Compliance
Compliance Checklist: Adapting to the UK's Residence-Based Tax System
As the UK’s tax laws transition, individuals and employers must update reporting, PAYE operations, and ensure records align with the residence-based treatment of foreign income and gains.
By NomadicTax Research Team • 5-8 min read • April 21, 2026
## Key Compliance Changes Since April 2025
- **Remittance basis abolished**: All UK residents are taxed on foreign income and gains as they arise, unless eligible and claiming under the 4-year FIG regime. No more remittance basis option ([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)).
- **PAYE changes for globally mobile employees**: Employers must use the new notification process for Overseas Workday Relief; existing PAYE directions (Section 690) before 6 April 2025 no longer have effect ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2025/april-2025-issue-of-the-employer-bulletin?utm_source=openai)).
- **OWR eligibility and documentation**: Records of overseas working days, residential status and employment contracts now critical; offshore bank accounts are no longer a requirement (except for certain historical income) ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/672105124da1c0d41942a8a8/Reforming_the_taxation_of_non-UK_individuals.pdf?utm_source=openai)).
- **Inheritance Tax forms & trusts**: Updated schedules like IHT401a, D31a, D31b must be used; trustees must monitor whether settlors and beneficiaries are long-term UK residents, as it may trigger inclusion of overseas assets or exit charges ([gov.uk](https://www.gov.uk/government/publications/hm-revenue-and-customs-trusts-and-estates-newsletters/hmrc-trusts-and-estates-newsletter-april-2025?utm_source=openai)).
## Example Compliance Scenarios
- **Employer example**: A US digital nomad working part-time for a UK employer and part overseas. Employer must file new notification to HMRC if intending to apply PAYE on only UK portion under OWR—old Section 690 directions no longer valid after 6 April 2025. Employee’s overseas duties and residence must be documented to support relief claim ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2025/april-2025-issue-of-the-employer-bulletin?utm_source=openai)).
- **Trustee example**: Trust assets including overseas investments were previously excluded property. Now, if settlor becomes long-term UK resident, those assets may lose exclusion status and could be subject to IHT—trustees must evaluate residence status and consider whether to restructure or report accordingly ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4705?utm_source=openai)).
## Checklist for Individuals and Employers
1. **Review your residential history** for last 20 years to determine long-term UK residence status.
2. **Calculate eligibility** for FIG regime if arrival in the UK is recent.
3. **Maintain records** of overseas workdays, contract terms, travel logs for OWR claims.
4. **Update trust governance** if settlors or beneficiaries change residence status.
5. **Use updated tax forms** and ensure use of correct schedules for IHT. Seek advice if uncertain about interplay with double tax treaties.
6. **Consult a tax professional** for impacted individuals (non-doms, settlors, employers with globally mobile employees).
Staying ahead of these compliance shifts can help minimize risk, take advantage of reliefs, and avoid penalties under the new residence-based system.