Tax Planning
Planning for UK Income and Capital Tax under the Residence-Based Regime
Since 6 April 2025, the UK has replaced non-domicile rules with a new residence-based foreign income and gains regime—this article helps digital nomads and returners understand and plan for the new regime.
By NomadicTax Research Team • 5-8 min read • May 24, 2026
## The end of “remittance basis” and the residence-based regime
As of **6 April 2025**, the UK ended the long-standing non-domicile (“non-dom”) rules and replaced them with a **residence-based foreign income & gains (FIG)** regime. Under the new system, tax residence determines UK taxation, removing earlier distinctions based on domicile. ([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)) This is especially relevant for digital nomads, international contractors, and returners.
## Key features of the foreign income & gains (FIG) regime
- **Qualifying individuals**: Those becoming UK tax resident after being non-UK resident for **10 years** now have four tax years during which foreign income and capital gains are largely exempt, if a claim is made. ([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)**: Employees who meet FIG criteria can additionally apply OWR for foreign employment duties performed outside UK. Available during initial years of residence. ([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))
- **End of remittance basis**: No more tracking of which foreign-source income or gains were “remitted” to the UK. The system after 6 April 2025 is simpler: most foreign income or gains are taxed when arising, except in qualifying initial 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))
## Planning tips for nomads, returners, and globally-mobile individuals
- **Track your periods of non-UK residence**: To benefit from the four-year FIG grace, you must precede UK residence with 10 years abroad. If returning, ensure you claim promptly. Otherwise full taxation applies.
- **Assess return timing**: If considering moving back to the UK, align it with tax years to ensure maximum benefit. Claim FIG from first eligible year.
- **Use OWR strategically**: If you have employment income from foreign duties, manage the days spent in UK vs abroad judiciously—OWR can reduce taxable exposure for qualifying employment income during early years under FIG.
## Worked example
> *John left the UK in 2000 and doesn’t return until tax year starting 6 April 2025. He becomes UK tax resident in that year and claims FIG. During 2025-26, 2026-27, 2027-28 and 2028-29, his foreign investment income and capital gains are not taxed in the UK (beyond certain exclusions), even if repatriated.*
>
> After year 4, those exemptions end, and foreign income and gains are taxed like any UK resident’s.
## Common pitfalls to avoid
- Failing to **make the FIG claim**: It’s not automatic. If you’re eligible, you need to claim via HMRC.
- Assuming remittance basis relief still applies: It does **not**, post-6 April 2025. Mistaking this can lead to surprise tax bills and compliance breaches. ([gov.uk](https://www.gov.uk/guidance/deemed-domicile-rules?utm_source=openai))
- Neglecting to monitor split-year and treaty-residence details: They still matter for other reliefs (e.g., double taxation). Seek advice if your situation spans UK/non-UK residence crossing tax years.
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The move to a **residence-based system** is arguably the most significant change for globally mobile individuals in the last decade. While it simplifies several concepts (no dom status, no remittance basis), it also places more emphasis on understanding residence criteria, timing, and maximizing initial reliefs. For nomads, returners, and those with international income, planning must now be more proactive and data-driven.