The new residence-based regime: overview
As of 6 April 2025, the UK abolished the remittance basis and replaced the domicile concept with a residence-based tax system. (assets.publishing.service.gov.uk)
Key features include:
- A 4-year Foreign Income and Gains (FIG) regime: newcomers eligible after 10 years non-UK residence can claim FIG relief for the first four UK tax years without being taxed on foreign income/gains or remittances. (assets.publishing.service.gov.uk)
- Overseas Workday Relief (OWR) simplified: eligibility during early years of residence, removal of requirement to keep income overseas, capped by financial limits. (assets.publishing.service.gov.uk)
- Temporary Repatriation Facility (TRF) for existing remittance-basis users, offering reduced rates (12-15%) on designated pre-April 2025 foreign income/gains. (assets.publishing.service.gov.uk)
- Inheritance Tax (IHT) now residence-based—non-UK property comes into IHT for long-term UK residents. Domicile is no longer the key test. (gov.uk)
What this means for digital nomads & globally mobile individuals
Digital nomads who spend part of the year in the UK or relocate temporarily should be especially aware of these changes. Key implications:
- Past periods of non-residence matter: eligibility for FIG depends on prior non-UK tax residence for 10 tax years.
- Timing moves matters: arriving in or leaving the UK within certain windows (e.g., qualifying years) can affect whether FIG or OWR applies.
- Trusts and foreign income structures: schemes leveraging non-UK domiciled status or offshore trusts will be taxed differently; protections are limited.
Strategies & planning opportunities
- Plan your UK entry or re-entry timing: If you have been non-UK tax resident for 10 years, align your arrival date to begin qualifying years that maximise FIG relief.
- Use OWR in early residence years: If you qualify, this gives relief on overseas employment duties—combine with FIG for best effect.
- Designate pre-2025 foreign income via TRF: Existing remittance basis users may use TRF to bring in pre-2025 foreign income/gains under favourable rates.
- Rebase assets: On certain personal assets disposed of post-6 April 2025, individuals may rebase values back to 5 April 2019. This helps reduce capital gains on older assets. (gov.uk)
Common pitfalls to avoid
- Relying on old domicile-based assumptions and failing to adapt structures or tax returns accordingly.
- Not keeping proper documentation for foreign income, foreign trust interests, or work done abroad.
- Missing thresholds or misclassifying benefits—could lead to unintended tax liabilities or audits.
Example case
Hannah is a US citizen who has not been UK tax resident for 12 years. She moves to the UK in May 2026 and qualifies for the FIG regime. Her foreign investment gains of £100,000 in 2026-27 are eligible for FIG relief, meaning she won’t pay UK tax on them for four years. She also works partly remotely for her foreign employer: OWR may apply to parts of her employment income. Meanwhile, she wishes to bring pre-April 2025 trust-held income; via TRF she can pay reduced 12–15% tax on that.
Action plan for nomads and expats
- Track your UK tax residence history—years out of the UK matter.
- Review your foreign income and Assets to establish eligibility for FIG, OWR, or TRF.
- Ensure trusts and overseas structures are properly reported.
- Seek specialised tax advice early—changes that took effect as of April 2025 have broad retrospective implications.
- Keep abreast of further amendments—technical fixes might impact reliefs or thresholds over time.
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