Understanding the New Foreign Income and Gains (FIG) Regime (Replacing Non-Domiciled Tax Rules) Works in the UK!
- Adil Akhtar
- May 31, 2024
- 22 min read
Updated: Jun 26
What is the FIG regime, and how does it work from 6 April 2025?
Let’s get straight to it: the Foreign Income and Gains (FIG) regime, kicking off on 6 April 2025, is a game-changer for UK taxpayers with overseas income or assets. It replaces the old remittance basis, which let non-domiciled (non-dom) residents avoid UK tax on foreign earnings unless they brought them into the country. The FIG regime scraps the concept of domicile entirely, offering a four-year tax holiday on foreign income and gains for new UK residents who’ve been non-resident for at least 10 consecutive years. You don’t pay UK tax on these earnings, even if you bring them to the UK, but you’ll need to claim this relief through your self-assessment tax return by 31 January in the second year following the tax year (e.g., 31 January 2028 for 2025/26). Sounds appealing, right? But there’s more to unpack.
Why was the remittance basis scrapped?
Now, you might be wondering why the UK ditched a 200-year-old system. The remittance basis, while attractive for wealthy non-doms, was complex and divisive. It allowed non-doms to keep foreign earnings tax-free offshore, but it came with strings attached—like a £30,000 or £60,000 Remittance Basis Charge for long-term residents. The government, aiming to simplify taxes and align with global norms, announced in the 2024 Spring Budget that domicile would no longer matter for income tax, capital gains tax (CGT), or inheritance tax (IHT) from 6 April 2025. The FIG regime is designed to make the UK competitive for new residents, like tech entrepreneurs or returning expats, while ensuring long-term residents pay tax on worldwide income. It’s a bold shift, but not without trade-offs.
Who can claim FIG relief?
Here’s the deal: not everyone qualifies for FIG relief. You’re eligible if you’re a “qualifying new resident,” meaning you’ve become UK tax resident under the Statutory Residence Test (SRT) after at least 10 consecutive years of non-UK residency. This applies whether you’re a foreign national or a British expat returning home. For example, if you moved to the UK in 2023/24, you could claim relief for 2025/26 and 2026/27 if you’re still resident. The relief lasts for up to four tax years, but if you leave the UK temporarily (say, in 2027/28), you can’t “pause” the clock—you only claim relief for the years you’re resident within that four-year window. MPs and Lords, however, are excluded.
What types of income and gains qualify?
So, what exactly gets this tax-free treatment? The FIG regime covers most foreign income and gains, including:
Profits from a trade conducted wholly outside the UK (e.g., an overseas business).
Rental income from foreign properties.
Dividends from non-UK companies.
Capital gains from selling overseas assets, like shares or property.
Earnings from foreign employment (if eligible for Overseas Workday Relief, or OWR).
But be careful! Not all foreign income qualifies, and you’ll need to check HMRC’s manual RFIG45100 for specifics. For instance, income from UK-connected trusts may not be exempt. You also choose which income or gains to claim relief on, giving you flexibility to optimize your tax bill.
Qualifying Income and Gains Under the FIG Regime
This document outlines the types of income and gains that qualify for tax-free treatment under the Foreign Income and Gains (FIG) regime. Understanding these categories is crucial for individuals seeking to leverage the benefits of this regime and optimize their tax liabilities. The FIG regime offers significant tax advantages for UK residents with foreign income and gains, but it's essential to determine which sources of income are eligible for this preferential treatment.
The FIG regime covers a broad spectrum of foreign income and gains, offering potential tax benefits for individuals with diverse international financial interests. The following categories of income and gains typically qualify for tax-free treatment under the FIG regime:
Profits from a Trade Conducted Wholly Outside the UK
This category encompasses profits generated from business activities conducted entirely outside the United Kingdom. To qualify, the trade must be managed and controlled from outside the UK, with no significant business activities taking place within the UK.
Key Considerations:
Wholly Outside the UK: The business operations, including management, sales, and production, must be conducted outside the UK.
Management and Control: The day-to-day management and strategic decision-making for the business should occur outside the UK.
Substantial Activities: The business must have substantial activities and a physical presence outside the UK. A mere post office box or a nominee director is insufficient.
Example: A UK resident owns and operates a manufacturing business in Germany, with all production, sales, and management activities taking place in Germany. The profits from this business would likely qualify under this category.
