The UK introduced the Foreign Income and Gains (FIG) regime from 6 April 2025. It replaces the long-standing Remittance Basis of taxation and offers a simpler framework for qualifying new residents. The regime exempts foreign income and gains for the first four tax years, whether or not funds are brought into the UK.
Key Features of the FIG Regime
General Eligibility Criteria
The FIG regime applies to individuals who become UK tax resident on or after 6 April 2025 and who have been non-resident for at least ten consecutive tax years. These individuals are referred to as “qualifying new residents”. To benefit, individuals must:
- Become UK tax resident under the statutory residence test
- Have spent ten consecutive tax years outside the UK before arrival
- Actively claim FIG each year in their Self-Assessment tax return
- Have foreign income or gains arising within the relevant four tax years
The FIG regime exempts foreign income and gains from UK tax for up to four consecutive tax years starting with the first year of UK tax residence. Funds can be brought into the UK without triggering tax.
Relief must be claimed annually. FIG applies only to income and gains arising within the four-year FIG window. Other reliefs apply to pre-arrival income and gains, including the Temporary Repatriation Facility (TRF) and Rebasing for capital gains tax.
Significant Changes to the UK Inheritance Tax (IHT) Regime
The UK’s wider reform landscape also includes substantial changes to the Inheritance Tax (IHT) regime, which took effect from 6 April 2025. These reforms move the system from a domicile-based model to a residency-based approach and abolish the previous domicile and deemed-domicile rules for IHT purposes.
The new framework provides far clearer rules on when individuals fall within the UK IHT net – a marked improvement on the uncertainty that historically surrounded non-domiciled status. The impact is particularly significant for internationally mobile clients.
Key points include:
- An individual is considered a long‑term resident if they have been UK tax resident for at least 10 of the previous 20 tax years.
- After leaving the UK, long‑term residents remain within the UK IHT scope for a defined “tail” period of up to 10 years, depending on their residence history. This creates a clear end‑date for UK exposure and replaces the ambiguity of the former non‑domicile rules.
Clients for Whom the Regime Is Suitable
The FIG regime is suitable for:
- Individuals becoming UK resident after ten or more years abroad
- Professionals relocating to the UK for work
- Returning UK nationals who meet the ten year non-residence condition
- Non-domiciled clients who previously could not use the remittance basis
These clients gain a clear four-year window during which foreign income and gains are exempt from UK tax. The simplification of reporting and the freedom to bring funds into the UK without tax consequences offer meaningful planning advantages.
Clients for Whom the Regime Is Not Suitable
The FIG regime does not benefit:
- Individuals already UK resident for more than four years before April 2025
- Long term non-doms who relied on the remittance basis to shelter foreign income
- Clients unable to meet the strict ten year non-residence test
- Individuals with significant pre-arrival income or gains who do not qualify for TRF or Rebasing
These clients transition into worldwide taxation more abruptly. TRF and Rebasing may soften the change until the end of the 2027/28 tax year, but FIG does not extend to them.
Key Considerations for Advisers
- FIG applies only for four tax years. After that period, clients become subject to full UK worldwide taxation.
- TRF and Rebasing may provide relief on pre-arrival income and gains where conditions are met.
- Advisers must confirm UK residence status under the statutory residence test.
- Clients with previous UK connections must track historic residency carefully to understand whether they qualify as “new” residents.
- Advisers may consider planning structures to replicate some advantages previously available under the remittance basis.
- Clients expecting to spend limited time in the UK should monitor their residence position to avoid unintended loss of FIG eligibility.
Understanding the timing of residence, the four-year window and the interaction with TRF and Rebasing is essential for planning.