Tax Planning for New Arrivals to the UK: The FIG Regime and Pre-Arrival Strategy

For most of the twentieth century, the UK's approach to internationally mobile high-net-worth individuals was the remittance basis: non-domiciled UK residents could avoid UK tax on foreign income and gains by simply not bringing the money into the UK. The system was complex, not always effective, and after repeated reforms culminated in its abolition from April 2025.

In its place, the UK introduced the Foreign Income and Gains (FIG) regime — a clean four-year exemption for new UK arrivals on all foreign income and gains, without the need to track remittances, claim an annual basis charge, or maintain the complex offshore structures that the remittance basis had spawned.

For high-net-worth individuals considering relocating to the UK, the FIG regime represents both a genuine improvement in accessibility and a significant time-limited planning opportunity. This guide explains how it works, who qualifies, what it covers, and how to maximise its value before and during the four-year window.

What the FIG Regime Does

The FIG regime provides a complete exemption from UK income tax and capital gains tax on foreign income and gains for the first four tax years of UK residency, for individuals who qualify. During those four years:

• Dividends received from overseas holdings: exempt from UK tax
• Rental income from overseas properties: exempt from UK tax
• Interest income from overseas accounts and bonds: exempt from UK tax
• Capital gains on overseas assets sold during the FIG period: exempt from UK CGT
• Employment income from a non-UK employer for non-UK duties: exempt

UK-source income and gains remain fully taxable from day one. A salary paid by a UK employer, UK rental income, dividends from UK companies, and gains on UK assets are all subject to UK income tax and CGT regardless of the FIG regime status.

The exemption is automatic — it does not need to be claimed on a year-by-year basis like the old remittance basis, and there is no annual charge. Individuals can also bring foreign income and gains into the UK freely during the FIG period without any UK tax consequence.

Who Qualifies

To qualify for the FIG regime, an individual must satisfy two conditions:

1. They are UK resident in the relevant tax year (assessed under the Statutory Residence Test)
2. They were not UK resident in any of the ten consecutive tax years immediately preceding the year in which they become UK resident

The ten-year non-residence window is assessed strictly. Even a single year of UK tax residence within the ten years before the arrival year disqualifies the individual from the FIG regime. A person who spent one year in the UK on a work assignment eight years ago and has since been non-resident cannot use the FIG regime in the year they return — they have not been non-UK-resident for the full preceding ten tax years.

For most genuine new arrivals — individuals who have never lived in the UK, or who left the UK more than ten years ago and have not returned — the test is straightforward to satisfy.

The Four-Year Window

The four FIG years run from the first tax year of UK residency. If an individual arrives in the UK partway through a tax year (which typically runs 6 April to 5 April), that partial year may count as year one under "split year" treatment, meaning the four-year period can be effectively compressed into three full tax years plus two partial years. Timing of arrival in relation to the tax year end can be important.

Year five onwards, the FIG exemption expires. All worldwide income and gains become subject to UK income tax and CGT in the normal way for a UK resident individual. This creates a natural cliff edge that needs to be managed.

The Pension Contribution Opportunity

The most powerful planning opportunity within the FIG regime is the combination of UK pension tax relief with FIG-exempt foreign income.

Under normal UK tax rules, pension contributions attract relief at the highest marginal rate of income tax. An individual earning £200,000 per year in the UK who contributes £60,000 to a Self-Invested Personal Pension (SIPP) saves approximately £27,000 in UK income tax (at 45% on the amount above the Personal Allowance taper).

The FIG regime creates an additional dimension:

1. During the FIG years, foreign income is exempt from UK tax
2. If that foreign income is contributed to a UK SIPP, the contribution attracts full UK income tax relief at the appropriate rate
3. The income funding the contribution may itself have paid no UK tax under FIG
4. The pension fund then grows free of UK tax and is drawn down in future years under pension tax rules

In simple terms: you use untaxed foreign income to fund pension contributions, and claim 40-45% UK tax relief on those contributions. The effective result is a substantial subsidy of UK pension accumulation during the FIG period — at the UK taxpayer's expense, legally and by design.

The annual pension contribution limit is currently £60,000 (the Annual Allowance), though unused allowances from the three previous years can be carried forward where the individual was a UK pension scheme member in those years (complex if the person was non-UK resident in those years). Professional advice is essential on carry-forward entitlement for new arrivals.

The Pre-Arrival Planning Window

For individuals who know they will be relocating to the UK, the period before UK residency begins is a critical planning window. Once UK residency starts, the FIG clock begins — and any pre-arrival steps that are not taken are permanently missed.

Asset Disposal and Rebasing

Unrealised capital gains on offshore assets are not crystallised until the asset is sold. If you sell an asset with a large gain during the FIG period, the gain is FIG-exempt. If you sell it after year four, the gain is taxable at UK CGT rates (currently 18% for basic-rate taxpayers and 24% for higher-rate taxpayers, on both residential property and other chargeable assets, following the 30 October 2024 alignment of the non-residential rates).

Before becoming UK resident: consider disposing of assets with large unrealised gains. Once UK residency begins and the four FIG years elapse, those gains will be taxable. Pre-arrival disposal (or disposal in the early FIG years) eliminates this deferred liability.

If the asset cannot be sold before arrival but has a large gain, the FIG period is the optimal window to sell — the entire gain is exempt.

Investment Structure Review

Pre-arrival, review whether investments held in offshore structures — offshore bonds, discretionary investment management accounts, holdings through offshore companies or trusts — are still the most appropriate structures for a UK-resident period. Some structures that were efficient offshore become less efficient once UK residency creates transparency requirements or UK tax charges on arising income.

Documenting Source of Funds

The CRS and UK money laundering regulations require financial institutions to satisfy themselves about the source of large incoming funds. For individuals bringing substantial offshore wealth into the UK during the FIG period (where there is no UK tax consequence on bringing in the funds), preparing source of funds documentation in advance — audited accounts, tax returns in the jurisdiction of origin, property sale records — avoids delays and banking friction on arrival.

UK Bank Account Opening

Non-resident individuals sometimes find it difficult to open UK accounts pre-arrival. Using the period between confirming the relocation and the actual move to establish UK banking relationships (with at least a basic account if not a private banking relationship) simplifies the first months of UK residency.

After the FIG Period: Year Five Planning

Year five is a significant transition. From that point, all worldwide income and gains are subject to UK tax in the normal way. Planning for the transition includes:

• Reviewing whether the UK remains the intended long-term domicile, or whether a further international move is planned before year five
• Ensuring that pension accumulation during the FIG years is well-funded, as pension drawdown is typically at lower marginal rates than employment income
• Reviewing offshore structures for continued appropriateness under the full UK tax regime
• If a further move is planned: understanding the UK exit tax position (principally on unrealised UK CGT assets; there is no specific UK exit tax on capital, but departure during a tax year requires careful SRT analysis)

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The FIG regime was introduced from 6 April 2025. The rules described here reflect the position as understood at the date of publication. Tax legislation changes; individual circumstances vary. Nothing in this guide is tax advice. New arrivals considering the UK should take professional tax advice well before establishing UK residency — the pre-arrival window is valuable and cannot be recovered once residency begins.

How Global Investments Can Help

Global Investments advises internationally mobile families relocating to the UK on the full range of pre-arrival tax planning, FIG regime structuring, and pension contribution strategy. We work alongside specialist UK tax counsel and private banking advisers to ensure that the FIG window is used to its maximum benefit. Contact our team well before your intended arrival date to ensure the pre-arrival planning steps are completed in time.