Rental Income from Foreign Properties
Rental income derived from properties located outside the UK is generally eligible for tax-free treatment under the FIG regime. This includes income from residential, commercial, or agricultural properties.
Key Considerations:
Property Location: The property must be located outside the UK.
Rental Activities: The income must be derived from genuine rental activities, such as leasing the property to tenants.
Deductible Expenses: Expenses related to the property, such as maintenance, repairs, and property management fees, can be deducted from the rental income.
Example: A UK resident owns an apartment in Spain and rents it out to tourists. The rental income from this property would likely qualify under this category.
Dividends from Non-UK Companies
Dividends received from companies that are not resident in the UK are generally eligible for tax-free treatment under the FIG regime. This includes dividends from both publicly traded and privately held companies.
Key Considerations:
Company Residence: The company paying the dividend must be resident outside the UK.
Dividend Income: The income must be classified as a dividend, which is a distribution of profits to shareholders.
Tax Treaties: The UK may have tax treaties with other countries that affect the taxation of dividends.
Example: A UK resident owns shares in a French company and receives dividends from that company. The dividend income would likely qualify under this category.
Capital Gains from Selling Overseas Assets
Capital gains realized from the sale of assets located outside the UK are generally eligible for tax-free treatment under the FIG regime. This includes gains from the sale of shares, property, and other investments.
Key Considerations:
Asset Location: The asset must be located outside the UK. For shares, this typically means the company is not UK resident. For property, it means the property is physically located outside the UK.
Capital Gain Calculation: The capital gain is calculated as the difference between the sale price and the purchase price of the asset, less any allowable expenses.
Tax Treaties: The UK may have tax treaties with other countries that affect the taxation of capital gains.
Example: A UK resident sells a vacation home in Italy for a profit. The capital gain from the sale would likely qualify under this category.
Earnings from Foreign Employment (if eligible for Overseas Workday Relief, or OWR)
Earnings from employment performed outside the UK may be eligible for tax-free treatment under the FIG regime if the individual qualifies for Overseas Workday Relief (OWR). OWR is a special tax relief available to certain UK residents who work both in the UK and overseas.
Key Considerations:
Overseas Workdays: The individual must have worked outside the UK for a certain number of days during the tax year.
UK Residence: The individual must be resident in the UK for tax purposes.
OWR Eligibility: The individual must meet the specific eligibility requirements for OWR, which may include limitations on the amount of time spent in the UK.
Reporting Requirements: The individual must report their foreign earnings to HMRC and claim OWR.
Example: A UK resident works for a multinational company and spends a significant portion of their time working in the company's overseas offices. If they meet the eligibility requirements for OWR, a portion of their earnings may be tax-free.
Disclaimer: This information is for general guidance only and does not constitute professional tax advice. The specific rules and regulations governing the FIG regime can be complex and may vary depending on individual circumstances. It is essential to consult with a qualified tax advisor to determine the tax implications of your specific situation.
How does the statutory residence test determine eligibility?
Now, let’s talk about the Statutory Residence Test (SRT)—it’s the gatekeeper for FIG eligibility. The SRT determines if you’re UK tax resident based on factors like days spent in the UK, work ties, and family connections. For FIG, you need to have been non-resident for 10 consecutive tax years before becoming resident. If you arrive mid-tax year (e.g., July 2025), you might qualify for “split-year” treatment, where only part of the year counts as UK residency, but it still uses one of your four FIG years. Check HMRC’s RDR3 guidance to nail down your status, as getting this wrong could cost you the relief.
Table: Remittance Basis vs. FIG Regime (2025/26)
Feature | Remittance Basis (pre-2025) | FIG Regime (2025 onwards) |
Eligibility | Non-doms (based on domicile status) | New residents after 10 years non-UK residency |
Duration | Up to 7–15 years (with charges after 7 years) | 4 tax years max |
Tax Relief | Foreign income/gains tax-free unless remitted | 100% relief, even if remitted to UK |
Allowances Lost | Personal allowance, CGT exempt amount | Personal allowance, CGT exempt amount |
Claim Process | Annual election via self-assessment | Annual claim via self-assessment (by 31 Jan) |
Cost | £30,000/£60,000 charge for long-term residents | No charge |
A real-world example: Priya’s move to London
Picture this: Priya, a 35-year-old tech founder from Mumbai, moves to London in April 2025 to launch her startup’s UK branch. She hasn’t lived in the UK for 12 years, so she qualifies for FIG relief. In 2025/26, she earns £50,000 from her UK job and £100,000 in dividends from her Indian company. By claiming FIG relief, she avoids UK tax on the £100,000, even if she transfers it to her UK bank account. However, she loses her £12,570 personal allowance and £3,000 CGT exempt amount, so her UK income is taxed at 20% from the first pound. Priya’s savvy enough to consult a tax advisor to ensure her claim is filed correctly by 31 January 2028.
