 1984, an individual becomes a long-term UK resident if they have been UK resident for at least 10 of the previous 20 tax years.

This new test radically changes the IHT landscape and introduces a "tail" provision. If an individual leaves the UK after meeting the 10-year threshold, they can remain within the scope of UK IHT for up to 10 consecutive years of non-residence.

| Taxation System | Pre-April 2025 Rule | 2026 Statutory Rule |
| --- | --- | --- |
| **Inheritance Tax** | Deemed Domicile (15 out of 20 years). | Long-Term Resident (10 out of 20 years). |
| **[Income Tax & CGT](https://www.accountingfirms.co.uk/blog/tax-on-flipping-a-house/)** | Remittance Basis available until Deemed Domiciled. | 4-Year FIG Regime. |

To assist those who left the UK before these sweeping changes, the Finance Act 2025 includes transitional rules. Individuals who were not domiciled in the UK on 30 October 2024 and have not been UK resident from the 2025-26 tax year onwards are treated as not being long-term UK residents, provided they meet specific prior non-residence criteria.

## The 4-Year FIG Regime and the TRF

The abolition of deemed domicile status also triggered the end of the remittance basis. In its place, the government enacted the Foreign Income and Gains (FIG) regime.

New arrivals to the UK receive a 100% [tax exemption](https://www.accountingfirms.co.uk/blog/when-is-a-nursery-not-a-nursery/) on their foreign income and gains for their first 4 years of UK tax residence, provided they were non-resident for the 10 consecutive years prior to arrival.

For former remittance basis users caught by the transition, the legislation provides a Temporary Repatriation Facility (TRF). During the 2025/26 and 2026/27 tax years, these individuals can remit pre-April 2025 foreign income and gains to the UK at a reduced [tax rate](https://www.accountingfirms.co.uk/blog/interesting-dividends/) of 12%.

## A Comparative Look at New Zealand Tax Residence

The UK's shift to a residence-based FIG regime brings it remarkably close to the New Zealand tax framework. New Zealand tax law does not utilise domicile or deemed domicile status to determine [tax liability](https://www.accountingfirms.co.uk/blog/in-with-the-new-basis-period-rules/).

Under section YD 1 of the [Income Tax](https://www.accountingfirms.co.uk/blog/section-24-for-landlords/) Act 2007 (NZ), an individual is a New Zealand resident if they have a permanent place of abode (PPOA) in New Zealand or are present for more than 183 days in any 12-month period.

> "Despite anything else in this section, a natural person is a New Zealand resident if they have a permanent place of abode in New Zealand, even if they also have a permanent place of abode elsewhere."

### The Transitional Resident Exemption

Mirroring the new UK FIG regime, New Zealand offers a transitional resident exemption. New tax residents to New Zealand qualify for a 48-month (4-year) temporary tax exemption on most foreign income, provided they have not been an NZ tax resident in the prior 10 years.

Where an individual is dual-resident in both the UK and New Zealand, the Double Tax Agreement (DTA) applies a series of tie-breaker tests. Because domicile is no longer a factor, the treaty relies on tests such as permanent home, centre of vital interests, habitual abode, and finally, nationality or citizenship to resolve taxing rights.

 

*Consider researching how the Temporary Repatriation Facility (TRF) mechanically applies to mixed funds previously protected under the remittance basis rules.*