How the Foreign Income and Gains Regime Affects UK Taxpayers

From April 2025 the UK tax rules changed dramatically. The long‑standing remittance basis for non‑domiciled individuals has been abolished and replaced with a four‑year Foreign Income and Gains regime. Under the new rules, UK tax residence – rather than domicile – is the test for relief. 

Apex Accountants monitors these changes carefully. We guide you on eligibility, claiming relief and staying compliant. Below we explain the key features of the FIG regime and answer common questions people are asking in the UK.

Who qualifies for the FIG regime?

To claim FIG relief, you must be a qualifying resident under HMRC rules:

• UK tax resident under the statutory residence test (SRT).
  
• You must have been a non- UK tax resident for at least ten consecutive tax years immediately before your arrival.
  
• Within your first four tax years of UK residence – this is a four-year window, and unused years cannot be rolled over.
  

This procedure means that you might be British or non‑domiciled; the key is being outside the UK for a decade before becoming a resident again. The regime applies to any qualifying newcomer, including UK-domiciled individuals who were not previously eligible under the remittance basis.

What income and gains qualify?

Relief is available for most foreign income and gains. The GOV.UK guidance lists examples such as:

• Profits from a trade carried on wholly outside the UK.
  
• Income from overseas property businesses.
  
• Dividends from non‑UK companies and foreign bank interest.
  

Foreign employment income is not covered by the foreign income and gains (FIG) regime but may instead qualify for Overseas Workday Relief.

Whether you bring the funds into the UK or not, these foreign income and gains are exempt from UK tax during the four-year period. This is a major difference from the old remittance basis, where bringing money to the UK triggered a tax charge. However, reporting is still required—you must disclose all foreign income and gains on your self-assessment tax return, even if FIG. relief applies.

How do you claim?

Relief is claimed on your Self‑Assessment tax return. The return must identify the foreign income and gains for which relief is being sought. A claim must be submitted by 31 January Claims for the tax year 2025/26 must be filed by 31 January 2028, which is two years after the end of that tax year. 

If you have small amounts of foreign income, you should still report them; there is no automatic exemption for amounts under £2,000 under FIG, unlike the old remittance basis.

Which allowances do you lose?

This regime offers generous relief but at a cost. A claimant loses several UK tax allowances for the year of claim:

• Income Tax personal allowance and Capital Gains Tax annual exempt amount.
  
• Married Couple’s Allowance and Marriage Allowance.
  
• Blind Person’s Allowance.
  

In addition, making a claim prevents the use of foreign income or capital losses in that year. Once the four‑year period ends, you become taxed on your worldwide income like any other UK resident.

Transitional rules and planning points

HMRC recognises that transitioning from the remittance basis to FIG may create complexity.

Key transitional measures include:

• Capital gains rebasing – remittance‑basis users can elect to rebase certain foreign assets to their value on 5 April 2017. Only gains accruing after that date are taxed on future disposals.
  
• Temporary Repatriation Facility (TRF) – between 2025 and 2028, individuals can bring foreign income and gains that arose before 6 April 2025 into the UK at a flat tax rate of 12%, rising to 15% in the final year. This encourages repatriation of “trapped” funds and is available even if you are no longer eligible for FIG.
  
• Overseas Workday Relief (OWR) – retained and expanded under the foreign income and gains (FIG) regime. OWR allows relief on non‑UK duties for up to four years and no longer requires the income to remain offshore. From 2025, the relief may be capped at 30% of income or £300,000.
  

Clients with offshore trusts need special attention. The “protected trust” rules no longer apply once FIG begins. If a UK‑resident settlor does not qualify for FIG, all foreign income and gains of a non‑UK trust will be attributed to them. Qualifying settlors can receive trust distributions tax‑free during the four‑year window. After four years, all trust income and gains become taxable.

Common questions and practical tips

• How do I count my non‑residence period? 

Determining ten consecutive years outside the UK can be complex. Split‑year treatment, treaty tie‑breakers and the Statutory Residence Test may affect your calculation.

• What if my foreign income is taxed abroad? 

Some countries may not recognise UK FIG relief. You might not receive foreign tax credits and could face double taxation. Professional advice is essential.

• Do I still need to keep records? 

Yes. HMRC requires details of foreign income and gains even when exempt.

• What about small amounts? 

There is no automatic exemption for small foreign income under FIG. All foreign income and gains should be reported; allowances like the personal savings allowance may cover the tax liability.

How Apex Accountants Can Help With Foreign Income And Gains Regime

At Apex Accountants we specialise in helping individuals and families navigate the FIG regime:

• Eligibility review – we assess your residency history to confirm whether you qualify for FIG relief and identify your four‑year window.
  
• Claim preparation – our experts prepare and file Self‑Assessment returns, including FIG claims and Overseas Workday Relief elections, ensuring that the required disclosures are made.
  
• Planning for allowances – we advise on whether claiming FIG is beneficial, taking into account the loss of allowances and potential interaction with other reliefs.
  
• Trust and estate planning – specialists review offshore trusts, identify attribution risks and structure distributions to maximise relief.
  
• Transitional reliefs – we assist with capital gains rebasing elections and help clients use the Temporary Repatriation Facility effectively.
  

The FIG regime offers an opportunity to shelter foreign income and gains for newcomers, but it demands careful reporting and planning. With the rules now in force, early advice is vital. Contact Apex Accountants for tailored guidance and ensure your move to the UK is tax‑efficient.

Frequently Asked Questions (FAQ) on the Foreign Income and Gains (FIG) Regime

1. What does “FIG” stand for in the UK tax context?

“FIG” stands for Foreign Income and Gains. It refers to a new tax relief regime for UK residents with foreign income and capital gains, introduced in April 2025. The FIG regime replaces the remittance basis system for non-domiciled individuals.

2. How long can I claim relief under the FIG regime?

You can claim relief under the FIG regime for up to four consecutive tax years, starting from the year you become a UK resident after having beThe claimant forfeits their Income Tax personal allowance and the annual exempt amount from Capital Gains Taxng on its source or amount.

4. Can I claim the FIG regime if I have foreign property income?

Yes, if you meet the eligibility criteria for the FIG regime, foreign property income can be included in the claim. However, you must report all income to HMRC through your self-assessment tax return.

5. Will I lose my personal tax allowances if I claim the FIG relief?

Yes, by claiming the FIG relief, you will lose access to certain allowances, including the UK personal income tax allowance and capital gains tax annual exempt amount, among others. It’s important to assess whether the relief benefits outweigh the loss of these allowances.

6. How do I report foreign income under the FIG regime?

You must report any foreign income and gains that are being claimed for relief under the FIG regime in your self-assessment tax return. This includes identifying the foreign income or gains being relieved from UK tax.

7. What if my foreign income is below the personal allowance?

Even if your foreign income is below the UK personal allowance or other tax-free allowances, you are still required to report it if you are making a claim under the FIG regime.

8. Can I still benefit from the marriage allowance while claiming the FIG regime?

No, claiming relief under the FIG regime means you will lose access to the marriage allowance, as well as other personal allowances like the blind person’s allowance and the capital gains tax annual exempt amount.

9. How does the FIG regime affect my capital gains tax liability?

Under the FIG regime, foreign capital gains from the sale of foreign assets can be relieved from UK tax. However, claiming the relief will result in the loss of the annual exempt amount from capital gains tax for that tax year.

10. What should I do if I am unsure whether to claim the FIG relief?

If you are unsure whether the FIG regime is right for you, it is highly recommended to seek professional advice. Our accountants and tax specialists can help you assess your eligibility and determine whether claiming relief under the regime will be beneficial for your situation.