Making the FIG Regime Work for You and Your Business
How do I claim FIG relief on my tax return?
Right, let’s get practical: claiming Foreign Income and Gains (FIG) relief isn’t automatic—you’ve got to roll up your sleeves and tackle your self-assessment tax return. From 6 April 2025, if you’re a qualifying new resident (10+ years non-UK residency), you’ll need to file a UK tax return by 31 January following the tax year (e.g., 31 January 2028 for 2025/26). You’ll report your foreign income and gains in the “Foreign” section (SA106) of the return, ticking the box to claim FIG relief. HMRC’s RFIG45100 manual spells this out clearly. Sounds straightforward, but miss the deadline, and you’re stuck paying tax on that foreign cash. Paper filers, take note: your deadline’s earlier—31 October. To make this crystal clear, here’s a step-by-step guide.
Step-by-Step Guide: Claiming FIG Relief
Confirm Eligibility: Use the Statutory Residence Test (SRT) to verify you’re UK resident and were non-resident for 10 prior years. HMRC’s RDR3 tool on GOV.UK helps.
Gather Records: Collect proof of foreign income/gains (e.g., bank statements, dividend vouchers, property sale contracts). Keep these for six years in case HMRC asks.
Register for Self-Assessment: If you’re new to UK tax, register by 5 October after the tax year (e.g., 5 October 2026 for 2025/26) via GOV.UK.
Complete SA106: Report all foreign income/gains, including those you’re claiming relief on. Specify FIG relief in the relevant box.
File by 31 January: Submit online for speed. Late filings trigger a £100 penalty, even if no tax is due.
Double-Check Double Taxation: If you paid foreign tax, claim relief to avoid double taxation (more on this below).
Keep HMRC Updated: If your residency status changes mid-year, notify HMRC to adjust your claim.
What are the best tax planning strategies for FIG?
Now, here’s where things get interesting: the FIG regime gives you a four-year window to be tax-smart. Since you can choose which foreign income or gains to claim relief on, timing is everything. Say you’re sitting on a hefty capital gain from selling overseas shares—wait until your first FIG year to sell, and it’s tax-free in the UK, even if you bring the proceeds here. But there’s a catch: claiming FIG relief means losing your £12,570 personal allowance and £3,000 CGT exempt amount for that year, so crunch the numbers. For high earners, this trade-off often makes sense, as 45% income tax or 28% CGT on foreign gains adds up fast.
Another savvy move? Use double taxation treaties (DTTs). The UK has over 100 DTTs to prevent you paying tax twice on the same income. For instance, if you pay 15% tax on US dividends, you can claim a credit against UK tax (if you don’t claim FIG relief on those dividends). Check HMRC’s DT Digest on GOV.UK for treaty details. Also, consider deferring UK income (e.g., bonuses) to years when you don’t claim FIG relief to preserve your personal allowance. A tax advisor can model these scenarios to save you thousands.
How does FIG affect business owners with foreign income?
So, you’re a business owner with overseas operations—how does FIG fit in? If you’re a new UK resident running a trade wholly outside the UK (e.g., a Dubai consultancy), your foreign profits can be FIG-exempt for 4 years. This is huge for entrepreneurs like Idris, who we’ll meet soon. But if your business has a UK arm, only the foreign portion qualifies. For employees of international firms, Overseas Workday Relief (OWR) dovetails with FIG: if you work abroad part-time, a portion of your salary can be tax-free, provided you meet OWR rules (see HMRC’s RFEIG45000).
