The change in asset income taxation
UK Budget 2025 introduces increased tax rates on property, savings and dividend incomes, effective:
- 6 April 2026 for dividend income from close companies, etc. for the tax year 2026-27 onwards.
- 6 April 2027 for property and savings rates from 2027-28 onward. (gov.uk) These shifts are designed to narrow the gap between taxation of earned income (employment/self-employment) and income from assets. (gov.uk)
Implications for digital nomads
- If you receive rental income or income from savings/dividends outside the UK while resident, prepare for higher UK tax rates on these sources from the effective dates.
- Ensure your residency status is clear—if you become UK resident, foreign income may become taxable under these new rates.
- Useful to monitor any tax treaties between UK and your country of origin; treaty relief could be affected.
Practical planning tips
- Consider timing income: defer dividends or rental income until after the effective date if possible and beneficial.
- Use structures like offshore trusts or investment vehicles—but note increasing scrutiny and possible trapped assets under non-resident capital gains reforms.
- Explore tax reliefs or allowances that may offset the higher rates, e.g. Property Income Allowance, dividend allowance (if still applicable), or investment in tax-efficient vehicles.
- Maintain thorough records, especially for foreign income sources, to ensure correct declarations and treaty claims.
Example
Carlos is a remote worker domiciled abroad but UK tax resident. He receives £10,000/year in dividends from a start-up in his home country, and £5,000/year from savings interest. Before changes, these incomes were taxed at lower rates. Under the new regime, in 2026-27 his dividend rate will jump to 10.75%, and savings income rate may fall into the higher bracket. Proper planning (e.g. timing distributions or using allowances) could reduce liability.
Key takeaways for digital nomads
- Understand the dates of change: dividends from April 2026; property & savings from April 2027.
- Clarify UK residence and domicile status if you’re crossing borders.
- Evaluate whether setting up entities abroad or keeping sources outside the regime can help—but beware reforms like the non-resident capital gains change tightening conditions.
- Seek professional advice early—these rules are complex and interlinked.
Category: Digital Nomad • TaxHome: UK • Author: NomadicTax Research Team • ReadTime: 5-8 min • Published: true