Digital Nomad
How the New Residence-Based Regime Replaces Non-Dom Status: What Digital Nomads Need to Know
With the UK abolishing domicile-based tax treatment from April 2025, digital nomads must understand eligibility for the new 4-year foreign income & gains (FIG) regime and what ‘long-term UK residence’ means for Inheritance Tax.
By NomadicTax Research Team • 5-8 min read • April 21, 2026
## What’s Changing for Non-UK Residents and Non-Domiciled Individuals
From **6 April 2025**, the UK is removing the remittance basis and ending the preferential ‘non-dom’ regime—moving to a **residence-based test** for foreign income, gains, and inheritance tax (IHT) ([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)). This regime introduces the **4-year FIG regime**, where new residents who meet certain eligibility get relief on foreign income and gains in their first four UK tax years ([gov.uk](https://www.gov.uk/government/publications/2024-non-uk-domiciled-individuals-policy-summary/changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai)).
## What This Means for Digital Nomads
| Area | Old Rules (Non-Dom) | New Rules (Residence-Based) |
|------|----------------------|------------------------------|
| **Overseas income/gains** | Could use remittance basis—only taxed when brought to UK | Automatically taxed as they arise, unless eligible for FIG relief in first 4 years ([gov.uk](https://www.gov.uk/government/publications/changes-to-the-taxation-of-non-uk-domiciled-individuals/technical-note-changes-to-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai)).
| **Overseas Workday Relief (OWR)** | Needed offshore bank account; conditions tied to domicile | Eligibility based on **residence not domicile**; no requirement to use offshore account (except for pre-April 2025 income) ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/672105124da1c0d41942a8a8/Reforming_the_taxation_of_non-UK_individuals.pdf?utm_source=openai)).
| **Inheritance Tax (IHT)** | Based on domicile/deemed domicile; excluded trusts could avoid UK-situs tax | From 6 April 2025, IHT is residence-based: non-UK assets in scope if individual has been UK resident **10 of last 20 years**; excluded property status for trusts now depends on long-term residence status ([gov.uk](https://www.gov.uk/government/publications/hm-revenue-and-customs-trusts-and-estates-newsletters/hmrc-trusts-and-estates-newsletter-april-2025?utm_source=openai)).
## Practical Steps & Examples
- **Example**: You arrive in the UK in 2025/26, having non-UK residence for the previous ten years. You qualify for the 4-year FIG regime and won’t pay UK tax on foreign gains arising during your first four years, provided you remain within FIG eligibility ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg26400?utm_source=openai)).
- **Trust review**: If you or your family are involved with external trusts, you’ll need to evaluate how long your settlor has been a UK resident—and whether trust distributions or benefits may now be taxed under the new regime ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4705?utm_source=openai)).
- **OWR election**: If working overseas but resident in the UK, you should check the new eligibility—for example, whether your UK residence qualifies and submit any required election in your Self Assessment return ([gov.uk](https://www.gov.uk/government/publications/employer-bulletin-april-2025/april-2025-issue-of-the-employer-bulletin?utm_source=openai)).
## Action Points
- Assess eligibility for **FIG relief** and ensure you understand which tax years qualify under the new regime.
- Review any overseas assets or trusts to identify potential exposure to IHT or CGT changes.
- Keep detailed records of overseas work days, residency status, and income sources, especially when preparing Self Assessment returns.
- If you were previously claiming remittance basis or non-dom status, obtain professional advice to determine transitional arrangements and any tax elections needed.
Understanding these changes now—before or shortly after April 2025—will help digital nomads plan optimally under the residence-based system. With careful planning and proper documentation, the transition can be managed effectively without unexpected tax liabilities.