Be warned, though: FIG claims can impact your UK business. Without a personal allowance, your UK profits face tax from the first pound, bumping up your effective rate. Also, if you’re extracting foreign profits as dividends, time them within your FIG window to avoid UK dividend tax (up to 39.35% in 2025/26). For complex setups, like holding companies abroad, get specialist advice to avoid HMRC’s anti-avoidance rules.
What is the Temporary Repatriation Facility, and should I use it?
Now, let’s talk about the Temporary Repatriation Facility (TRF)—a transitional perk for former non-doms. If you were on the remittance basis before 6 April 2025, you can bring previously untaxed foreign income or gains to the UK at a reduced tax rate: 12% in 2025/26 and 2026/27, rising to 15% in 2027/28. This applies to income earned before 2025/26, not new FIG-eligible income. You’ll claim TRF via your self-assessment, but it’s a one-shot deal per tax year, so plan carefully.
Should you use it? Depends. If you’ve got £500,000 in offshore gains from 2020, remitting them in 2025/26 costs £60,000 in tax via TRF versus £140,000 at the standard 28% CGT rate. But if you’re eligible for FIG relief as a new resident, you might not need TRF—your new foreign gains are tax-free anyway. The TRF shines for those transitioning from non-dom status with old, unremitted funds. Check HMRC’s RFIG44000 for eligibility.
What happens if I miss reporting foreign income?
Be careful! Failing to report foreign income, even if FIG-eligible, can land you in hot water. HMRC’s Worldwide Disclosure Facility (WDF) targets unreported offshore income, with penalties up to 100% of tax due for negligence (or 200% for deliberate errors). If you don’t claim FIG relief by the deadline, your foreign income becomes taxable at standard rates: up to 45% for income, 28% for CGT (2025/26 rates). Late self-assessment filings start with a £100 fine, escalating to £300 or 5% of tax due after six months. HMRC’s “no safe havens” approach means they’ll chase you via data-sharing agreements with countries like Switzerland or Singapore.
Table: FIG Claim Deadlines and Penalties (2025–2028)
Tax Year | Self-Assessment Deadline | Penalty for Late Filing | Penalty for Unreported FIG Income |
2025/26 | 31 Jan 2028 (online) | £100 (initial), up to £1,600 | Up to 100% of tax due (negligence) |
2026/27 | 31 Jan 2029 (online) | Same as above | Same as above |
2027/28 | 31 Jan 2030 (online) | Same as above | Same as above |
Case study: Idris returns from Dubai
Picture Idris, a 42-year-old British expat who’s lived in Dubai since 2013, returning to Manchester in May 2025. He sells his Dubai rental property in 2025/26, netting a £200,000 gain. As a new UK resident after 12 years abroad, he claims FIG relief, avoiding £56,000 in CGT (28% rate). He also earns £80,000 in UK salary, but without his personal allowance, he pays 20% tax from pound one. Idris uses a DTT to offset 10% UAE tax on his old Dubai savings against UK tax, saving £2,000. By timing his property sale in his first FIG year, he maximizes relief, but he files early (December 2027) to avoid penalties.
Essential Points to Master the FIG Regime in 2025
What are the top 10 things to know about FIG?
Replaces remittance basis with four-year tax relief for new residents after 10 years non-residency.
Requires SRT UK residency and 10-year non-residency; MPs/Lords excluded.
Covers foreign dividends, rents, gains, and certain employment income.
Claiming relief forfeits £12,570 personal allowance and £3,000 CGT exemption.
File SA106 by 31 January (online) or 31 October (paper).
TRF taxes pre-2025/26 income at 12% (2025/26–2026/27) or 15% (2027/28).
Use DTTs to offset foreign taxes.
Business owners exempt foreign profits but lose UK allowances.
Non-reporting risks 100% tax penalties via WDF.
Timing income/gains in FIG years saves tax with advisor planning.
How does FIG compare to other countries’ tax regimes?
The UK’s FIG offers 100% relief for four years without investment thresholds, unlike Italy’s 15-year €100,000 flat tax or Portugal’s 20% NHR rate. FIG’s allowance loss makes it less ideal for high UK income earners.
Table: FIG Regime vs. Other Countries’ Tax Incentives
Country | Regime Name | Duration | Tax Relief | Key Conditions |
UK | FIG Regime | 4 years | 100% on foreign income/gains | 10 years non-residency, SRT |
Italy | Flat Tax Regime | 15 years | €100,000 flat tax on foreign income | €200,000 family fee |
Portugal | NHR (pre-2024) | 10 years | 20% flat rate on certain income | Residency, no prior residency |
What niche scenarios should I watch out for?
