What changed for internationally mobile individuals
The UK government replaced much of the non-domicile (non-dom) tax framework with a residence-based tax regime from 6 April 2025. Key features include:
- Residence-based taxation: UK residents are taxed on worldwide income and gains, with some reliefs depending on residence status. (gov.uk)
- FIG regime (Foreign Income & Gains): a temporary mechanism for certain arriving individuals. It remains as originally designed. (kpmg.com)
- Trust charges capped: Relevant property trust charges for former excluded property trusts are capped at 6% per year. Effective from 6 April 2025, with roll-forward and grandfathering for many trusts. (kpmg.com)
- Inheritance Tax (IHT): PETs (Potentially Exempt Transfers), exit charges for former excluded property trusts, etc., have new caps and timings. (kpmg.com)
Planning moves and residence transitions
For digital nomads considering relocation to the UK—or switching residence status—consider the following principles:
- Examine the date of arrival against behaves of FIG eligibility. If arriving from April 2025 onwards, the residence rules will apply, though FIG might lessen exposure in early years.
- Former non-dom status for trusts: many trusts with “excluded property” before 30 October 2024 benefit from protective caps. Post-that, newer trusts will see standard treatment. (kpmg.com)
- Tax year alignment: UK tax years run April to April. If arriving mid-year, pro-rata or split residency rules will apply.
- Plan property income and savings income timing: higher rates for dividends take effect from 6 April 2026, and property income rates change from April 2027. (gov.uk)
Example scenario
Maria, a software engineer from Canada, plans to move to London in May 2026, making her resident for the tax year 2026-27. She will:
- Be taxed on worldwide income from that date.
- Possibly elect into the FIG regime in her first year, reducing exposure to some foreign income/gains.
- Evaluate any trusts she has—if settled before October 2024 with excluded property, she may benefit from the 6% IHT cap.
- If she has income from both dividends and property, note that new tax rates apply to dividends from April 2026, and property income will see new rates from April 2027. This may affect when she realizes income or distributes assets.
Practical tips for nomads
- Keep thorough records of foreign source income and dates overseas residence ended—evidence is key.
- Assess FIG eligibility: sometimes it’s elective, depends on arrival, tax history, and domicile background.
- Plan distributions: delaying dividends until after rate changes may have cost implications.
- Consider trust structures before moving, esp. if you hold or settle trusts with non-UK features; grandfathering may not apply if started after cut-off dates.
- Seek specialist advice on non-UK tax treaties, double taxation relief, and foreign tax credits. These often make or break value.
Conclusion
The UK’s residence-based regime modernizes non-dom policy, but transitions come with complexity. For digital nomads: timing, structure, and compliance matter now more than ever. Planning ahead—and choosing arrival dates, trust settlement dates, income realization with foresight—can preserve value and simplify compliance.