As a UK resident with Israeli income, can I still use the remittance basis after the 2025 non-dom reform?

For years, some UK residents with Israeli assets kept the rent and interest in Israel and told themselves it was invisible to HMRC unless they brought it home. That planning is over. From April 2025 the remittance basis is gone, and the question is no longer how to keep Israeli income offshore but how to declare it and claim credit for the Israeli tax you already paid.

---

Detailed Explanation

The change is structural, not cosmetic. From 6 April 2025 the UK abolished the remittance basis that non-domiciled residents used to shelter unremitted foreign income, and replaced it with a residence-based Foreign Income and Gains (FIG) regime. The relief is now narrow and time-limited: only someone in their first four tax years of UK residence, after at least ten consecutive years of non-residence, can claim to exempt qualifying foreign income and gains, and only if they make the claim, which costs them the personal allowance and the annual exempt amount for those years. Anyone who is a settled UK resident, which describes most people asking this question, is taxed on the arising basis. Your Israeli rent, interest, and gains go on your Self Assessment return in the year they arise, whether or not a shekel ever reaches Britain.

Israel is indifferent to all of this and taxes Israeli-source income under its own rules regardless. Residential rent can be taxed on the 10% flat track under Section 122 of the Income Tax Ordinance 1961 or at marginal rates; capital gains on Israeli property attract mas shevach; and Israeli companies withhold on dividends. Because both countries reach the same income, the UK-Israel double tax treaty, as amended by the 2019 protocol, is what stops it being taxed twice. You compute the UK tax, then claim Foreign Tax Credit Relief for the Israeli tax on the same income, so you pay broadly the higher of the two. Our guide to the UK-Israel tax treaty for British residents sets out how that credit is worked out and where it is capped.

Two points deserve attention. If you did arrive in the UK recently and fall inside the four-year FIG window, you may be able to shelter Israeli income for a short period, but you must claim it deliberately and weigh the loss of allowances. And for income that built up offshore before April 2025, the transitional Temporary Repatriation Facility offered a limited window to bring it to the UK at a reduced rate, a one-off opportunity rather than a permanent shelter. The overall direction is settled: for a UK resident, Israeli income is now UK-taxable as it arises, and the planning has shifted from hiding it to crediting it.

In Practice: For 2025-26 onward HMRC taxes a settled UK resident on Israeli income as it arises. Israel withholds on Israeli-source income under the Income Tax Ordinance 1961, for example the 10% flat track under Section 122 costing NIS 12,000 on NIS 120,000 of annual rent collected by the Israel Tax Authority, and the UK grants Foreign Tax Credit Relief on the SA106 pages by the 31 January filing deadline. The new 4-year FIG exemption is open only to those who were non-UK-resident for the prior ten years.

Key Considerations

• The remittance basis was abolished on 6 April 2025 and replaced by the 4-year FIG regime.
• Only recent arrivals with ten prior non-resident years can use the FIG exemption, and only by claiming it.
• A settled UK resident is taxed on Israeli income and gains as they arise, worldwide.
• Israel taxes Israeli-source income regardless, and the UK-Israel treaty gives Foreign Tax Credit Relief.
• Pre-2025 offshore income could only be brought in cheaply through the transitional Temporary Repatriation Facility.

When to Consult a Lawyer

This question typically requires professional legal advice when:

• You relied on the remittance basis for Israeli income and now need to bring it onto Self Assessment cleanly.
• You are a recent UK arrival and want to know whether the four-year FIG regime is worth claiming.
• You have years of undeclared Israeli income and need to regularise it before HMRC raises an enquiry.

A qualified Israeli attorney working with your UK accountant should align the Israeli and UK filings so the foreign tax credit works and nothing is taxed twice.

---

Speak With an Israeli Attorney

We help British residents with Israeli property, accounts, or company income handle the Israeli side of the new UK rules, confirm the correct Israeli tax, and coordinate with your UK adviser so Foreign Tax Credit Relief is claimed in full.

Contact us for a confidential initial consultation.