🇬🇧UK FIG Regime: Foreign Income and Gains

Background

Until 6 April 2025 a non-UK-domiciled resident could keep foreign income and gains outside the UK net on the remittance basis, in some cases for up to fifteen years. That door closed. Domicile was removed from income tax and capital gains tax, the inheritance tax system was rebuilt around residence, and a new four-year relief took the place of the old open-ended planning. FIG is the headline part of that settlement: a short, deliberate welcome for people in their first years of UK residence.

Concept

The Foreign Income and Gains regime lets a qualifying new UK resident escape UK tax on foreign income and gains arising in their first four years of residence. It is residence-based and strictly time-limited, and it carries none of the permanence of the remittance basis it replaced. Every other UK resident pays tax on the arising basis on worldwide income and gains; FIG is the narrow exception, and only for amounts arising on or after 6 April 2025.

The rule

From 6 April 2025 every UK resident is taxed on the arising basis. The exception is for someone who becomes UK resident after at least ten consecutive tax years of non-UK residence: they can claim relief on eligible foreign income and gains for each of their first four UK-resident years. Residence is fixed by the statutory residence test, the four years run consecutively from the year residence begins, and unused years cannot be carried forward. Because the clock starts at arrival rather than at 6 April 2025, the regime also reaches some people already here: s 845B(3)(c) ITTOIA 2005, inserted by s 37 Finance Act 2025, treats 2022-23, 2023-24 and 2024-25 as qualifying tax years where the 10-year non-residence test was met, so someone who became UK resident in one of them claims the residual years of the window from 2025/26 — 2025/26 alone for a 2022/23 arrival, three years for a 2024/25 arrival. Residence beginning before 2022/23 gives no access, and a 2025/26 claim must be made by 31 January 2028 (s 845A(5) ITTOIA 2005).

The test

Scope

FIG suits new arrivals, returners after a long absence, founders holding foreign companies, investors with offshore portfolios and beneficiaries of non-UK trusts. Being non-British, formerly non-dom, or simply holding assets abroad qualifies no one on its own. Foreign employment income sits outside FIG and runs instead through Overseas Workday Relief, which was rebuilt alongside it.

Consequences

Eligible foreign income and gains drop out of the income tax and CGT charge for each claim year. The price is the personal allowance and the CGT annual exempt amount for that year, together with the married couple's, marriage and blind person's allowances where they applied. The relieved income still counts towards adjusted net income, so it can trigger the High Income Child Benefit Charge or remove access to tax-free childcare. UK-source income, UK gains and UK land stay fully taxable.

Examples

A founder who becomes UK resident in 2026/27 after 12 years abroad and sells shares in a non-UK company during the 4-year period may be within FIG for the foreign gain if the conditions are met. A former long-term London resident who spent only 7 years outside the UK before returning is outside FIG even if assets and bank accounts are offshore. A UK-source consulting fee cannot be converted into FIG by invoicing through an offshore company.

Risk

The main risks are assuming eligibility without proving the 10-year history, claiming FIG on UK-source items, failing to model the loss of allowances, and confusing FIG with OWR. Trust and transfer-of-assets-abroad income can interact with FIG, but those analyses require exact attribution under HMRC's RFIG45300 and RFIG45400 guidance.

Evidence

The file should prove 10 years of non-UK residence, the first UK-resident year, split-year status, the source of each item, the foreign situs of assets, foreign taxes paid and the claim mechanics on SA109. It must remain usable after the 4-year window closes, when the same income and gains return to the arising basis.

Planning

FIG planning works best before UK residence begins. Disposals, portfolio composition, trust benefits, company distributions, overseas duties and foreign-tax-credit capacity all want modelling against the four-year window while there is still time to change them. The regime is a bridge taken deliberately, year by year, with the far bank already in view.