Split-year residents use one FIG year for partial residency. Athletes/entertainers face complex income classifications. IHT applies to worldwide assets after two years of residency. Foreign trusts may not qualify for FIG relief.
Why should I consult a tax advisor for FIG?
Advisors ensure correct filings, navigate OWR, anti-avoidance rules, and optimize FIG vs. TRF decisions, preventing costly errors.
Case study: Elowen’s freelance hustle
Elowen, a freelancer moving to Bristol in 2025 after 11 years in Canada, earns £30,000 from Canadian clients and £40,000 UK income, saving £4,200 CGT on a stock sale via FIG relief. She files early and uses DTT credits, guided by an advisor.
Check HMRC’s RFIG44000 and RFIG45100 on GOV.UK for details or consult a tax professional.
A Case Study of the Foreign Income and Gains (FIG) Regime in Action
Tamsin’s profile and the relevance of her story
Let’s dive into a practical example to see how the Foreign Income and Gains (FIG) regime, effective from 6 April 2025, works in real life. Meet Tamsin, a 38-year-old freelance consultant who relocated to Edinburgh in July 2025 after 12 years in Singapore. Her experience illustrates how UK taxpayers and business owners can harness FIG relief, avoid common pitfalls, and plan strategically. Tamsin’s case highlights the regime’s flexibility, the importance of timing income and asset sales, and the need for careful tax planning, making it a valuable guide for anyone eyeing this tax break.
Tamsin’s income and assets in the UK
Imagine this: Tamsin runs a thriving consultancy in Singapore, earning £120,000 annually from Asian clients. She also owns a Singapore rental property generating £30,000 a year and holds £200,000 in shares from a Singapore tech startup she advised. In her first UK tax year (2025/26), she earns £50,000 from UK clients, continues her Singapore consultancy, and plans to sell her shares for a £150,000 gain. As a new UK resident after 12 years abroad, she’s primed to use FIG relief, but her decisions will significantly impact her tax obligations.
Confirming Tamsin’s FIG eligibility
Establishing eligibility is the first step. The FIG regime requires 10 consecutive years of non-UK residency, which Tamsin satisfies, having lived in Singapore since 2013. She qualifies as a UK resident under the Statutory Residence Test (SRT) from July 2025, spending over 183 days in the UK and establishing a permanent home in Edinburgh. Her mid-year arrival triggers split-year treatment, counting 2025/26 as one of her four FIG years. Tamsin confirms her status using HMRC’s RDR3 guidance to ensure she’s on solid ground.
Foreign income and gains eligible for exemption
Tamsin’s income streams are a perfect fit for FIG relief. Her £120,000 Singapore consultancy income qualifies as foreign trade profits, as the work occurs entirely outside the UK via virtual client meetings. The £30,000 from her Singapore rental property is also eligible, being derived from a non-UK asset. Her £150,000 gain from selling Singapore shares counts as a foreign capital gain, fully exempt if claimed under FIG. Unlike the old remittance basis, she can transfer these funds to her UK account tax-free, a major advantage for her plan to buy a home in Edinburgh.
Trade-offs of claiming FIG relief
There’s a catch: claiming FIG relief means Tamsin loses her £12,570 personal allowance and £3,000 CGT exempt amount for 2025/26. Her £50,000 UK income faces 20% tax from the first pound, costing £10,000 instead of £7,486 with the allowance. Without FIG relief, her share sale would incur 28% CGT (£42,000). By claiming FIG, she saves £42,000 on the shares and £33,600 on her Singapore income (28% higher rate), but pays an extra £2,514 on UK income. After crunching the numbers, Tamsin sees the £75,600 in savings outweighs the added UK tax.
Filing for FIG relief
Filing correctly is critical. Tamsin registers for self-assessment by 5 October 2026, her first UK tax year. She collects records—Singapore bank statements, rental agreements, share sale contracts—to support her FIG claim. By 31 January 2028, she files her 2025/26 return online, reporting £120,000 consultancy income, £30,000 rental income, and £150,000 share gain in the SA106 “Foreign” section, ticking the FIG relief box. She keeps records for six years in case HMRC audits and submits early in December 2027 to avoid a £100 penalty.
