The Remittance Basis Abolished: 2026/27 UK Tax Guide

For decades, the remittance basis of taxation served as the cornerstone of UK tax planning for non-domiciled individuals, sheltering their unremitted foreign income and gains from UK tax. However, the UK tax landscape has undergone a seismic shift. For the 2026/27 tax year and beyond, advisors must navigate an entirely new, residence-based regime, whilst managing historical unremitted wealth through transitional facilities.

The Legislative Abolition of the Remittance Basis

The government definitively abolished the remittance basis via the Finance Act 2025. Section 40 of the Act expressly removes the availability of the regime from the 2025-26 tax year onwards.

“(1) Amendments made by paragraph 1 of Schedule 9 have the effect that the remittance basis is not available for tax year 2025-26, or for subsequent tax years. (2) But provisions relating to the remittance of income and gains will continue to have effect in relation to income and gains subject to the remittance basis in previous tax years.”

Consequently, in the 2026/27 tax year, no taxpayer can claim the remittance basis to shelter newly arising foreign income and gains. Instead, individuals face taxation on their worldwide income and gains on an arising basis, unless they qualify for the new replacement relief.

The Replacement: The 4-Year FIG Regime

Replacing the domicile-based remittance basis is a new residence-based framework known as the 4-year Foreign Income and Gains (FIG) regime.

The FIG regime provides 100% tax relief on foreign income and gains for new arrivals to the UK.  To qualify, the individual must be in their first four years of UK tax residence and must not have been UK tax resident in any of the 10 consecutive tax years prior to their arrival.  Unlike the old remittance basis, individuals utilising the FIG regime can bring their relieved foreign income into the UK entirely tax-free.

Managing Historic Wealth: The Temporary Repatriation Facility (TRF)

While the remittance basis is dead for newly arising income, the historical rules continue to bite. Any foreign income and gains that arose on or before 5 April 2025, while an individual actively claimed the remittance basis, remain taxable under the old remittance rules if brought into the UK today.

To encourage the injection of this historic offshore wealth into the UK economy, the government introduced the Temporary Repatriation Facility (TRF).  The TRF allows former remittance basis users to designate and remit their pre-April 2025 foreign income and gains at a significantly reduced flat tax rate.

The TRF is strictly time-limited to a three-year window (the 2025/26, 2026/27, and 2027/28 tax years).

Mixed Funds and Priority Ordering

Historically, extracting clean capital from mixed funds proved to be an administrative nightmare for remittance basis users. The TRF introduces highly favourable ordering rules for designated TRF capital.  Under section 809Q(9) of the Income Tax Act 2007 (as amended), any TRF capital designated in a tax return is treated as remitted to the UK in priority to all other kinds of income and gains held within a mixed fund.  This allows taxpayers to cleanly extract their wealth at the 12% rate without triggering higher tax charges on undesignated funds.

Inheritance Tax (IHT) Transformation

The abolition of the remittance basis forms part of a wider legislative purge of the “domicile” concept from UK tax law. Historically, individuals claiming the remittance basis often relied on their non-domiciled status to shield their worldwide assets from Inheritance Tax.

Section 44 of the Finance Act 2025 replaced this domicile-based IHT system with a residence-based test.

(1) For the purposes of this Act, an individual is a “long-term UK resident” at all times in a tax year if they were UK resident for at least 10 of the previous 20 tax years.

In the 2026/27 tax year, an individual falls fully into the scope of UK IHT on their worldwide assets once they meet this 10-year residency threshold, completely severing the historical link between IHT exposure and remittance basis utilisation.

Consider researching the specific mechanisms for nominating a “TRF capital account” under section 809RZB of ITA 2007, and how breaches of the 30-day deposit rules impact the ability to remit historic funds.