What is the FIG Regime?
From 6 April 2025, the UK moved fully to taxing individuals on the arising basis for their worldwide income and gains. The remittance basis, which previously allowed certain non-UK domiciled individuals to defer UK tax on foreign income and gains until they were brought into the UK, is no longer available for new years from that date.
In its place, the government introduced a new system of relief for internationally mobile individuals known as the FIG regime. This regime is designed for people who come to the UK after at least 10 consecutive tax years of non-UK residence. Where the conditions are met, qualifying new residents can claim relief on most foreign income and gains that arise during their first four years of UK residence.
Importantly, eligibility is based on residence history rather than nationality or domicile status. Claims must be made in order to access the reliefs, and the way a claim is structured can affect allowances and other aspects of an individual’s tax position. The FIG regime therefore forms a central part of the new post-2025 landscape for individuals moving to, or returning to, the UK.
The Old Method: Remittance Basis
Before 6 April 2025, certain UK resident individuals who were non-domiciled could choose to be taxed on the remittance basis. Under that system, UK tax was charged on UK income and gains as they arose, but foreign income and gains were only taxed if they were brought into, or used in, the UK.
What is Remittance?
A remittance broadly meant bringing foreign income or gains into the UK, whether by transferring money to a UK bank account, using overseas funds to buy UK assets, or using those funds to pay for UK services. If foreign income or gains were kept outside the UK, they could remain outside the scope of UK tax while the remittance basis applied.
The End of Remittance Basis
From 6 April 2025, the remittance basis is no longer available for new tax years. All UK residents are now taxed on the arising basis on their worldwide income and gains. The FIG regime replaces the remittance basis as the primary relief for internationally mobile individuals, but the new rules operate differently and are time-limited to the first four years of UK residence for qualifying new residents.
It is important to recognise that guidance based on the remittance basis is now outdated for post-April 2025 years. Individuals who previously relied on the remittance basis, or who are considering moving to the UK, should review their position carefully to understand how the FIG regime applies in practice.
Why Did the UK Change?
From 6 April 2025, the UK moved away from a domicile-based system for taxing internationally mobile individuals and replaced it with a residence-based approach under the FIG regime. Previously, the availability of the remittance basis depended largely on an individual’s domicile status, which refers to the country an individual regards as their permanent home or has the strongest long-term connection to. Residence and domicile are different concepts, and the old system could be complex for long-term mobile individuals.
Over time, the remittance basis became increasingly complex due to deemed domicile rules, remittance basis charges of £30,000 and £60,000 for long-term residents, and detailed provisions on mixed funds and historic remittances. The FIG regime removes domicile as a factor and focuses on residence, providing a clearer and more consistent framework for taxing worldwide income and gains while offering time-limited relief to qualifying new residents.
Who Qualifies for the FIG Regime
Access to the FIG regime is not automatic. An individual must meet specific statutory conditions to be treated as a qualifying new resident for a particular tax year. The rules are designed to target genuinely internationally mobile individuals who are coming to the UK after a significant period of non-residence, rather than those with only a short absence.
Qualification is determined by reference to UK residence status under the Statutory Residence Test and by examining an individual’s recent residence history. Nationality and domicile are not relevant. A UK domiciled individual returning after a long period abroad can qualify in the same way as someone who has never previously lived in the UK.
Relief under the regime is available if a claim is made through Self Assessment. It applies for a maximum of four consecutive tax years, beginning with the first year in which the individual becomes a qualifying new resident. The regime cannot be extended, and unused years cannot be carried forward. If your first year of UK residence was before 6 April 2025, you may still access the regime from 2025-26 onwards, provided you are still within your four-year window.
Key Limitations
A few important limitations apply:
- You must actively claim the relief through your Self Assessment return
- You can choose which foreign income and gains to relieve, rather than claiming for everything
- You cannot claim the regime for any tax year in which you are non UK resident
- Unused years cannot be rolled forward
The 10-Year Rule
At the centre of the qualifying conditions is the requirement that the individual must have been non-UK resident for at least 10 consecutive tax years immediately before the relevant year of claim. This ensures that the regime is restricted to individuals who have made a genuine and sustained departure from the UK, rather than those who have been absent for only a short period.
The 10-year test is applied strictly. Residence is determined under the Statutory Residence Test. A year in which split-year treatment applies still counts as a full year of UK residence. Being treated as resident in another country under a double tax agreement does not override UK residence under the Statutory Residence Test when assessing the 10-year history.
