A London home is taxed as a UK asset whatever its owner's residence status, and that is the starting point for any family moving here under the rules that replaced non-dom status. For decades, international families planned around one word: domicile. That framework ended on 6 April 2025. The remittance basis was abolished, and both income tax on foreign income and inheritance tax now turn on how long a person has been resident in the UK rather than where they are domiciled.
The change is now eighteen months old. For anyone buying a home in Mayfair, Kensington or Hampstead as part of a move to London, it is worth understanding how the pieces fit, because the home itself is treated differently from almost everything else they own.
The four-year window for new arrivals
The replacement for the remittance basis is the four-year foreign income and gains regime, usually shortened to FIG. According to HMRC's guidance, someone who becomes UK tax resident after at least ten consecutive years of non-UK residence can claim relief on their foreign income and gains for up to four tax years. Qualifying income includes the profits of an overseas property business, dividends from non-UK companies and interest on foreign bank accounts; foreign capital gains qualify too. Foreign employment income does not.
Two points are easy to miss. First, the relief covers foreign income and gains only. Rent from a London property let out, or a gain on selling one, is UK source and outside the regime. Second, the window is fixed to the first four consecutive years of residence. Unused years cannot be carried forward, and arrival dates matter.
Inheritance tax now follows residence
Inheritance tax moved to a residence test on the same date. Under the government's guidance, a person is a long-term UK resident if they have been UK resident for at least ten of the previous twenty tax years. Once long-term resident, their overseas assets come within inheritance tax as well as their UK assets. The status also continues after departure: it can persist for up to ten tax years after someone leaves the UK, depending on how long they were resident.
For a family planning a stay of five or six years, this may never apply. For one that intends to settle, the ten-year mark becomes a planning date in its own right.
Where the London home sits
Whatever an individual's residence position, their London property is a UK asset. HMRC's guidance is plain that for people based abroad, inheritance tax is charged on UK assets such as property and bank accounts. Since 6 April 2017, holding UK residential property through an overseas company or partnership no longer takes it outside inheritance tax either; HMRC's manual records that the old offshore structures stopped working for this purpose on that date.
The purchase itself carries its own costs. Stamp duty land tax applies on completion, with surcharges for buyers who own property elsewhere and for those who are not UK resident under the stamp duty test; we set out the bands and a worked example at £3 million in an earlier article. These are separate tests from the income tax and inheritance tax residence rules above, and a buyer can be resident for one and not the other.
None of this is tax advice. The interaction between these rules, a family's other assets and the tax system of the country they are leaving needs a UK tax adviser, ideally before contracts are exchanged rather than after.
The market these buyers are entering
The market itself is in a different place from three years ago. UBS's Global Real Estate Bubble Index, published on 22 September, placed London in its low bubble risk category, noting that inflation-adjusted prices are more than 15% below their 2021 levels and that the market has been weak for a fifth consecutive year, while rents stay close to record highs. Knight Frank's figures published on 5 October recorded the first quarterly rise in prime central London prices for four years, of 0.3%, and 121 sales at £10 million and above in the year to September, matching the previous year, with spend up 14% to £2.4 billion. LonRes, which measures achieved prices, recorded prime central London values 6.5% lower on the year in the third quarter, with an average discount of 12.6% to the initial asking price.
For a buyer, that combination means choice and room to negotiate in much of the market, alongside a top end that has held its volume. The Budget on 28 October may bring changes to property taxation; any announcement should be checked against the date a purchase is expected to complete.
Dolce Vita advises buyers and sellers across the UK from Mayfair, handles lettings for owners who keep their London home when they travel, and helps clients buy abroad through partner agencies. If you already own in London and are weighing a sale alongside a move, Request a valuation; we acknowledge the same working day and return a written valuation within 24 to 48 hours.
Hanane Dawson, Founder
Sources: HMRC, "Check if you can claim the 4-year foreign income and gains regime" (gov.uk, checked 12 October 2026). HMRC, "Inheritance Tax if you're a long-term UK resident" (gov.uk). gov.uk, "Inheritance Tax: if you're based abroad". HMRC Inheritance Tax Manual IHTM04311, Schedule A1 IHTA 1984. UBS Global Real Estate Bubble Index 2026, 22 September 2026. Knight Frank prime London figures to September 2026, published 5 October 2026 (via Property Industry Eye and Estate Agent Today, 5 October 2026). LonRes, "London property sales: summer 2026 standouts", 6 October 2026.