The Foreign Income and Gains Regime: Planning for New UK Arrivals

The UK tax landscape for internationally mobile individuals changed fundamentally from 6 April 2025, when the long-standing non-domicile regime — the remittance basis — was abolished and replaced with the Foreign Income and Gains (FIG) regime. For those moving to the UK for the first time, or returning after a sufficient period of absence, the FIG regime offers a generous but time-limited window of tax relief that requires careful planning to exploit fully.

This guide explains how the FIG regime works, what steps should be taken before arriving in the UK, and how to manage the transition as the four-year window approaches its end.

What the FIG Regime Provides

The FIG regime applies to individuals who have not been UK tax resident in any of the ten tax years immediately preceding their first year of UK residence under the new rules. Subject to that qualifying condition, the regime provides:

A four-year exemption from UK tax on foreign income and gains. For the first four UK tax years (including the year of arrival), qualifying individuals pay no UK income tax or capital gains tax on income arising, and gains realised, outside the UK. They may bring that income and those gains to the UK without incurring any UK tax charge.

This is a fundamental change from the old remittance basis. Under the remittance basis, the tax charge was deferred until the income or gain was brought to the UK — it was never exempt. Under the FIG regime, the income and gains are genuinely exempt for the four-year period, regardless of whether they are remitted to the UK.

Overseas Workday Relief (OWR) extended to four years. The relief for earnings attributable to days worked outside the UK (previously available for three years under the old non-domicile rules) is also extended to four years and simplified.

Who Qualifies?

The ten-year clean break requirement means that the FIG regime is most relevant to:

• Individuals moving to the UK for the first time, with no prior UK residence history
• Individuals who were previously UK resident but have been non-resident for at least ten consecutive tax years before returning

For UK nationals who have been working abroad and wish to return, the ten-year requirement is demanding. Someone who left the UK in April 2015 and returns in April 2025 will have been non-resident for exactly ten years but the counting of that period requires careful analysis under the Statutory Residence Test.

Where the ten-year condition is not met, the individual is not entitled to the FIG regime but may still benefit from treaty relief, the Temporary Repatriation Facility (discussed below), or other provisions applicable to their circumstances.

Pre-Arrival Planning: The Critical Window

The most important tax planning for a new UK arrival should take place before the individual becomes UK resident. Once UK residence commences, the FIG regime provides exemption from UK tax on foreign sources — but CGT applies from day one of UK residence to gains on assets already held. Pre-arrival planning should therefore address:

Realising Offshore Gains Before Arrival

Capital gains on non-UK assets are outside the scope of UK CGT until the individual becomes UK resident. An individual who holds a portfolio of equities, investment properties, or business interests with substantial unrealised gains should consider whether to realise those gains before UK residence begins.

Gains realised before UK residence:

• Are not subject to UK CGT
• Are not subject to UK income tax (on any income element)
• Can be brought to the UK after arrival under the FIG regime without UK tax charge

This can be highly valuable where gains are large. The individual effectively resets the base cost of their assets to market value immediately before UK arrival, so that any future gains are measured from that higher starting point.

The decision requires analysis of:

• Whether any tax is payable in the current jurisdiction on a disposal (some countries impose exit taxes)
• Whether there are practical barriers to sale and repurchase (bid-offer spreads, liquidity, transaction costs)
• Whether the individual intends to continue holding the asset — unnecessary disposals for tax reasons should be avoided if the investment case remains sound
• Market timing considerations

Establishing or Reviewing Offshore Trust Structures

The excluded property trust rules — which exempt settled property from UK inheritance tax where the property was settled by a non-UK domiciliary before they acquired a UK domicile of choice — have been significantly reformed under the post-2025 changes. However, trusts settled by individuals who have not yet become UK resident may still benefit from excluded property status for IHT purposes, subject to the new rules.

A prospective UK arrival who wishes to settle property on trust for IHT planning purposes should do so before UK residence begins, when the IHT analysis is likely to be more favourable. From 6 April 2025, IHT is residence-based: an individual becomes a "long-term UK resident" — and so subject to UK IHT on their worldwide estate — once they have been UK resident in at least 10 of the previous 20 tax years. This is a longer horizon than the four-year FIG window, but planning ahead of the point at which long-term resident status is acquired is essential.

Reviewing the Structure of Offshore Investments

The FIG regime provides exemption on foreign income and gains — but the nature of the investment vehicle matters. Offshore funds subject to the UK's Offshore Funds regime, controlled foreign company rules, and other anti-avoidance provisions all need to be reviewed before and after arrival to ensure the FIG exemption applies as expected.

In particular, offshore investment bonds can be an effective vehicle for holding investments during and after the FIG window. The 5% tax-deferred withdrawal facility and the ability to time bond surrenders for low-income years can complement the FIG regime.

The Statutory Residence Test: Timing Arrival Precisely

Under the Statutory Residence Test (SRT), UK residence for a full tax year is determined by a combination of automatic tests and tie-breaker counts. An individual who intends to move to the UK can, within limits, manage the timing of their arrival to affect how many FIG-exempt years they receive.