Leveraging double taxation relief
Tamsin paid 17% tax (£20,400) on her Singapore consultancy income. The UK-Singapore double taxation treaty allows a credit, but only if she skips FIG relief on that income. Since FIG saves £33,600 (28% UK tax), she chooses it over the credit. For her rental income, Singapore’s 10% tax (£3,000) is lower, so she considers claiming a treaty credit instead of FIG relief to preserve her personal allowance in future years. Her advisor models both options to find the best approach.
Utilising the Temporary Repatriation Facility
Tamsin has £80,000 in unremitted 2023 Singapore income from her remittance basis days. The Temporary Repatriation Facility (TRF) allows her to bring this to the UK at 12% tax (£9,600) in 2025/26, versus 45% (£36,000) at standard rates. Since her new income is FIG-eligible, TRF is ideal for these old funds. She claims it via her 2025/26 return, ensuring the funds arrive before 5 April 2027 to secure the 12% rate.
Planning for future FIG years
With three FIG years left (2026/27–2028/29), Tamsin plans strategically. She aims to sell £100,000 in Singapore shares in 2026/27, saving £28,000 in CGT. Her advisor suggests deferring UK bonuses to 2029/30 to regain her personal allowance, reducing her UK tax rate. She also plans to wind down her Singapore consultancy by 2028/29, shifting to UK clients as her FIG window closes, maximising tax-free income.
Risks Tamsin faces
Mistakes carry big consequences. Misreporting income or missing the 31 January 2028 deadline could trigger HMRC’s Worldwide Disclosure Facility, with penalties up to 100% of tax due (£75,600). Claiming FIG on UK-connected income, like trust distributions, risks disallowance. After two years of residency, her worldwide assets, including her Singapore property, face 40% IHT, a shift from the old 17-year non-dom rule, requiring careful estate planning.
Lessons from Tamsin’s experience
Tamsin’s case underscores the FIG regime’s potential and complexity. Timing asset sales, balancing FIG and treaty relief, and filing accurately are key. Business owners benefit by aligning foreign income with the FIG window and using advisors to navigate split-year rules and IHT risks. Her approach—strategic, documented, and advised—offers a roadmap for new residents to maximize tax savings while staying compliant.
The Role of Tax Accountants in Assisting with the Foreign Income and Gains (FIG) Regime
The necessity of tax accountants for the FIG regime
Navigating the Foreign Income and Gains (FIG) regime, effective from 6 April 2025, is no small task, and tax accountants are essential allies. With its complex eligibility rules, strict filing deadlines, and hefty penalties for errors, the FIG regime demands expertise to maximize benefits. Whether you’re an expat returning to the UK or a business owner with overseas income, accountants ensure you secure tax relief, avoid HMRC pitfalls, and plan strategically. Their role transforms the regime’s complexity into a powerful tool for tax savings, making them indispensable for new UK residents.
Confirming eligibility for FIG relief
Determining FIG eligibility hinges on proving 10 consecutive years of non-UK residency under the Statutory Residence Test (SRT). Tax accountants meticulously review your residency history, analyzing travel logs, employment records, and UK ties to confirm you qualify as a new resident. For example, they’ll check if a 100-day UK visit in 2017/18 breaks your non-residency streak. They also handle split-year treatment for mid-year arrivals, ensuring your first FIG year is correctly claimed without jeopardling errors that could disqualify you.
Managing self-assessment filings
Filing for FIG relief through self-assessment is critical, with deadlines of 31 January (online) or 31 October (paper) after the tax year. Missing these triggers a £100 fine, with unreported income risking 100% tax penalties. Accountants streamline this by collecting records like foreign bank statements or asset sale contracts, accurately completing the SA106 “Foreign” section, and filing early. For someone like Tamsin, our case study from Part 4, an accountant ensures her £150,000 Singapore share gain is claimed correctly, saving £42,000 in CGT.
Optimising FIG tax strategies
Tax accountants shine in strategic planning, leveraging the FIG regime’s flexibility to choose which income or gains to exempt. They might advise selling a foreign property in 2025/26 to avoid 28% CGT (£56,000 on a £200,000 gain) but weigh the cost of losing your £12,570 personal allowance. For high UK earners, they could recommend skipping FIG relief on smaller income streams to preserve allowances later. They also coordinate double taxation treaties, calculating whether a 15% foreign tax credit on, say, Canadian dividends outweighs FIG relief, ensuring maximum savings.
