Entity Setup
Entity Setup Options for Digital Nomads in UK Post-Non-Dom Reforms
With the abolition of domicile status in April 2025 and a new residence-based system for non-UK individuals, digital nomads must rethink how to structure their income. This article compares options and offers actionable setups.
By NomadicTax Research Team • 5-8 min read • March 6, 2026
## The New Non-UK Resident / Non-Domicile Regime: What You Need to Know
Since **6 April 2025**, the UK has removed the concept of **domicile status**, replacing it with a **residence-based regime**. Former non-domiciled individuals are taxed on foreign income and gains under a new Foreign Income & Gains (FIG) regime. Inheritance Tax (IHT) now applies based on residence, not domicile. A Temporary Repatriation Facility (TRF) allows some legacy pre-April 2025 funds to be designated and remitted at special rates for three years. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/672105124da1c0d41942a8a8/Reforming_the_taxation_of_non-UK_individuals.pdf?utm_source=openai))
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## Structures and Entity Setup Options for Digital Nomads
| Option | Advantages | Drawbacks | Ideal For |
|---|---|---|---|
| **Personal residence-based tax regime (individual structure)** | Simpler setup, full control; TRF helps with funds accumulated already; FIG regime may reduce compliance complexity abroad once residence established | May have less flexibility for business operations; foreign tax credit and treaty relief maintenance critical; exposure to UK tax on worldwide income/gains post-residence | Freelancers, contractors, those with modest foreign investments/services income |
| **Limited company incorporated in the UK** | Profits taxed at Corporation Tax; potential for retained earnings; separation of liabilities; use of capital allowances like FYA for assets; useful if setting up remote workforce or operations | UK resident requirements; company affected by transfer pricing; foreign earnings repatriated may be taxed; additional compliance costs | Digital nomads with recurring business operations; larger scale contractors; those re-investing profits |
| **Overseas company/non-UK entity with UK tax exposure planning** | May rely on double tax treaties; foreign entity may shelter some profits; possible favourable jurisdiction planning | Complex; risk of mis-alignment with UK residence rules; potential anti-avoidance/diverted profits implications under new reform; administrative burden and reputational risk | Those with permanent clients in multiple jurisdictions; high asset or income complexity |
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## Examples: Applying the Rules
- A nomad who moved to the UK in May 2025 and declared residence must now include foreign income and gains under FIG. If they had funds from before April 2025, using TRF could mitigate remittance taxation over the next three tax years. Strategic deferral or remittance scheduling matters.
- A UK limited company hiring remote workers globally still must care about **permanent establishment**, **transfer pricing**, and **Diverted Profits Tax** reforms effective **1 January 2026**. Avoiding artificial arrangements or mispricing will be critical. ([gov.uk](https://www.gov.uk/government/publications/amendments-to-uk-law-relating-to-transfer-pricing-permanent-establishment-and-diverted-profits-tax/reform-of-uk-law-relating-to-transfer-pricing-permanent-establishment-and-diverted-profits-tax?utm_source=openai))
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## Action Steps for Digital Nomads Setting Up Favourable Structures
1. **Determine residency status** under UK rules—time-based residence for tax purposes matters more than domicile now.
2. **Audit your pre-2025 foreign assets/investments** to see if you can use the TRF and plan remittance accordingly.
3. **Choose entity wisely**, favouring combinations of personal vs corporate depending on income levels, ability to invest capital, and asset type.
4. **Consult on transfer pricing and permanent establishment** if operating abroad or with clients overseas. UK is reforming rules from **1 January 2026**. ([gov.uk](https://www.gov.uk/government/publications/amendments-to-uk-law-relating-to-transfer-pricing-permanent-establishment-and-diverted-profits-tax/reform-of-uk-law-relating-to-transfer-pricing-permanent-establishment-and-diverted-profits-tax?utm_source=openai))
4. **Manage compliance obligations**, including FIG reporting, IHT on residence basis, capital allowances eligibility (new FYA), and MTD-ITSA if you earn from UK property or are self-employed above thresholds.
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## Summary
The post-non-dom reforms mark a shift: digital nomads can no longer rely on old domicile-based advantages. But with careful planning—using residence-based regimes, leveraging TRF, choosing entity structure, and avoiding anti-avoidance pitfalls—you can structure operations to maximise tax efficiency while staying compliant under UK law.