The UK tax year runs from 6 April to 5 April. An individual who arrives on 6 April 2025 has a full first tax year 2025/26 as their first FIG year, giving them years 2025/26, 2026/27, 2027/28, and 2028/29 as their four exempt years.

An individual who arrives on 5 April 2025 technically has a split-year treatment that may give them only three full FIG years thereafter (the year of arrival counting as year one, even if arrival is on the last day of the year).

Advice on arrival timing from an adviser with detailed knowledge of the SRT is essential before committing to a specific move date.

The Temporary Repatriation Facility (TRF)

For individuals who were previously entitled to the remittance basis (under the old non-domicile rules, before April 2025) and who accumulated offshore income and gains during that period, the government introduced the Temporary Repatriation Facility.

The TRF allows pre-April 2025 accumulated offshore income and gains to be remitted to the UK at reduced rates:

• 12% for remittances in the 2025/26 and 2026/27 tax years
• 15% for remittances in the 2027/28 tax year
• After 2027/28, the TRF closes — pre-April 2025 offshore income and gains remitted thereafter are taxed at the individual's marginal rate

For individuals who remittance-basis users and who have accumulated substantial offshore income or gains, the TRF represents a meaningful planning opportunity. Bringing funds to the UK at 12%–15% during the window — when those funds would otherwise attract income tax at up to 45% or CGT at up to 24% — can represent a significant saving.

The TRF is not available to individuals who were never remittance-basis users. New arrivals under the FIG regime who have not previously used the remittance basis do not need to use the TRF — their pre-arrival foreign income and gains can be brought to the UK during the FIG window tax-free.

Managing the End of the FIG Window

The FIG exemption expires after four UK tax years. From year five onwards, the individual is fully within the UK tax system and is taxed on worldwide income and gains in the same way as any other UK resident.

Planning for the transition from year four to year five should begin early. Key considerations:

Offshore trust structures: If excluded property trusts have been established, they continue to shelter assets from IHT after the four-year period ends, but the income and gains within those trusts become subject to UK income tax and CGT from year five under the trust taxation rules.

Offshore investment bonds: These can continue to defer income tax until withdrawals are made. The 5% tax-deferred withdrawal facility allows £50,000 of deferred income per year on a £1 million bond without immediate income tax, regardless of UK residence status.

Realising gains before year five: Where assets with significant unrealised gains are held, there may be a case for realising those gains in year four (while the FIG exemption still applies) rather than waiting until year five when UK CGT will apply.

IHT exposure: IHT exposure on worldwide assets is determined separately from the FIG window. Under the residence-based IHT rules in force from 6 April 2025, an individual becomes a long-term UK resident — and therefore subject to UK IHT on their worldwide estate — only once they have been UK resident in at least 10 of the previous 20 tax years. New arrivals therefore have a longer runway before worldwide IHT applies, but reviewing excluded property trust structures or other IHT mitigation well before long-term resident status is acquired is important.

Overseas Workday Relief

For individuals employed by non-UK employers who continue to perform some of their duties outside the UK, Overseas Workday Relief (OWR) provides that earnings attributable to non-UK workdays are exempt from UK income tax during the four-year FIG window.

The relief requires careful record-keeping. HMRC requires the individual to maintain detailed records of which days were worked where, and the proportion of employment income attributable to non-UK workdays. Under the new rules (from 2025/26), the requirement to keep funds offshore that was associated with the old remittance-basis version of OWR has been removed — the relief is now simpler to administer.

OWR does not apply after the four-year window expires. For employees with significant non-UK workdays who expect to remain in the UK beyond four years, transitioning to local employment contracts or restructuring arrangements before the OWR window closes may be worth considering.

Compliance and Reporting

The FIG regime does not eliminate UK tax reporting obligations. UK tax residents must still:

• File a Self Assessment tax return for each year of UK residence
• Declare worldwide income and gains, with the FIG exemption claimed on the return
• Maintain adequate records to substantiate the FIG claim
• Comply with any reporting requirements for offshore accounts under the Common Reporting Standard

HMRC has stated that it will monitor FIG claims carefully. Claims that are incorrect — for example, because the individual does not actually qualify for the ten-year clean break, or because the income or gain does not fall within the definition of "foreign income and gains" — will be subject to correction with interest and potentially penalties.

How Global Investments Can Help

Global Investments advises internationally mobile clients at every stage of the UK arrival process, from initial planning before departure from their home country to managing the transition out of the FIG window.

We can help you assess your eligibility for the FIG regime, time your UK arrival to maximise your exempt years, and identify pre-arrival planning steps — realising gains, reviewing trust structures, and positioning your investment portfolio — that can significantly reduce your UK tax exposure.

We work alongside specialist tax counsel and international lawyers to ensure that your planning is coherent across all relevant jurisdictions. We are transparent with HMRC and do not recommend arrangements that rely on artificial structures or arrangements that are primarily motivated by tax avoidance.

This guide is for general information only and does not constitute tax advice. The FIG regime is new and HMRC guidance continues to evolve. Individual circumstances vary significantly. You should obtain specialist tax advice before making any decisions about your UK residence or investment arrangements. Tax rules can change.