Entity Setup
Entity Setup Considerations for Non-UK Domiciled Individuals Under the UK’s Residence-Based Regime
UK is ending domicile-based status and moving toward a residence-based tax model—here’s what those setting up entities or domiciling abroad need to know.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## What’s the Shift in UK Non-Domicile Tax Rules
Effective **6 April 2025**, the UK removed the concept of *domicile status* and introduced a **new residence-based regime** for individuals’ foreign income, gains, and trusts. ([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))
Instead of the older rules, new provisions include:
- A **4-year foreign income and gains relief regime** for qualifying individuals.
- Removal of preferential treatment for overseas trusts and outdated domicile thresholds.
- Simplified rules for Overseas Workday Relief for those employed overseas but resident in the UK. ([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))
## Setting Up Entities or Residency Structures with This in Mind
### For Individuals Setting Up Companies or Holding Entities
- If you remain a UK resident, foreign income from entities now generally taxed as it arises, unless you qualify for the 4-year grace regime. Plan carefully with respect to ownership and timing of distributions.
- Avoid relying on old trust domicile rules; post-2025, trusts are taxed under new, residence-based rules. Structures originally designed for domicile benefit may no longer offer advantage.
### For Digital Nomads & Remote Employees
- Qualifying for the **4-year foreign income and gains relief** may offer temporary shelter from taxation of foreign earned income. Carefully document residency, income source, and application for relief.
- Overseas Workday Relief still available for some remote workers aboard; keep employment contracts and days worked abroad well documented. ([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))
## Practical Examples
- **Example 1**: Anna moves to the UK from another country and becomes UK resident in 2025. She owns a rental property abroad earning £50,000 net in foreign income.
• Under the prior domicile rules, Anna might have claimed non-dom status to avoid UK tax on foreign rent if it were remitted.
• Under the new rules, that rent will be taxed in the UK as it arises, unless she qualifies under the 4-year relief regime. She should structure ownership via non-UK entities only after modelling tax impact of residence vs domicile.
- **Example 2**: Liam, a UK employer with many digital nomads working remotely overseas, may find changes in Payroll and Over-Workday Relief. Contracts should reflect days working abroad; payroll officers should review if new reliefs apply and ensure withholding takes place correctly.
## Actionable Steps for Entity Setup
- Consult UK tax advisors to review current structures relying on domicile status or overseas trusts; assess whether reorganisation or restructuring is needed.
- Track residency closely—time spent abroad, pattern, and contracts—because eligibility depends on being UK resident.
- Maintain foreign bank and asset records—reporting and compliance have tightened.
- For incoming talent or investment, incentives may exist under the new regime. Entities may form UK entities or work via foreign entities depending on where income arises and residence status.
The end of domicile-based status is one of the biggest changes in UK tax rules of recent years. Whether you’re setting up an entity, seeking investment, or relocating, adapting to the new residence-based regime will be essential.