Foreign Income and Gains regime: what UK residents need to know
The Foreign Income and Gains (FIG) regime was introduced on 6 April 2025, replacing the remittance basis of taxation for individuals who become UK tax resident after a prolonged period of living overseas.
The new regime can provide valuable tax relief for qualifying individuals, allowing them to claim relief from UK tax on certain foreign income and gains arising during their first four years of UK tax residence
However, the rules are different from the previous non-domicile and remittance basis regime, and making a FIG claim can also affect other tax allowances and reliefs.
For individuals moving to the UK, or returning after a period of living abroad, understanding whether the FIG regime applies and whether making a claim is beneficial should be an important part of their tax planning.
What is the Foreign Income and Gains regime?
The FIG regime provides qualifying new UK residents with relief from UK tax on eligible foreign income and gains for up to their first four years of UK tax residence.
It was introduced as part of the wider changes to the taxation of individuals who have historically been able to use the remittance basis.
From 6 April 2025, the remittance basis was abolished and UK residents are generally taxed on their worldwide income and gains on an arising basis.
The FIG regime provides a specific relief for individuals who meet the qualifying conditions.
Importantly, eligible individuals can bring foreign income and gains covered by a FIG claim to the UK without an additional UK tax charge.
Who can claim the FIG regime?
The regime is aimed at qualifying new residents.
Broadly, you may be eligible if:
• you are UK tax resident under the Statutory Residence Test;
• you are within your first four years of UK tax residence; and
• you have been non-UK tax resident for at least 10 consecutive tax years immediately before becoming UK resident.
The four-year period begins with the first tax year in which you become UK resident following the required period of non-UK residence.
Your nationality, domicile or previous ability to claim the remittance basis does not determine whether you qualify. The key consideration is your UK tax residence history.
Individuals who became UK resident before 6 April 2025 may also be able to benefit from the FIG regime from 6 April 2025 onwards, provided they satisfy the qualifying conditions and remain within their first four years of UK residence following at least 10 consecutive tax years of non-UK residence.
What foreign income and gains qualify?
The FIG regime does not cover every type of foreign income or gain.
Qualifying foreign income can include:
• dividends from non-UK resident companies;
• interest from overseas bank accounts;
• profits from an overseas property business;
• profits from a trade carried on wholly outside the UK; and
• certain categories of foreign pension income.
Foreign capital gains can also qualify, subject to the detailed rules.
The income or gains must arise on or after 6 April 2025 to qualify for relief under the new regime.
There are also categories of income that are specifically excluded, so it is important to establish whether the particular income or gain qualifies before making a claim.
What about offshore trusts?
Special rules apply where foreign income and gains arise within offshore trust structures. Although the FIG regime can provide valuable relief for qualifying individuals, the interaction between the FIG rules and the taxation of offshore trusts can be complex and will depend on the nature of the trust, the assets held and the individual’s connection to the trust. Separate provisions may apply to settlors, trustees and beneficiaries, and professional advice should be sought before assuming that trust income or gains will qualify for relief under the FIG regime.
How long does the FIG regime last?
The FIG regime is available for a maximum of four consecutive tax years.
The four years start with the first year of UK tax residence following at least 10 consecutive tax years of non-UK residence.
A claim is not automatically made for all four years.
Instead, you need to make a claim for each tax year in which you want to use the relief. You can choose whether to claim relief on foreign income, foreign gains, or both.
For example, an individual could make a FIG claim in their first year, decide not to claim in their second year and then make claims again in their third and fourth years.
However, an unused year cannot be carried forward beyond the four-year period.
This means that deciding whether to claim in each year requires careful consideration.
How do you claim the FIG regime?
A claim is made through your Self Assessment tax return.
You do not have to claim relief on every source of foreign income or every foreign gain. Instead, you can choose which qualifying foreign income and gains to claim relief on.
This flexibility can be valuable where an individual has different types of overseas income and investments and needs to consider the wider tax consequences of making a claim.
For the 2025/26 tax year, the normal Self Assessment filing deadline is 31 January 2027. However, HMRC allows claims under the FIG regime to be made up to the anniversary of 31 January following the end of the relevant tax year. This means a claim relating to 2025/26 can generally be made by 31 January 2028.
What are the disadvantages of making a FIG claim?
