What’s Changing
From 6 April 2025, the UK abolished the non-domicile (non-dom) rules and the remittance basis of taxation. In place is a residence-based system, where tax liability depends solely on UK tax residence, not domicile status. Under the new rules:
- Individuals who become UK resident after at least 10 consecutive years of non-residence will be taxed on all foreign income and gains (FIG), not just those remitted. (gov.uk)
- A Temporary Repatriation Facility (TRF) gives those previously taxed under remittance basis an option to bring in amounts derived from pre-6 April 2025 foreign income/gains at a reduced rate, for up to three tax years.(assets.publishing.service.gov.uk)
- Foreign employment income is eligible for Overseas Workday Relief (OWR) in the first four tax years of UK residence, subject to meeting certain conditions.(gov.uk)
Implications for Digital Nomads
| Scenario | What Changes | Tax Impact | Practical Strategy |
|---|---|---|---|
| Previously non-resident, now returning | You’ll likely be “long-term resident” if passing the 10-out-of-20 years test. | Worldwide FIG taxed fully, inheritance tax rules tighten. | Consider timing of returns, use TRF to bring funds in gradually. |
| Using work stops outside UK under OWR | OWR applies only for first 4 years residence; increases exposure after that. | Foreign employment earnings may be taxed without relief post 4 years. | Keep precise travel/work logs; consider splitting income sources. |
| Holding assets & trusts overseas | Previously excluded trusts/assets may now be subject to UK Tax laws, under “long-term residence” rules. | Inheritance Tax (IHT) liabilities on non-UK assets may increase. | Review trust-settlements pre-2024; consider rebasing options. |
Actionable Steps Right Now
- Check if you qualify as UK resident under the Statutory Residence Test and whether you are “long-term resident.”
- Prioritize TRF: If you have foreign income/gains accrued before 6 April 2025, evaluate whether designating amounts into the TRF is beneficial.
- Track employment overseas days, since OWR relief only works for first 4 years.
- Update estate and trust structures: Review ownership of non-UK assets; plan for IHT changes.
- Seek professional advice, especially for multi-jurisdiction income, cryptos, or high value assets.
Example Case
Maria, a freelance software developer, returned to the UK in August 2024 after being non-resident for 12 years. She has foreign savings with gains accrued in 2023, foreign employment income working remotely, and inherited property overseas. Under the new regime:
- She’s a long-term UK resident, so she’ll face full FIG taxation.
- She may use TRF to bring in pre-2025 gains at reduced rate.
- OWR covers only her first four tax years (2024-25 onwards), so after 2027-28 foreign employment income is fully taxed.
- Overseas property may now feature in her IHT estate more heavily.
Bottom Line
The shift to a residence-based system fundamentally alters UK tax exposure for digital nomads. If you’ve been treating UK stays or foreign income lightly under non-dom rules, the new FIG regime, OWR limits, and IHT changes mean you need to review your tax status, plan transitions, and take advantage of transitional facilities now to optimize your tax position.