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For 40 years, the UK non-dom regime was the primary tool for British expats with overseas income. If you were a UK resident but domiciled abroad (through property ownership, family relationships, or formal domicile declarations), you could claim remittance basis relief. Foreign income and gains were tax-free in the UK if they were not remitted (brought into the UK).
For a British expat in Portugal earning GBP 50,000 per year from overseas investments or rental properties, non-dom status meant paying zero UK tax on that income if they left it in foreign accounts.
On 6 April 2025, this regime was abolished entirely.
Non-dom status no longer exists. Remittance basis relief is gone. All UK residents are now subject to UK tax on worldwide income, subject only to the new four-year FIG regime for those returning after 10+ years of non-residence.
For British expats in Portugal who have been relying on non-dom status, this creates immediate compliance risk and strategic uncertainty. This article explains what non-dom was, why it was abolished, what the replacement regime is, and how the transition affects British expats in Portugal specifically.
Non-dom status was based on the concept of domicile, which is distinct from residence.
You could be resident in the UK (spending 91+ days per year in the UK, or having a home in the UK) but domiciled overseas. Domicile is determined by law, not choice:
For a British expat in Portugal with a domicile of origin in the UK, the pathway to non-dom status was establishing a domicile of choice in Portugal. This required:
Once non-dom status was established, the remittance basis relief worked as follows:
From 2017, "deemed domicile" rules meant that anyone who had been UK resident for 14 of the previous 20 years was deemed UK domiciled and could not claim non-dom status (regardless of overseas property or declared choice). This particularly affected British expats who had worked abroad for 10-15 years and then returned to the UK.
But for expats who had left the UK in the 1980s or 1990s and remained overseas continuously (or with fewer than 14 years' UK residence in the most recent 20 years), non-dom status remained available until 6 April 2025.
The abolition was announced in the Autumn 2023 Budget and implemented with no exemptions or grandfathering. The rationale was:
Fiscal Revenue
The Treasury estimated that non-dom status cost approximately GBP 7-8 billion per year in uncollected tax on overseas income and gains. The estimate assumed that non-doms were typically high-income individuals (earning GBP 100,000+ per year) with substantial overseas investments or business interests. The removal of the relief was expected to raise GBP 2-3 billion per year (conservative estimate, since some non-doms would migrate or change behaviour to avoid the new regime).
Simplification and Fairness
The government argued that the non-dom regime was complex, difficult to administer, and provided preferential treatment to wealthy individuals based on arcane domicile rules that bore no relationship to modern mobility or fairness. The concept of domicile (which relies on tests like property ownership, family ties, and subjective intent) was viewed as outdated compared to modern tax residence definitions (which use objective day-count tests).
Post-Brexit Recalibration
After Brexit, the government was repositioning the UK tax system to discourage wealth migration and encourage high-earners to remain. Non-dom status was seen as creating a perverse incentive for UK-origin wealth-holders to leave the UK and remain non-resident. The abolition aligned with a broader shift towards residence-based taxation (rather than domicile-based) and the introduction of the FIG regime (which provides relief only for those with 10+ years of non-residence).
Wealth Tax Agenda
While not explicit, the abolition of non-dom was part of a broader shift towards closing tax planning opportunities for high-net-worth individuals. The subsequent introduction of residence-based IHT rules (from April 2025) and increased scrutiny of offshore structures reflected a general political appetite for ending historical reliefs.
The abolition took effect on 6 April 2025 with no exemptions. Even non-doms who had claimed the relief continuously for 30 years lost the status immediately.
No transitional relief was provided for:
The only practical concession was that non-doms could claim non-dom relief for the 2024/25 tax year (the last year of its existence) if they had validly claimed it in previous years.
What this means: - Tax year 2024/25: Non-dom relief was available if claimed - Tax year 2025/26 onwards: Non-dom relief is unavailable for any UK resident, regardless of circumstances
For British expats currently living in Portugal, the abolition of non-dom has several immediate implications:
If You Have Been Claiming Non-Dom Status
You are now out of compliance if you continue to claim non-dom relief for tax years 2025/26 onwards. The relief no longer exists, and HMRC will not accept returns that claim it.