While the FIG regime can provide significant tax savings, making a claim is not necessarily beneficial in every situation.
One important consequence is the loss of certain tax allowances and reliefs.
If you make a FIG claim, you will lose entitlement to:
• the Income Tax personal allowance;
• the Capital Gains Tax annual exempt amount;
• Married Couple’s Allowance, where applicable;
• Marriage Allowance, where applicable; and
• Blind Person’s Allowance, where applicable.
Your foreign income can also be taken into account when calculating your adjusted net income, which can affect areas such as the High Income Child Benefit Charge and entitlement to certain childcare support.
The value of the FIG relief therefore needs to be weighed against the allowances and reliefs that would be lost.
What happens to foreign income and gains brought to the UK?
One of the significant differences between the FIG regime and the previous remittance basis is what happens when relieved foreign income and gains are brought into the UK.
Under the FIG regime, qualifying foreign income and gains on which relief has been claimed can generally be brought to the UK without an additional UK tax charge.
This means qualifying individuals do not need to keep the relieved funds offshore simply to avoid a further UK tax charge.
This can provide greater flexibility for individuals who have recently moved to the UK and want to use their overseas wealth to fund their life here.
What about foreign income and gains from before 6 April 2025?
The FIG regime applies to qualifying foreign income and gains arising from 6 April 2025 onwards.
It does not provide relief for foreign income and gains that arose before that date.
However, individuals who previously used the remittance basis may need to consider the Temporary Repatriation Facility (TRF).
The TRF was introduced to allow eligible taxpayers to bring certain pre-6 April 2025 foreign income and gains into the UK at a reduced tax rate, subject to the relevant conditions and deadlines.
The interaction between the historic remittance basis position, the FIG regime and the TRF can be complex, so professional advice may be appropriate for individuals with significant overseas assets or previously unremitted income and gains.
What happens after the four years?
Once the four-year FIG period has ended, the individual will generally no longer be able to claim FIG relief.
Foreign income and gains will then generally be subject to UK tax under the normal rules applicable to UK residents.
This makes the four-year period an important opportunity for forward planning.
Individuals coming to the UK should consider not only their tax position in their first year of residence, but also how their overseas investments, property, pensions and other assets will be taxed once FIG relief is no longer available.
How does the FIG regime interact with Inheritance Tax?
The reforms introduced from 6 April 2025 also included significant changes to the UK’s Inheritance Tax regime, moving away from the historic domicile-based system towards a residence-based approach. As a result, individuals relocating to or from the UK should consider their Inheritance Tax position alongside the FIG regime. For many internationally mobile individuals, Inheritance Tax exposure may now be influenced by their residence history, making pre-arrival and long-term planning particularly important.
Planning before moving to the UK
For someone considering moving to the UK after spending 10 or more consecutive tax years overseas, obtaining tax advice before becoming UK resident can be particularly valuable.
Areas to consider may include:
• establishing your UK tax residence position;
• identifying overseas income and gains that may qualify for FIG relief;
• reviewing overseas investments and property;
• considering the timing of disposals;
• understanding the impact of losing personal allowances and the CGT annual exempt amount;
• reviewing pension and trust arrangements;
• considering the interaction with the Temporary Repatriation Facility where relevant; and
• planning for the end of the four-year FIG period.
The rules can be particularly important for individuals with substantial overseas investments or complex international financial arrangements.
A new approach to UK tax for international individuals
The introduction of the FIG regime represents a significant change to the way the UK taxes individuals with international financial affairs.
For qualifying new residents, it can provide valuable relief on eligible foreign income and gains for up to four years, while allowing those relieved funds to be brought into the UK without an additional UK tax charge.
However, the decision to claim should not be made in isolation. The loss of personal allowances and other reliefs, together with the individual’s wider tax position, needs to be considered.
With the rules now in their second year, anyone who has recently moved to the UK, is planning a move, or is returning after a long period overseas should review whether the FIG regime could apply to them.
How Moore South can help
International tax rules can be complex, particularly when you have recently moved to the UK or have income, investments, property or other assets overseas.
Our tax team can help you establish whether you qualify for the Foreign Income and Gains regime, assess whether making a claim is beneficial and plan for your UK tax position both during and after the four-year period.
If you are moving to the UK or returning after living overseas, get in touch with Moore South to discuss your circumstances and make sure you have the right tax plan in place.