If you have recently moved to the UK, or returned after living abroad for many years, you may still have bank accounts, investments, property or other income overseas.
From 6 April 2025, the way the UK taxes this income changed significantly.
The old remittance basis was replaced by the Foreign Income and Gains regime, usually shortened to the FIG regime. A qualifying new UK resident can claim relief from UK tax on eligible foreign income and gains arising during their first four years of UK residence.
But the relief is not automatic, and the words “four-year regime” can be misleading if you became UK resident before 6 April 2025.
You also need to consider whether making a claim is actually beneficial. A FIG claim can remove UK tax from substantial overseas income or gains, but it also affects tax allowances and certain losses.
The starting point is therefore not simply “Do I have foreign income?” It is: when did I become UK resident, do I qualify, what foreign income or gains do I have, and which amounts should I claim relief on?
What changed on 6 April 2025?
Before 6 April 2025, some UK residents who were not UK domiciled could use the remittance basis. Broadly, this could allow foreign income and gains to remain outside UK tax unless they were brought to, or used in, the UK.
That system has now ended for new foreign income and gains.
From 6 April 2025, a UK resident is generally taxed on worldwide income and gains as they arise. The FIG regime provides an exception for qualifying new residents, allowing them to claim relief on eligible foreign income and gains during the relevant four-year period.
Unlike the old remittance basis, the FIG regime does not require relieved income or gains to remain overseas. Once qualifying foreign income or gains have been relieved under the FIG regime, they can be brought into the UK without an additional UK tax charge simply because they have been transferred here.
That is an important distinction if you are moving money to the UK after arriving here.
Who can claim the FIG regime?
For most people, there are two main conditions.
You must be UK resident under the Statutory Residence Test for the tax year concerned, and you must have had at least 10 consecutive tax years of non-UK residence immediately before the first year in which you became a qualifying new UK resident.
If you meet those conditions, the FIG regime can potentially be available during that first UK-resident tax year and the following three tax years.
Your nationality and domicile do not determine whether you qualify. The regime is based principally on your UK tax residence history.
Your four-year period may already have started
This is particularly important for people who came to the UK before the FIG regime itself began.
The legislation took effect from 6 April 2025, but the four-year residence clock can include earlier tax years.
For example, if you became UK resident in:
- 2022/23, after at least 10 consecutive non-resident tax years, 2025/26 is potentially your fourth and final FIG year.
- 2023/24, you may potentially have 2025/26 and 2026/27 remaining.
- 2024/25, you may potentially have three years remaining from 2025/26.
- 2025/26, you may potentially have the full four-year period from 2025/26 to 2028/29.
You could not claim FIG relief before 2025/26, but those earlier UK-resident years can still use up part of the four-year window.
So somebody who moved to the UK in 2023 should not assume they now have four fresh years simply because the new regime started in April 2025.
Split years can also affect the calculation
The residence history needs checking carefully.
A tax year in which you were UK resident under the Statutory Residence Test still counts as a UK-resident year for FIG eligibility even if split-year treatment applied.
Similarly, being treated as resident in another country under a double tax treaty does not necessarily make that tax year a non-UK-resident year for the FIG eligibility test if you were UK resident under the Statutory Residence Test.
This is one reason we would normally establish the residence position before deciding that somebody qualifies.
What foreign income can qualify for FIG relief?
The regime can cover a wide range of foreign income.
Common examples include:
- interest from an overseas bank account;
- dividends from non-UK companies;
- profits from an overseas property business; and
- profits of a trade carried on wholly outside the UK.
There are also rules for certain foreign pension income, partnership income and income arising through more complicated arrangements.
Not every type of foreign income qualifies.
In particular, foreign employment earnings are not dealt with through the ordinary foreign-income claim under the FIG regime. Qualifying internationally mobile employees may instead need to consider Overseas Workday Relief, which has its own rules.
We would treat Overseas Workday Relief as a separate topic rather than trying to cover it fully here.
There are also specialist rules for trusts, settlements, offshore structures and certain types of pension or attributed income. Those can require a more detailed review.
What foreign gains can qualify?
A qualifying new resident can also claim relief on certain foreign capital gains.
For the more straightforward cases, this will often involve a gain arising from the disposal of a qualifying asset situated outside the UK, such as certain overseas investments.
The detailed rules are more involved than simply asking where a broker account is based. Among other things, there are restrictions for assets connected with UK land and separate rules for gains attributed through companies, trusts and other structures.
For a normal investment portfolio, we would identify the assets disposed of, calculate the gains and then establish which gains are eligible before making the claim.
Does FIG relief apply automatically?
No.
Being eligible for the regime does not itself remove the UK tax.
You must make a claim through your Self Assessment tax return for the relevant year. For 2025/26, the new SA109 pages contain separate boxes for a foreign income claim and a foreign gains claim. The amount being relieved is then reported on the relevant supplementary pages of the return.
Crucially, the income or gains are still reported.
You do not simply leave an overseas bank account, dividend or gain off the return because you believe it qualifies for FIG relief.
HMRC requires the amounts being relieved to be identified source by source.
You can claim relief on foreign income, foreign gains or both, and you do not have to claim relief on every source you have.
That flexibility matters because claiming FIG relief has other tax consequences.
