Since 6 April 2025, the way the UK taxes internationally mobile individuals has changed fundamentally. The old remittance basis, long associated with non-domiciled status, has been abolished and replaced by a residence-based system known as the Foreign Income and Gains (FIG) regime. For anyone who has recently moved to the UK, or who is advising clients who have, understanding how the FIG regime works is no longer optional it is central to getting both tax planning and Self-Assessment compliance right.

This article sets out what the FIG regime is, who qualifies, the tax planning opportunities it creates, and the compliance obligations that come with it, including the latest position for the 2025/26 and 2026/27 tax years.

What Is the FIG Regime?

From 6 April 2025, all UK resident individuals are taxed on their worldwide income and gains as they arise, regardless of whether the money is brought into the UK. This is known as the arising basis. Domicile no longer has any bearing on how income and gains are taxed.

Within this new framework, the FIG regime offers a time-limited relief. A ‘qualifying new resident’ can elect not to pay UK tax on eligible foreign income and gains for their first four tax years of UK residence, and can bring that money into the UK freely without triggering a further tax charge. This is a significant simplification compared with the old remittance basis, which restricted how and when foreign funds could be brought onshore.

Who Qualifies as a Qualifying New Resident?

To access the FIG regime relief, an individual must meet three conditions:

•       They must be UK resident for the tax year in question, as determined by the Statutory Residence Test.

•       The tax year must fall within their first four tax years of UK residence.

•       They must not have been UK resident in any of the ten consecutive tax years immediately before their arrival.

The regime first became available for the 2025/26 tax year, meaning individuals who became UK resident any time between 2022/23 and 2025/26 (inclusive) can potentially claim relief, provided the ten-year non-residence test is met. Members of the House of Commons and House of Lords are excluded from claiming, regardless of their residence history.

Importantly, the four-year window is fixed once it begins and does not pause or roll over. If an individual leaves the UK part-way through the period and later returns while still within their original four years, they can resume claiming for the remaining years, but any year in which they were non-resident is not recoverable.

What Foreign Income and Gains Are Covered?

Relievable foreign income and gains include a broad range of overseas sources, such as foreign employment income, profits from a trade carried on wholly outside the UK, a partner's share of overseas partnership profits, profits from an overseas property business, foreign interest, and foreign dividends. Foreign capital gains, such as those arising on the sale of an overseas property or share portfolio, are also eligible.

Two areas call for particular care. First, foreign employment income relief operates through Overseas Workday Relief (OWR), which is capped at the lower of thirty per cent of qualifying employment earnings and an annual limit of £300,000. Second, self-employment income is subject to an ‘all or nothing’ rule: profits are only relieved if the business is managed and carried out wholly outside the UK. Where any part of the trade is conducted in the UK, the whole of the profit becomes taxable here, which in practice makes relief difficult to achieve for most sole traders who split their time between the UK and overseas.

Tax Planning Opportunities Under the FIG Regime

For those who qualify, the four-year window offers a genuine and valuable planning opportunity, though one that requires careful timing. Points worth considering include:

•     Accelerating the realisation of foreign gains into the exemption period, where circumstances allow, rather than deferring disposals until after the relief has expired.

•     Rebasing overseas investments by selling and repurchasing, subject to the bed and breakfasting rules, to increase the base cost of assets before the four-year period ends.

•     Making full use of Overseas Workday Relief where employment duties are genuinely split between the UK and overseas, and ensuring the associated election is made correctly and on time.

•     Reviewing the Temporary Repatriation Facility (TRF) for those who previously used the remittance basis, which allows certain pre-6 April 2025 foreign income and gains to be designated and taxed at a reduced rate of 12% for 2025/26 and 2026/27, rising to 15% for 2027/28.

•     Weighing the loss of the personal allowance and the Capital Gains Tax annual exempt amount against the value of the relief claimed, since a FIG claim is rarely worthwhile where foreign income is modest.

This last point is worth dwelling on. Claiming FIG relief means voluntarily giving up the UK personal allowance and the annual exempt amount for that tax year. For individuals with substantial foreign income or gains, the relief comfortably outweighs this cost. For those with only modest overseas earnings, however, the loss of allowances can leave them worse off overall, so the decision should always be reviewed year by year rather than assumed to apply automatically.

Compliance Requirements and Reporting Deadlines

The FIG regime is not applied automatically. A valid claim must be made annually, through the Self-Assessment tax return, for each year relief is sought. Claims are made through the SA109 residence pages, in the section dealing with the foreign income and gains regime, alongside the SA106 foreign pages, which must still disclose all relevant foreign income even where relief is being claimed. Depending on the nature of the income, further supplementary pages may also be needed, such as SA108 for capital gains or SA107 for trust income.

The time limit for making a claim is 31 January in the second tax year following the end of the relevant tax year. For the 2025/26 tax year, ending 5 April 2026, the normal filing deadline is 31 January 2027, but the FIG claim deadline extends to 31 January 2028. The same time limit applies to foreign income claims and foreign capital gains claims alike. Anyone becoming UK resident for the first time who has not previously filed a return must also register for Self-Assessment with HMRC, generally by 5 October following the end of the tax year of arrival.

Because the relief is elective and must be actively claimed each year, missing the deadline results in the total loss of relief for that year, with no scope to carry it forward. Given the interaction with residence status, employment income, and overseas business activity, early preparation and accurate record-keeping of foreign income sources are essential.

Planning Beyond the Four-Year Period

Once the four-year FIG period ends, an individual who remains UK resident reverts to full worldwide taxation on the arising basis, with no further relief available on foreign income or gains, even if the underlying funds remain offshore. This transition can represent a significant change in tax exposure, so it is sensible to plan for it well before the final qualifying year concludes.

Practical steps to consider ahead of the transition include rebasing overseas assets while relief is still available, reviewing the structure of foreign investment portfolios, and making use of UK tax-efficient wrappers such as pensions and ISAs to hold future growth in a more sheltered environment. Individuals with significant offshore assets, property, or family investment structures are likely to benefit most from taking advice before the four-year window closes, rather than after.