Handling the Temporary Repatriation Facility
The Temporary Repatriation Facility (TRF) allows former non-doms to remit pre-2025/26 income at 12% (2025/26–2026/27) or 15% (2027/28). Accountants analyze your pre-2025 offshore funds, calculate TRF savings versus standard 45% rates, and ensure accurate self-assessment claims. For £100,000 in 2023 income, they could save £33,000 by using the TRF’s 12% rate. They’ll also time remittances before 5 April 2027 to lock in the lower rate, preventing costly missteps.
Supporting business owners with foreign income
Business owners with overseas operations rely on accountants to maximize FIG benefits. Accountants confirm that profits from trades wholly outside the UK, like a Hong Kong consultancy, qualify for relief, while separating them from UK operations. They navigate Overseas Workday Relief (OWR) for employees splitting time abroad, ensuring tax-free income. For complex structures, like offshore holding companies, they avoid HMRC’s General Anti-Abuse Rule (GAAR), potentially saving £50,000 by timing foreign dividends within the FIG window to dodge 39.35% UK tax.
Mitigating risks and penalties
HMRC’s Worldwide Disclosure Facility (WDF) imposes penalties up to 100% of tax due for unreported income (200% for deliberate errors). Accountants prevent this by ensuring accurate reporting, timely filings, and six years of record-keeping. They catch errors, like claiming FIG on UK-connected trust income, which could be disallowed. If HMRC audits, accountants manage correspondence, minimizing penalties. For a £100,000 misreported gain, their intervention could save a £28,000 penalty, keeping you compliant.
Addressing inheritance tax implications
The FIG regime doesn’t cover inheritance tax (IHT), but the 2025 residence-based IHT rules affect FIG users. After two years of UK residency, worldwide assets face 40% IHT, unlike the old 17-year non-dom rule. Accountants assess exposure—say, a £500,000 foreign property—and recommend gifting assets or setting up trusts before the two-year mark. They ensure FIG claims don’t trigger IHT issues, like taxing foreign trust distributions as UK income, safeguarding your estate.
Navigating niche FIG scenarios
Complex cases, like athletes with foreign sponsorships or split-year residents, require accountants’ expertise. They classify tricky income sources, such as royalties or prize money, for FIG eligibility. For split-year cases, they optimize partial-year relief. They also handle edge cases, like temporary non-residency or UK-connected trusts, ensuring compliance with HMRC’s RFIG44000 and RFIG45100 manuals. Without their guidance, you risk missing relief or facing unexpected tax liabilities.
Evaluating the cost-benefit of accountants
Tax accountants charge £500–£2,000 for FIG-related work, but the savings can be substantial. For £200,000 in foreign income, they could save £56,000 by optimizing FIG claims, far exceeding their fee. They also save time, reduce stress, and protect against penalties, making them a wise investment for anyone navigating the FIG regime’s complexities.
Table: Benefits of Tax Accountants for FIG Regime
Task | Accountant’s Role | Potential Savings |
Eligibility Confirmation | Verifies 10-year non-residency via SRT | Avoids disallowed claims |
Self-Assessment Filing | Ensures accurate SA106 filing by deadlines | Prevents £100–£1,600 penalties |
Tax Planning | Times income/gains, coordinates treaties | Up to £50,000+ in tax savings |
TRF Management | Optimizes pre-2025 income remittance | Saves up to 33% vs. standard rates |
Risk Mitigation | Ensures compliance, handles audits | Avoids 100% tax penalties |
The value of accountants as FIG allies
Tax accountants turn the FIG regime’s challenges into opportunities. They confirm eligibility, file accurately, optimize strategies, and mitigate risks like IHT or WDF penalties. For freelancers, expats, or business owners, their expertise ensures you maximize tax-free foreign income while staying HMRC-compliant, making them essential partners in your FIG journey.
FAQs
Q1: **What is the purpose of the FIG regime introduced on 6 April 2025?**
A1: The FIG regime aims to simplify UK taxation by replacing the remittance basis, attracting new residents with a four-year tax exemption on foreign income and gains while ensuring long-term residents pay tax on worldwide income.