If the test is met, the individual will be a qualifying new resident in their first year of UK residence and, provided they remain UK resident and continue to meet the conditions, for the following three tax years. If they become non-UK resident during that four-year period, they cannot claim for that year, and the missed year cannot be recovered later. In short, the 10-year rule establishes a clear boundary: only those who have spent a full decade outside the UK tax system can access the time-limited relief offered by the FIG regime.
Consequences of Claiming FIG
Making a claim under the FIG regime can provide significant relief on eligible foreign income and gains. However, it also affects a number of allowances, reliefs, and loss claims for that tax year . These consequences apply for each year in which a claim is made and should be reviewed carefully before submitting a return.
Loss of Personal Allowance
If you make a FIG claim for a tax year, you lose your Income Tax personal allowance for that year. This means your UK income will be taxed from the first pound, without the usual tax-free threshold. In addition, certain related allowances are also unavailable:
- Blind Person’s Allowance
- Marriage Allowance
- Married Couple’s Allowance
This can significantly increase the effective tax cost of claiming FIG, particularly if UK income is substantial.
Loss of Capital Gains Tax Annual Exempt Amount
For any year in which a FIG claim is made, you also lose access to the Capital Gains Tax annual exempt amount. As a result, any UK chargeable gains realised in that year will be fully taxable from the first pound of gain. This is an important consideration if you are planning disposals of UK assets, as it may be more efficient to realise gains in a year when no FIG claim is made.
Restriction on Foreign Loss Relief
A further consequence of claiming FIG is that certain foreign losses cannot be used in the year of claim. Specifically:
- Foreign trade losses and foreign property business losses cannot be set against UK income.
- Foreign capital losses on the disposal of foreign assets are not available for relief.
This prevents individuals from claiming exemption for foreign income and gains while also using foreign losses to reduce UK tax on other income or gains.
No Relief for Finance Costs on Foreign Property
If you claim under the FIG regime, finance costs relating to foreign rental properties, such as mortgage interest, cannot be relieved in that year. This restriction can materially affect the tax position of individuals with leveraged overseas property investments. Even if the underlying rental income qualifies for FIG relief, the inability to deduct finance costs may influence whether a claim is beneficial overall.
Impact of FIG Regime on LLC Interests
From 6 April 2025, the UK replaced the historic non-dom rules with a new tax regime. Individuals who were previously able to claim the remittance basis are now generally taxed on an arising basis on their worldwide income and gains, unless they qualify for the four-year FIG relief.
This change has significant implications for UK residents with interests in US LLCs. Under UK tax law, an LLC may be treated either as transparent (profits taxed as they arise) or opaque (profits taxed only on distribution). Unlike the US, there is no automatic “check-the-box” election in the UK, and HMRC generally treats LLCs as opaque. This can create potential double taxation, as US pass-through taxation may result in US tax being paid on profits before the UK taxes distributions.
Determining how a specific LLC is treated for UK tax purposes requires careful analysis of the entity’s structure, US law, and its operating agreement. For more detailed guidance on how US LLCs are classified and taxed in the UK, see our dedicated article on US LLCs and UK Tax Treatment.
What Income and Gains Qualify for FIG Relief?
Relief under the FIG regime applies only to specific categories of foreign income and gains. It is not a general exemption for anything earned outside the UK. Each source must fall within the permitted categories and meet the technical conditions of the regime.
Relievable Foreign Income and Gains
Overseas Property Income
Rental income from property situated outside the UK is generally eligible for relief. The property business must relate to non-UK land or buildings.
Foreign Dividends and Interest
Dividends from non-UK resident companies and interest arising from overseas sources, such as foreign bank accounts, can qualify. The key factor is that the income must be foreign in source.
Capital Gains on Foreign Assets
Gains on the disposal of non-UK assets are within scope, provided the asset does not derive 75 percent or more of its value from UK land. Assets that are UK land rich are excluded.
Profits from Overseas Trades
Profits from trades carried on wholly outside the UK may qualify. This includes an individual’s own trade or their share of partnership profits, but only where the trade is conducted entirely overseas.
Foreign Pension Income
Most foreign pension receipts fall within the regime, allowing eligible individuals to claim relief during the four-year FIG period.
Royalties and Offshore Investment Gains
Royalty income and other intellectual property income arising abroad can qualify, as can certain offshore income gains from overseas investment structures.
Foreign Employment Income
Income from overseas employment may be eligible, although it is usually capped. Relief is typically limited to the lower of £300,000 or 30 percent of total employment income from duties performed wholly or partly overseas.
