Overview: Non-Domicile Regime Ends, FIG Regime Begins
From 6 April 2025, the UK ended the non-domicile (non-dom) regime. It now operates under a residence-based system, introducing the Foreign Income & Gains (FIG) regime. (assets.publishing.service.gov.uk)
Key features include:
- New arrivals pay no UK tax on foreign income or gains for the first four tax years, provided they were non-resident for the previous 10 years. (gov.uk)
- A Temporary Repatriation Facility (TRF) allows those who held foreign income/gains pre-6 April 2025 to pay a reduced rate of 12% over three tax years. (assets.publishing.service.gov.uk)
- Overseas Workday Relief (OWR) is reformed: eligibility extended to 4 years; annual financial cap introduced; offshore status less strictly required. (assets.publishing.service.gov.uk)
What Digital Nomads Should Know
If You’re Thinking of Moving to the UK or Becoming Resident
- Your first 4 years: may enjoy significant tax relief on foreign income/gains under FIG.
- If you have capital assets overseas, consider rebasement to 5 April 2019 (new regime baseline) for assets held before 2025. (gov.uk)
- TRF allows lower tax on distributions or gains from pre-April 2025 assets/trusts. Good for those who suppressed values or accrued wealth abroad.
If You're Already UK Tax Resident
- FIG applies regardless of arrival date; overseas income/gains taxed as they arise once the 4-year period ends.
- Watch for liability under other residence-based reforms, incl. to Inheritance Tax, trust taxation, and overseas workdays.
Example: Work Location Strategy
Suppose Alex is a software developer, non-resident in the UK for over 10 years, considering establishing UK residency starting June 2026. While overseas clients still pay foreign income:
- Under FIG, Alex would have no UK tax on this foreign income for the first 4 UK tax years, then full taxation thereafter.
- If Alex owns assets abroad acquired pre-6 April 2025, TRF allows accessing them with 12% tax spread over 3 years, potentially minimizing liability.
Actionable Tips for Digital Nomads
- Map your timeline: Your date of UK residence matters.
- Consider trusts or legal structures: If income or gains are held offshore via trusts, structures may affect how FIG and TRF apply.
- Keep detailed foreign income/gain records: For periods before and after residency, to ensure correct application of reliefs.
- Review travel/work arrangements: OWR now more accessible, but annual caps and residence requirements need attention.
Broader Implications
- Tax compliance will intensify. As FIG applies taxes on “when realised”, timing of gains and income realization becomes more strategic.
- For high-net-worth individuals, the end of domicile opens both new costs (on previously sheltered wealth) and possibly new planning opportunities.
- Nomads must now be more transparent; misclassification or misreporting can lead to penalties.
Digital nomads planning to spend extended periods in the UK should get advice early, understand FIG and TRF, and ensure their structures and income streams align with the new residence-based tax landscape.