UK Remittance Basis Reforms in 2025: What U.S. Citizens Need to Know

Navigating taxes as a U.S. expat in the UK has always been a balancing act, especially when it comes to understanding the UK remittance basis. If you lived in the UK before 2025, you may remember this system as a unique way for non-domiciled Americans to manage their foreign income and gains. In this article, we’ll break down what the UK remittance basis was, how it worked, and why it was eventually abolished—so you can better understand your past filings and what’s changed for expats today.

What the UK remittance basis was and how it worked

The UK remittance basis was a special tax regime designed for individuals who were UK residents but not UK-domiciled. In simple terms, it allowed eligible expats—like many Americans living in the UK—to pay UK tax only on the foreign income and gains they brought (or “remitted”) into the UK, rather than on their worldwide income.

For example, if you earned investment income in the U.S. and kept it in a U.S. bank account, you wouldn’t owe UK tax on that income unless you transferred it to the UK. This system was especially attractive for U.S. expats with significant overseas assets or income streams, as it offered a way to manage tax exposure while living abroad.

Eligibility requirements for U.S. expats under the old system

Not everyone could claim the remittance basis. To qualify, you needed to be a UK resident for tax purposes but not “domiciled” in the UK. Residency was typically determined by the number of days you spent in the UK each tax year, while domicile was a more complex concept tied to your long-term home and intentions.

For U.S. expats, this often meant:

• You were living and working in the UK, but your permanent home (domicile) was still considered to be in the U.S.
• You had to actively claim the remittance basis on your UK Self Assessment tax return each year.
• After a certain number of years of UK residency (usually 7 out of the previous 9 years), you faced additional charges to keep using the remittance basis (more on this below).

Understanding non-domiciled status for American residents

Domicile is a legal concept that goes beyond where you live—it’s about where you consider your permanent home. For many Americans in the UK, their domicile remained in the U.S., even if they spent several years abroad. This non-domiciled (or “non-dom”) status was the key to accessing the remittance basis.

To maintain non-dom status, you generally needed to show strong ties to the U.S., such as family, property, or an intention to return. The UK tax authorities could challenge your status if your circumstances changed, so it was important to keep clear records and seek professional advice if your situation was complex.

How foreign income and gains were treated under remittance basis

Under the remittance basis, your foreign income and capital gains were only taxed in the UK if you brought them into the country. This included money transferred to a UK bank account, used to buy property, or spent on goods and services in the UK.

Let’s look at a practical example:

• Scenario: You’re a U.S. expat working in London. You receive rental income from a property in New York, which you keep in your U.S. bank account.
• Result: As long as you don’t transfer that income to the UK, it isn’t subject to UK tax under the remittance basis. If you later use those funds to pay for a UK holiday or deposit them in a UK account, they become taxable in the UK.

It’s important to note that the U.S. taxes its citizens on worldwide income, so you still needed to report and pay U.S. tax on your foreign income, even if it wasn’t taxed in the UK. This made careful planning essential to avoid double taxation and make the most of available credits and exclusions.

What constituted a remittance to the UK

A “remittance” wasn’t just about transferring cash. The UK had detailed rules about what counted as bringing foreign income or gains into the country. Common examples included:

• Transferring money from a foreign account to a UK account
• Using foreign income to buy goods or services in the UK
• Purchasing UK property with foreign funds
• Paying off UK debts with foreign income

Even indirect remittances—such as using a foreign credit card to pay for UK expenses—could trigger UK tax. The rules were complex, and mistakes could be costly, so many expats worked with tax professionals to track their remittances and stay compliant.

Annual charges and costs of claiming remittance basis

While the remittance basis could offer significant tax savings, it wasn’t always free. Once you’d been a UK resident for a certain number of years, you had to pay an annual Remittance Basis Charge (RBC) to keep using the system:

• £30,000 if resident for at least 7 of the previous 9 tax years
• £60,000 if resident for at least 12 of the previous 14 tax years

This charge was in addition to any UK tax due on remitted income. For some expats, the cost outweighed the benefits, especially if their foreign income was modest or they planned to stay in the UK long-term. It was always wise to review your situation annually and consider whether the remittance basis still made sense for you.

Why the remittance system was abolished in 2025

In 2025, the UK government abolished the remittance basis, citing concerns about fairness and the need to modernize the tax system. Policymakers argued that the regime disproportionately benefited wealthy non-doms and created complexity for both taxpayers and HMRC.

For U.S. expats, this change meant a significant shift: all UK residents, regardless of domicile, are now taxed on their worldwide income and gains. While this has simplified some aspects of tax compliance, it also means that careful planning is more important than ever to avoid double taxation and make the most of available reliefs.

If you lived in the UK before 2025 and claimed the remittance basis, it’s important to keep records of your past filings and understand how the rules have changed. If you’re unsure about your current obligations, seeking expert advice can help you stay compliant and minimize your tax burden.

Ready for clarity on your expat taxes?

The end of the UK remittance basis has changed the landscape for Americans living in the UK, but you don’t have to navigate these changes alone. Our team of friendly, knowledgeable expat tax professionals is here to help you understand your obligations, avoid costly mistakes, and make the most of your international life. Get started with expert support tailored to your unique situation.

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