Digital Nomad
Beyond Domicile: How the New Residence-Based Tax Regime Transforms UK Non-UK Domiciled Individuals
The UK has removed the old ‘domicile’ system and introduced a residence-based tax regime from 6 April 2025—understand what this means for foreign income, inheritance tax, and transitional reliefs.
By NomadicTax Research Team • 5-8 min read • March 19, 2026
## Overview of the Residence-Based Regime
- As of **6 April 2025**, the concept of **domicile** for tax purposes has been abolished. In its place: a **residence-based tax regime**. ([gov.uk](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai))
- Individuals who become UK tax resident after being non-resident for **10 tax years** may qualify for a **4-year Foreign Income & Gains (FIG)** regime, during which foreign income/gains may not be taxed immediately. ([gov.uk](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai))
- A **Temporary Repatriation Facility (TRF)** exists for certain FIG arising before 6 April 2025, allowing reduced tax rates during a transition period. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/672105124da1c0d41942a8a8/Reforming_the_taxation_of_non-UK_individuals.pdf?utm_source=openai))
## Key Impacts & Areas of Adjustment
| Area | Before | After Regime Change |
|---|---|---|
| Foreign income & gains tax treatment | Based on remittance basis if non-UK domicile applies | Arising basis for almost all; FIG regime may delay immediate taxation for 4 years if criteria met ([gov.uk](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai)) |
| Trusts & foreign structures | Domicile could affect taxation of overseas trusts | Trusts exposed under new residence rules; many old reliefs removed ([gov.uk](https://www.gov.uk/government/publications/tax-changes-for-non-uk-domiciled-individuals/reforming-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai)) |
| Inheritance Tax (IHT) | Domicile status influenced IHT on worldwide estates | IHT becomes **residence-based** across assets, removing previous domicile-based differences ([gov.uk](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai)) |
## Practical Examples
- **Emma**, who moved to the UK in 2024 after 15 years abroad, becomes tax resident. Under new rules, she qualifies for the four-year FIG regime starting 2025-26. Her foreign dividends during that period are not taxed until later, but post that she pays arising basis.
- **Arun**, who had overseas trusts under domicile planning, now faces altered tax status. Trust distributions may be taxed differently under residence basis rules. Planning must adapt.
## Actions You Should Take Now
- **Review foreign assets/income**: Identify gains & income that could be taxed now vs those covered by FIG or TRF.
- **Understand your residency history**: Non-UK residence for 10 years prior is key to FIG eligibility.
- **Plan estate and trust structures**: New IHT rules may mean earlier IHT liabilities if you were depending on domicile-based reliefs.
- **Consult tax experts**: Professional guidance can help optimize within the new regime.
## What This Means for Digital Nomads & International Individuals
- Digital nomads who enter UK residence may benefit from FIG if eligible but should expect full exposure after 4 years.
- Those with foreign income/gains need streamlined reporting and must understand how incoming payments (remittances) are treated—no more remittance basis for non-doms after transition.
---
**Takeaway**: The UK’s switch to a residence-based tax system marks a seismic shift in how foreign income, inheritance, and trusts are taxed. If you had been planning based on domicile, you’ll need to rethink your strategy now.