You face three compliance risks:
The safest path if you have been claiming non-dom status is to file an amended return for 2024/25 (if non-dom relief is still validly claimed) and transition to a compliant position immediately.
If You Have Not Claimed Non-Dom Status
You are likely in compliance, but only if you have been correctly treating yourself as UK resident and paying UK tax on worldwide income, or if you have formally claimed Portuguese tax residence (through IFICI registration).
If you have been treating yourself as non-resident in the UK (not filing UK tax returns, not declaring foreign income, not registering with HMRC) and have not claimed Portuguese tax residence, your position is uncertain. You should consult a tax adviser to determine your correct tax residency and file any overdue returns.
The Critical Decision: UK Residence, Portuguese Residence, or FIG Relief
Once non-dom status is no longer an option, British expats in Portugal must choose one of three paths:
Path 1: Remain a UK Tax Resident (Full Worldwide Income Taxation)
This is the default position if you have maintained UK ties (UK bank account, UK family relationships, UK pension) and have not formally claimed Portuguese tax residence. Under this path:
Path 2: Claim Portuguese Tax Residence (IFICI Registration)
If you are a Portuguese resident, you can register under the IFICI regime (Regime de Tributacao das Pessoas Singulares). Under this path:
To qualify for IFICI registration: - You must be a Portuguese tax resident (typically requiring 183+ days in Portugal per year) - You must register with Portuguese tax authorities and file a Portuguese annual tax return - You must sever material UK ties (UK property ownership, UK employment, UK business presence)
Path 3: Claim the Four-Year FIG Regime After Return to the UK
If you are planning to return to the UK within the next 5-15 years, and have been non-UK resident for 10+ consecutive tax years, you may qualify for the four-year FIG regime when you return. Under this path:
This path requires that you have been non-UK resident for at least 10 full tax years before returning. If you left the UK in 2015, you have 10 years by 2025. If you left in 2013, you have 12 years and are well-qualifying for FIG.
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For British expats remaining in Portugal, IFICI registration is now the replacement for non-dom status. While it functions differently, it provides similar economic relief: limiting your Portuguese tax exposure to Portuguese-source income only, while leaving foreign income (including UK income) untouched by Portuguese tax.
The key differences from non-dom status:
The practical requirements for IFICI registration:
Once IFICI registration is formalised, British expats are protected from Portuguese tax on foreign income indefinitely (provided Portuguese residence is maintained). This is better than non-dom status in some respects (because it is permanent and based on objective residence tests) and worse in others (because it requires formal severance of UK ties).
The four-year FIG regime (Foreign Income and Gains regime, effective from 6 April 2025) is the UK's replacement for non-dom status, but with a critical difference: it is available only to those returning after 10+ years of non-UK residence.
The conditions are:
For a British expat who left the UK in 2015, remained in Portugal continuously for 10 years (2015/16 through 2024/25), and returns to the UK in the 2025/26 tax year:
This provides a four-year buffer for expats returning after long absences, which is similar in economic effect to non-dom status (relief on foreign income) but narrower in scope (it is only available for four years, not indefinitely).
For expats still in Portugal, FIG relief is a reason not to return to the UK until the timing is right. If you return at the wrong time (fewer than 10 years of non-residence), you cannot claim FIG relief, and you immediately become liable for UK tax on worldwide income at standard rates.
The UK-Portugal DTA signed in September 2025 harmonises the tax residence rules between the two countries and reduces scope for planning around the loss of non-dom status.
Specific provisions include:
For British expats who transition from non-dom status to IFICI registration under the DTA, the relief is protected and explicit. This reduces the risk that HMRC will challenge Portuguese tax residence claims after the DTA takes effect.