The package around FIG

FIG never travelled alone. The Temporary Repatriation Facility is its counterpart for the past: a three-year window to bring pre-6 April 2025 foreign income and gains onshore at a flat rate, 12% for 2025/26 and 2026/27 and 15% for 2027/28, against the up-to-45% a normal remittance would cost. Designate the funds, pay the charge, and the money then moves freely with no further UK tax.

The working part of the TRF is designation. Amounts are designated in the Self Assessment return for the year, the designation is treated as made at the start of that tax year, and once the charge is paid the money can be remitted in any later year — inside the window or long after it — with no further UK tax (RDRM73100). Designation also rewrites the mixed fund arithmetic: a new step A1 treats designated TRF capital as remitted first, ahead of every other layer and regardless of when the underlying income or gains arose, and accounts holding TRF capital are analysed on an annualised rather than transaction-by-transaction basis (RDRM75200, RDRM75100). The ordering rules — the most unforgiving machinery of the old regime — become a cleaning tool: designate the cheap layers first, then remit. Amounts can be designated now and remitted years later; the rate is locked, the timing is free.

Beside the TRF sits a separate transitional relief — it is not part of the TRF and runs on its own terms: CGT rebasing under Schedule 11 to the Finance Act 2025. On a disposal on or after 6 April 2025 of a foreign asset held personally on 5 April 2017, the base cost is reset to the asset's market value on 5 April 2017, leaving only the later growth in charge. The gate: at least one remittance basis claim under s 809B for 2017/18 to 2024/25 (years of automatic remittance basis do not count), no actual or deemed UK domicile in any tax year before 2025/26, and an asset that stayed outside the UK from 6 March 2024 to 5 April 2025, with narrow exceptions. The TRF cleans up the past; rebasing trims the taxable slice of the future.

Inheritance tax changed in the same reform. Domicile no longer decides exposure; long-term residence does. Anyone UK resident for at least ten of the previous twenty tax years becomes a long-term resident, taxable on worldwide assets. On leaving, a tail keeps those assets in scope: three years for ten to thirteen years of residence, lengthening by a year for each further resident year up to a maximum of ten, and resetting only after ten consecutive years of non-residence. Succession planning now turns on this clock rather than on domicile.

Two layers of the IHT change matter most in practice. For trusts, excluded property status is no longer fixed at settlement: it is dynamic, tested against the settlor's long-term-resident position at the date of each charge, so a trust can drift in and out of the IHT net as the settlor's residence history moves — the mechanics are in trusts and inheritance tax, the wider reform in the abolition of the non-dom regime. And the clocks are unsynchronised by design: FIG's four-year window closes six years before long-term residence can begin, while a long stay leaves a tail of up to ten years after departure (GOV.UK). Plan both horizons together — the income tax runway and the IHT clock — or the free years mask the exposure building behind them. A third clock now runs alongside them: the proposed earned settlement model would raise the default qualifying period for indefinite leave to remain from 5 to 10 years, so permanent status could arrive around the time long-term residence begins rather than years before it — see the earned settlement reform.

Overseas Workday Relief was re-cut to match. It now runs for four tax years rather than three, drops the old need to keep the pay offshore, and is capped each year at the lower of £300,000 or 30% of qualifying employment income. Anyone who qualifies for FIG and has overseas duties can elect into it, whatever their former domicile.

Where it is heading

The first year brought fixes rather than reversals. At Legislation Day in July 2025 the government published technical amendments to the regime, most effective retrospectively from 6 April 2025, and the Autumn 2025 Budget confirmed the four-year limit with no extension. That Budget also floated an enhanced offer for high-talent arrivals, with consultation promised but no detail yet. FIG therefore stays what it was designed to be: a clean four-year runway rather than a destination, rewarding people who model the exit before they arrive.

Set against Europe's standing alternatives, FIG is generous but brief, which is why the planning is front-loaded. Italy's flat tax, the Cyprus and Greece non-dom routes and the UAE's zero-rate residence compete for the same mobile families on very different terms; the Five Flags map sets out how those choices fit together.