Certain Non-UK Company and Trust Gains
In some cases, gains attributed to UK residents from non-UK resident close companies, and certain foreign income and gains connected with non-UK resident trusts, may also fall within the regime.
Income and Gains That Do Not Qualify
UK Source Income and Gains
The regime applies only to foreign income and gains. Any UK source income or UK chargeable gains remain taxable in full under normal rules.
Trades Carried On Partly in the UK
If a trade is carried on partly in the UK, its foreign profits are not eligible. The requirement is that the trade be conducted wholly outside the UK.
Offshore Bond Gains
Chargeable event gains arising from non-UK insurance policies, often described as offshore bonds, are specifically excluded from FIG relief.
Performance Income
Performance-related income does not qualify under the regime.
Cryptocurrency Gains
HMRC’s view is that cryptocurrency gains are situated where the beneficial owner is resident. For UK residents, this typically means such gains are treated as UK gains and therefore fall outside FIG relief.
Eligibility is highly technical. The classification of income, the location of assets, and the way a trade is structured can all affect whether relief is available. Careful analysis is essential before making a claim.
Temporary Repatriation Facility (TRF): What about Foreign Income from Pre-April 2025
For individuals who previously used the remittance basis, pre-6 April 2025 foreign income and gains may still exist that were never taxed in the UK. The Finance Act 2025 introduced the Temporary Repatriation Facility (TRF) to allow a limited window for these amounts to be brought into the UK at a lower tax rate.
The TRF applies for a fixed three-year period covering the 2025-26, 2026-27, and 2027-28 tax years. To use the facility, individuals must formally designate amounts of pre-April 2025 foreign income or gains as “qualifying overseas capital”. Once designated, these amounts are treated as capital on which the TRF charge is paid. Importantly, designated amounts do not need to be physically remitted to the UK during the TRF period to benefit from the lower rate, though remittance is permitted if desired.
The process of designation can include cash held overseas, investments, or assets purchased with pre-2025 income, such as property. Mixed funds are subject to specific ordering rules, with designated amounts treated as priority for remittance. Because the rules governing the TRF are highly technical, determining eligibility, calculating designated amounts, and planning the timing of remittances can be complex. Professional advice is strongly recommended to ensure compliance and optimise the potential tax benefit.
What Happens When the Four-Year FIG Relief Ends
Once an individual’s four-year period under the Foreign Income and Gains (FIG) regime concludes, all eligible foreign income and gains that were previously relieved will be subject to UK taxation on the arising basis. Under the arising basis, UK residents are taxed on their worldwide income and gains as they arise, regardless of whether the funds are brought into the UK. This marks a return to the standard UK treatment for individuals who are domiciled or deemed domiciled, and is a key consideration for planning once FIG relief expires.
Income and gains arising after the FIG period will automatically be included in the individual’s UK tax return. This includes foreign employment income, dividends, interest, rental income, and capital gains, among others. While FIG allowed relief regardless of remittance, the arising basis does not provide this flexibility: all qualifying income and gains are taxable in the UK, though double tax relief may be available for taxes already paid abroad.
Although the arising basis brings a more comprehensive reporting requirement, it also restores access to certain UK tax allowances, including the personal allowance for income tax and the annual exempt amount for capital gains tax. This can partially offset the additional UK tax liability that arises from worldwide taxation. Individuals transitioning from FIG should consider reviewing their foreign assets and income streams carefully and may benefit from professional advice to manage the interaction of overseas tax obligations and UK reliefs effectively.
The Risk of Double Taxation on Arising Basis
When the FIG relief period ends and an individual moves onto the arising basis, foreign income and gains become fully subject to UK tax, even if they are also taxable in another jurisdiction. For US citizens and other expatriates, this creates a real risk of double taxation, as the same income may be liable to both UK and US tax.
To mitigate this, taxpayers can typically rely on foreign tax credits (FTCs) or double taxation treaties. The UK–US treaty, for example, allows US expats to claim credit for UK tax paid on foreign income against their US tax liability. Similarly, taxes paid in the US can often reduce UK liability through unilateral relief provisions. Planning ahead is crucial: timing of remittances, structuring foreign investments, and reviewing tax residency status can all help minimise overlap.
Careful record-keeping of foreign taxes paid and income sources is essential for claiming relief efficiently. Professional advice is strongly recommended, especially for US expats, to ensure that both UK and US reporting obligations are met and that the available credits and reliefs are fully utilised. This can prevent unexpected tax liabilities once FIG protection ends.
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