Q2: **How does the FIG regime differ from the non-dom status?**
A2: Unlike non-dom status, which relied on domicile and taxed foreign income only when remitted, the FIG regime uses residency status, offering tax-free foreign income and gains for four years, regardless of remittance.
Q3: **Can someone claim FIG relief if they’ve been non-resident for less than 10 years?**
A3: No, individuals must have been non-resident for at least 10 consecutive tax years to qualify for FIG relief.
Q4: **Does the FIG regime apply to UK nationals returning after living abroad?**
A4: Yes, UK nationals who return after 10 or more years of non-UK residency can claim FIG relief as qualifying new residents.
Q5: **What happens to FIG eligibility if someone leaves the UK during the four-year period?**
A5: If someone leaves the UK, they cannot claim FIG relief for non-resident years, and the four-year window continues without pause, using up eligible years.
Q6: **Can FIG relief be claimed for foreign pensions?**
A6: Certain foreign pensions may qualify for FIG relief, but only if they meet HMRC’s criteria for foreign income and are not UK-connected.
Q7: **How does the FIG regime impact National Insurance contributions?**
A7: The FIG regime does not directly affect National Insurance contributions, which are based on UK earnings and residency, not foreign income.
Q8: **Is there a limit to the amount of foreign income eligible for FIG relief?**
A8: No, there is no monetary cap on foreign income or gains eligible for FIG relief, provided they meet the qualifying criteria.
Q9: **Can someone claim FIG relief for foreign income earned before moving to the UK?**
A9: FIG relief applies only to foreign income and gains earned during the four-year period after becoming a UK resident, not prior earnings.
Q10: **Does claiming FIG relief affect eligibility for UK tax credits?**
A10: Claiming FIG relief may reduce eligibility for certain tax credits, as losing the personal allowance increases taxable income, impacting means-tested benefits.
Q11: **Can a spouse or partner also claim FIG relief if one partner qualifies?**
A11: Each individual must independently meet the 10-year non-residency requirement to claim FIG relief, regardless of their partner’s status.
Q12: **How does the FIG regime interact with UK trust taxation?**
A12: Foreign income or gains from trusts may not qualify for FIG relief if the trust is UK-connected, requiring careful review of trust structures.
Q13: **Can FIG relief be claimed for cryptocurrency gains earned abroad?**
A13: Yes, capital gains from selling foreign-held cryptocurrencies can qualify for FIG relief, provided they meet the foreign gains criteria.
Q14: **What records must be kept to support an FIG relief claim?**
A14: Individuals should keep detailed records, such as bank statements, dividend vouchers, and asset sale contracts, for six years to substantiate FIG claims.
Q15: **Does the FIG regime affect eligibility for UK social security benefits?**
A15: FIG relief itself does not directly impact social security benefits, but increased taxable income from losing allowances may affect means-tested benefits.
Q16: **Can FIG relief be claimed retroactively for a previous tax year?**
A16: FIG relief cannot be claimed retroactively for past tax years unless an amended return is filed within the allowable time limits set by HMRC.
Q17: **How does the FIG regime apply to foreign rental properties?**
A17: Rental income from properties located outside the UK qualifies for FIG relief, provided it is claimed on the self-assessment tax return.
Q18: **Can FIG relief be combined with other UK tax reliefs?**
A18: FIG relief can be combined with reliefs like double taxation credits, but some reliefs, like EIS or SEIS, may be limited due to lost allowances.
Q19: **What are the tax implications for FIG-eligible individuals after the four-year period?**
A19: After the four-year FIG period, individuals are taxed on their worldwide income and gains at standard UK rates, with access to personal allowances restored.
Q20: **Can businesses claim FIG relief for foreign subsidiaries?**
A20: FIG relief applies to individual taxpayers, not corporate entities, but business owners can claim relief on foreign profits from personally owned overseas trades.
About The Author:
Adil Akhtar, ACMA, CGMA, CEO and Chief Accountant of Pro Tax Accountant, is an esteemed tax blog writer with over 10 years of expertise in navigating complex tax matters. For more than three years, his insightful blogs have empowered UK taxpayers with clear, actionable advice. Leading Advantax Accountants as well, Adil blends technical prowess with a passion for demystifying finance, cementing his reputation as a trusted authority in tax education.
Email: adilacma@icloud.com
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