British Expats Aged 55-65 Who Worked Abroad Continuously Since 1990
These expats have spent 25-35 years overseas with strong non-dom claims. The abolition of non-dom status is a significant blow because they have structured their affairs (property ownership, business interests, family relationships) on the assumption that non-dom status would continue into retirement. They face:
For this cohort, IFICI registration is typically the best path forward: it formalises Portuguese residence, eliminates UK tax exposure on foreign income, and allows them to continue their current lives with minimal disruption.
British Expats Aged 40-55 Who Might Return to the UK
These expats may be considering returning to the UK in 5-15 years. For them, the abolition of non-dom has a strategic benefit: it creates incentive to remain in Portugal (and thus not incur UK tax residency) until they have accumulated 10+ years of non-UK residence, at which point they can return and claim FIG relief. The path is:
British Expats Who Became UK Tax Resident Under the Deemed Domicile Rules
For expats who became deemed domiciled in 2017 (because they had been UK resident for 14 of the previous 20 years), non-dom status ceased to apply from 2017 onwards anyway. The abolition in 2025 has no additional impact. They should have already transitioned to full UK tax residence or Portuguese IFICI registration.
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If you are a British expat in Portugal and are transitioning from non-dom status to a compliant position, follow this checklist:
The cost of this transition (typically EUR 2,000 to EUR 5,000 with a qualified adviser) is recovered in reduced tax liability and risk mitigation within the first year.
If you are a British expat in Portugal and have been claiming non-dom status, or are uncertain whether non-dom status is still valid, your next step is a compliance review with a tax adviser who understands both UK and Portuguese tax law.
You may find:
The conversation is not about finding loopholes or aggressive tax planning. It is about confirming your compliant tax position and understanding how the loss of non-dom status affects your long-term planning in Portugal or your return to the UK.
Most British expats who undertake this review are relieved to learn that their situation is either compliant or easily remedied. Few regret the conversation. Nearly all regret having delayed it.
Non-dom status was a powerful and valuable relief for British expats with overseas income. For 40 years, it allowed expats to earn foreign income tax-free and remain connected to the UK simultaneously.
That era is over. From 6 April 2025, non-dom status no longer exists, and claiming it is a compliance violation.
For British expats in Portugal, the transition is not difficult, but it is mandatory. The options are clear:
The cost of not making a decision is permanent compliance risk and the possibility of back tax assessment if HMRC discovers unclaimed foreign income. The cost of making the right decision is a conversation with a tax adviser and a few amended tax returns.
For most British expats in Portugal, this is an easy trade-off.
In a career spanning numerous locations around the world, Ryan has first-hand experience of how to best support international investors with financial planning advice and security on a domestic and international level.
This article is for information purposes only and does not constitute financial advice. Tax residency, domicile, and non-dom status are technical areas with specific legal tests that vary by individual circumstances. Professional advice should always be sought before making decisions regarding tax residency or non-dom status transitions.
The risk is not civil negligence penalties (which are harsh), but criminal evasion charges if the non-compliance appears intentional. A conversation with a tax adviser can help you:
For four decades, non-dom status was the gold standard for British expats with overseas income. That era is over. The new gold standard is Portuguese IFICI registration (Regime de Tributacao das Pessoas Singulares-Foreign Income and Gains). IFICI registration formalises Portuguese tax residency and limits Portuguese tax to Portuguese-source income only. Foreign income (including UK rental income, overseas investments, or funds managed offshore) remains subject only to UK tax, but the UK tax is not triggered unless the income is remitted to the UK or unless you are claiming FIG relief. For expats planning to remain in Portugal indefinitely with no intention of returning to the UK, IFICI registration is the solution. For expats who might return to the UK in 5-10 years, IFICI registration is still optimal for now, with the option to transition to FIG relief when the return occurs.
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Ryan Donaldson is a Chartered FCSI Private Wealth Partner at Skybound Wealth who advises British expats on the transition from non-dom to permanent UK tax residence or Portuguese tax residence. A focused conversation now can help you:
