What’s Changing for Non-UK Domiciled Individuals
The UK government is replacing the remittance basis of taxation with a residence-based regime from 6 April 2025. Under the remittance basis, individuals with non-domicile status were taxed on UK income, but foreign income and gains only if remitted to the UK. The new regime offers 4 years of 100% relief on foreign income and gains for new UK residents who were not UK tax resident in any of the previous 10 years.(gov.uk)
From the same date, protection for foreign income and gains arising through settlor-interested trust structures will be removed for those not qualifying under the new regime. A Temporary Repatriation Facility will also allow prior foreign income/gains (pre-6 April 2025) to be remitted at reduced rates for a limited 3-year period.(gov.uk)
Implications for Digital Nomads
Digital nomads often move between jurisdictions and derive income globally. Key impacts include:
- Tax on foreign income: Unless you qualify for the 4-year regime, future foreign income or gains will be taxed when they arrive in the UK, even if earned abroad.(gov.uk)
- Overseas Workday Relief: The limit for Overseas Workday Relief becomes the lower of £300,000 or 30% of your UK employment income. You no longer need to maintain income offshore to benefit.(gov.uk)
- Inheritance Tax regime: The domicile-based IHT system is replaced by a residence-based test, tied to years resident in the UK (10 out of 20 years) and years resident after departure. Non-UK assets held in trusts may be exposed.(gov.uk)
Actionable Planning Strategies
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Check eligibility now — If you haven’t been UK resident in the last 10 years, you may qualify for the 4-year relief on foreign income and gains. Consider moving or planning your UK arrival date accordingly.
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Use TRF wisely — The Temporary Repatriation Facility (3 years, reduced rates of 12% first 2 years, 15% final year) offers a chance to bring in old income/gains at lower cost. Budget for it before the window closes.(gov.uk)
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Review trust structures — If foreign assets are held in trusts, especially settlor-interested ones, these will lose protection unless you qualify. Consider trust redesign or timing of dispositions.
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Track overseas work days and reliefs — With relief limits and eligibility tighter, accurate records of where and how you earned income will support claims.
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Estate and inheritance planning — Given changes to IHT, review what non-UK assets you hold, and whether your residential history may trigger exposure. Planning before 6 April 2025 could bring advantages.
Example Scenario
Maria, a digital nomad, arrives in the UK in May 2025. She has not been UK resident in the previous 10 years. Under the new rules:
• She qualifies for the 4-year foreign income & gains regime — her overseas earnings remain tax-free for 4 years.
• But her IHT exposure starts counting because she’s now resident; her trust holdings may become taxable on a residence test after 10 of past 20 years.
She uses TRF to bring in foreign gains from 2020 at the 12% rate in 2025-26 to avoid higher rates later. She tracks her UK workdays and employer contracts carefully to satisfy Overseas Workday Relief limits.
Key Takeaways
- The remittance basis is gone; residence now determines how your foreign income/gains and assets are taxed.
- The 4-year “safe” period gives breathing space for planning but only if eligibility criteria are met.
- Trusts, IHT exposure, and employment income overseas all require attention.
- Plan ahead — the changes are live from 6 April 2025, and transitional facilities are time-limited.
By adapting now, digital nomads can stay tax compliant while preserving tax efficiency, avoiding unexpected expenses in income, gains, or in lifetime exposure to inheritance tax. Category: Digital Nomad