Digital Nomad
Residence-Based Regime: What Non-UK Domiciled Individuals Must Understand
The UK has abolished the remittance basis and replaced it with a residence-based tax regime—fundamental for non-UK domiciled individuals post-6 April 2025.
By NomadicTax Research Team • 5-8 min read • April 10, 2026
## Overview of the Reform
Effective **6 April 2025**, the UK has replaced the domicile-based tax rules with a **residence-based regime**, under which individuals newly resident in the UK may benefit from a four-year period of relief on foreign income and gains (FIG), provided they have not been UK resident for the previous 10 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?os=wtmbtqtajk9s&utm_source=openai))
## Key Features of the New Regime
- **4-Year Foreign Income & Gains Relief**: Fully relieved from tax on foreign income and gains in the first four years of UK residence, if you meet conditions. But once past that, worldwide income and gains taxed as they arise. ([gov.uk](https://www.gov.uk/government/publications/2024-non-uk-domiciled-individuals-policy-summary/changes-to-the-taxation-of-non-uk-domiciled-individuals?os=wtmbtqtajk9s&utm_source=openai))
- **Overseas Workday Relief (OWR)** retained for qualifying employment income from working abroad. Less complex than prior rules under the remittance basis. ([gov.uk](https://www.gov.uk/government/publications/2024-non-uk-domiciled-individuals-policy-summary/changes-to-the-taxation-of-non-uk-domiciled-individuals?os=wtmbtqtajk9s&utm_source=openai))
- **Inheritance Tax (IHT)** moves from domicile basis to being residence-based, generally applying to non-UK assets if resident for 10 years prior, including a “tail” of 10 years after leaving UK residence. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/672105124da1c0d41942a8a8/Reforming_the_taxation_of_non-UK_individuals.pdf?utm_source=openai))
- **Temporary Repatriation Facility (TRF)**: allows individuals taxed under old rules to bring in pre-6 April 2025 foreign income or gains under favourable conditions for a limited period. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/672105124da1c0d41942a8a8/Reforming_the_taxation_of_non-UK_individuals.pdf?utm_source=openai))
## Implications for Digital Nomads & Globally Mobile Individuals
- Expect to be taxed on foreign income/gains once the 4-year relief period lapses. Plan investments, contracts, and asset sales accordingly.
- Keep careful records of days physically present in the UK, paying attention to thresholds for residence.
- If you have employees working abroad or work non-locally, confirm eligibility for OWR to reduce your UK exposure.
## Practical Example
Sarah, a British citizen, lives abroad for many years. She moves to the UK on 1 May 2025. For tax years 2025-26 through 2028-29, her foreign income and gains are relieved under the FIG regime (given she wasn’t UK resident previously for 10 years). After that, foreign dividend income will be taxed under standard UK rules. If she inherits assets overseas, IHT may apply after being UK resident for 10 full years.
## Actionable Tips
- **Assess residence history**: If you don’t meet the “10 years non-residence” condition, foreign income/gains relief may not apply.
- **Document foreign earnings**: Substantiate sources, timing, and types of income (especially if earning while working abroad).
- **Plan asset disposal**: If you have foreign capital gains built up pre-April 2025, consider TRF eligibility.
- **Seek IHT advice**: For cross-border estate planning, especially if owning non-UK property/trusts.
Importance: these reforms simplify the once-complex remittance basis rules and aim to make UK taxation more equitable and competitive. Still, understanding your starting point, legal status, and timeline is vital to avoid unexpected tax liabilities.