Should you always claim if you qualify?
Not necessarily.
This is probably the most important practical point in the regime.
Making a FIG claim can produce substantial tax relief, but it also causes you to lose a number of UK tax allowances for that year.
If you make a foreign income claim or a foreign gains claim, you can lose your:
- Personal Allowance;
- Capital Gains Tax annual exempt amount;
- Blind Person’s Allowance;
- Marriage Allowance or certain married couple reductions; and
- certain other tax reductions.
The loss applies even if you only claim relief on foreign income or only claim relief on foreign gains. For example, making only a foreign income claim can still mean losing the Capital Gains Tax annual exempt amount.
Certain foreign losses can also be lost in a year in which FIG relief is claimed rather than being available for use in another year.
This means it is worth comparing the tax position before making the claim.
Someone with substantial foreign dividends or a significant foreign gain may obtain a clear benefit from FIG relief.
Someone with a small amount of foreign income, particularly where they would otherwise benefit from their UK Personal Allowance or have paid foreign tax for which UK tax credit relief may be available, may need a more careful comparison.
Eligibility and whether a claim is worthwhile are therefore two different questions.
Does relieved foreign income still affect anything else?
It can.
Foreign income on which FIG relief is claimed can still be taken into account when calculating adjusted net income.
Adjusted net income is used for a number of other purposes, including the High Income Child Benefit Charge and eligibility for some childcare support.
So “there is no UK Income Tax on this foreign income because I claimed FIG relief” does not necessarily mean the income is ignored everywhere else in the tax system.
Again, the wider position needs to be considered rather than looking at the foreign income in isolation.
Do you have to claim in all four years?
No.
A qualifying new resident can decide whether to claim in each eligible year.
You could claim in your first year, not claim in the second or third year, and make another claim in the fourth year if it was beneficial to do so.
But an unused year is not saved for later.
If your four-year period ends, you cannot extend it simply because you chose not to make a claim in one of those years.
Similarly, if you become non-UK resident temporarily during the four-year period, you cannot claim FIG relief for that non-resident year and the four-year window is not extended to give you an extra year later.
Can you bring FIG-relieved money into the UK?
Yes.
One of the significant differences between the FIG regime and the old remittance basis is that qualifying foreign income and gains which have been relieved under the FIG regime can be brought into the UK without an additional UK tax charge arising merely because the money has been remitted.
You therefore do not have to keep relieved FIG in an overseas account to preserve the relief.
However, this should not be confused with foreign income or gains that arose before 6 April 2025 while somebody was using the old remittance basis.
Pre-6 April 2025 unremitted foreign income and gains cannot simply be turned into FIG-relieved income by bringing them to the UK during the new regime. Separate transitional rules, including the Temporary Repatriation Facility in qualifying cases, may need to be considered.
We will cover those transitional rules separately rather than turning this guide into an article about the old remittance basis.
What happens after the four-year period?
Once you are outside the FIG period, the normal position is that a UK resident is taxed on their worldwide income and gains as they arise, subject to any other reliefs available.
The FIG regime does not permanently exempt the overseas assets themselves.
For example, if you continue to hold a foreign investment after the regime has ended, later dividends or gains may become taxable in the UK in the normal way.
The FIG regime is also specifically an Income Tax and Capital Gains Tax regime. Separate residence-based rules now apply for Inheritance Tax, so FIG eligibility should not be treated as a general exemption for foreign wealth from every UK tax.
What information should you gather?
If you think the FIG regime may apply to you, we would normally start by establishing the residence history before calculating the claim.
Useful information includes:
- the date you came or returned to the UK;
- where you lived during at least the previous 10 tax years;
- any previous periods of UK residence;
- previous UK tax returns or residence claims;
- overseas bank and investment statements;
- details of overseas property income;
- records of disposals of foreign investments or other assets; and
- details of any tax already paid overseas.
If you arrived part-way through a tax year, the residence and split-year position may also need reviewing.
The aim is to identify which amounts actually fall within the FIG regime before deciding what should be claimed.
How Thames Williams can help
The FIG regime can be very valuable, but the tax return is not simply a matter of ticking a box saying that you are a new UK resident.
At Thames Williams, we can review when you became UK resident, whether your previous residence history meets the 10-year condition and which years remain within your FIG period.
We can then identify the foreign income and gains relevant to the claim, consider the tax consequences of claiming or not claiming relief and prepare the relevant sections of your Self Assessment tax return.
Where foreign tax has already been paid, we can also consider how that fits into the UK position rather than assuming that FIG relief is automatically the best answer.
More complicated matters such as split-year residence analysis, Overseas Workday Relief, historic remittance-basis income, the Temporary Repatriation Facility, trusts or offshore structures may require additional work. Where those issues arise, we can identify them during the review and agree the appropriate next steps with you.
Have you recently moved or returned to the UK?
If you became UK resident within the last four tax years and still have income, investments, property or other assets overseas, tell us when you came to the UK and what types of foreign income or gains you have.
We can help establish whether the FIG regime is relevant to you and what information will be needed for your Self Assessment tax return.
Talk to Thames Williams about your foreign income and tax return
This article provides general guidance. FIG eligibility and whether making a claim is beneficial depend on your residence history, the nature of your foreign income and gains, and your wider tax position.
