The UK Foreign Income and Gains Regime: A Practical Guide for New Arrivals

April 2025 marked one of the most significant changes to UK international tax in decades. The non-domicile remittance basis — a regime that had existed in some form for over two centuries and allowed certain UK residents to pay no UK tax on offshore income and gains unless they brought them to the UK — was abolished.

In its place, the government introduced the Foreign Income and Gains (FIG) regime. For individuals who are new to UK residence, understanding the FIG regime from the outset is essential — it directly determines what tax planning is needed and what flexibility remains.

What the Old System Was

Under the previous non-dom remittance basis, an individual who was UK-resident but not UK-domiciled could elect to pay UK tax only on income and gains "remitted" to the UK — brought into the country in any form. Foreign income and gains that remained offshore were entirely outside the UK tax net.

This was extraordinarily valuable for internationally mobile individuals who had accumulated wealth offshore. They could live in the UK, benefit from UK public services, and pay UK tax only on their UK-source income. Their overseas investment returns, business income, and capital gains compounded offshore without any annual UK tax charge, indefinitely.

The regime was a significant draw for HNW international individuals to the UK and is widely credited with making London a pre-eminent global wealth centre.

What the FIG Regime Provides

The FIG regime represents a compromise — more restrictive than the old remittance basis but still meaningfully more generous than the standard UK worldwide-income regime.

The core benefit: An individual who becomes UK-resident for the first time (and has not been UK-resident in any of the preceding 10 tax years) can elect to pay UK tax only on UK-source income and gains for their first four years of UK residence. Foreign income and gains are excluded from UK tax during this initial period — and crucially, unlike the old remittance basis, can be freely brought to the UK and spent here without triggering UK tax.

This is the key structural improvement over the remittance basis in one respect: it removes the "lock-in" effect that prevented non-doms from using their offshore wealth in the UK without triggering tax.

The four-year limit: After four complete tax years of UK residence, the FIG regime eligibility ceases. From year five onwards, the individual is subject to the standard worldwide income regime — all income and gains wherever arising are fully taxable in the UK.

The election: The FIG regime is not automatic. An eligible individual must elect for it on their self-assessment tax return. There is a cost to making the election: if you elect, you cannot also claim the standard personal allowance or the CGT annual exemption for that year. For individuals with very low or nil foreign income, the standard worldwide basis (with personal allowance) may be more tax-efficient than electing FIG.

Who Is Eligible

To be eligible for the FIG regime in a given tax year, an individual must:

1. Be UK-resident in that tax year
2. Not have been UK-resident in any of the 10 tax years immediately before the year in question

The 10-year absence requirement is strict. An individual who was UK-resident as recently as 2015-16 and returns in 2025-26 does not meet the condition (10 years have elapsed only if they were last UK-resident in 2014-15 or earlier).

This means that the FIG regime is primarily available to:

• Individuals who have never previously been UK-resident (foreign nationals arriving in the UK for the first time)
• Long-term returners who have been absent from the UK for a full decade or more

For shorter-term returnees — the former UK resident who spent 5-7 years abroad and has now returned — no FIG relief is available. They are immediately subject to the full worldwide income basis.

Temporary Repatriation Facility

The government introduced a transitional "Temporary Repatriation Facility" (TRF) alongside the FIG regime, to encourage individuals who had used the old remittance basis to bring offshore accumulated income and gains to the UK at a preferential tax rate.

Under the TRF (available for tax years 2025-26 and 2026-27 and extended to 2027-28), former remittance basis users who have "designated" offshore income and gains can remit those amounts to the UK at a flat tax rate of 12% in 2025-26 and 2026-27, rising to 15% in 2027-28.

This is significantly lower than the rates that would otherwise apply to remittances by former non-doms (up to 45% on income). For individuals with large pools of historically accumulated offshore income and gains, the TRF window is a significant planning opportunity.

The window is time-limited. Decisions about whether to use the TRF and how much to designate need to be made with qualified specialist advice during the available years.

IHT and the Long-Term Resident Test

Alongside the income and gains changes, the IHT exposure of internationally mobile individuals was also reformed. From April 2025, the "Long-Term Resident" (LTR) test replaces domicile as the gateway to UK worldwide IHT exposure.

Under the LTR test, an individual becomes subject to UK IHT on worldwide assets once they have been UK-resident for 10 out of the last 20 tax years. Once caught by the LTR test, the worldwide IHT exposure continues for up to 10 years after leaving the UK.

For individuals using the FIG regime in their first four years in the UK, the LTR threshold is not yet relevant — they are well within the 10-year window. But planning the long-term IHT position requires thinking well ahead of reaching the 10-year mark.

Practical Implications for New Arrivals

Year 1-4 in the UK: If you qualify for the FIG regime, elect for it each year. Keep detailed records of what constitutes foreign income and gains. You may freely bring foreign income to the UK during this period without a UK tax charge.

Investment structuring: During the FIG period, UK-situs investments generate UK-taxable income and gains even under the FIG election. Foreign-situs investments — held offshore in foreign accounts or structures — remain outside UK tax. Consider whether it is appropriate to allocate your most income-generating assets to offshore accounts during the FIG period.

Year 5 and beyond: Plan the transition to the worldwide income basis. Review offshore investment structures that may create complications once the full worldwide basis applies. Consider whether an offshore bond (investing through a life assurance wrapper) can defer the recognition of gains and income during the transition years.

IHT planning from early on: The LTR clock starts running from the first year of UK residence. If you plan to stay in the UK long-term, begin IHT planning well before reaching the 10-year threshold. Gifts (PETs), trusts, and structuring of non-UK situs assets should be addressed while you are still below the LTR threshold.

What Has Not Changed

The UK still has no territorial tax system in the straightforward sense — there is no permanent exemption for foreign income for long-term UK residents. The FIG regime is a time-limited relief, not a permanent offshore income exemption.

For individuals who want a permanent territorial tax system, the options include: Cyprus (non-dom regime with 60-day rule, no IHT, 0% on dividends and interest); UAE (0% personal tax on all income); Portugal (NHR regime, though significantly tightened from 2024); Malta (Global Residence Programme); or several other jurisdictions with more favourable treatment of foreign-source income for residents.

How Global Investments Can Help

The transition from the non-dom remittance basis to the FIG regime represents a fundamental shift in the UK's offering to internationally mobile wealth. Understanding how the new regime applies to your specific circumstances — eligibility, election mechanics, investment structuring, TRF planning, and the long-term IHT picture — requires specialist advice.

Global Investments works with internationally mobile individuals who are considering a move to the UK, currently in their FIG period, or approaching the transition to the full worldwide basis. We help coordinate investment structuring with the tax planning to ensure your position is as efficient as possible within the rules.

This article is for general information purposes only and does not constitute personal tax or financial advice. The FIG regime and associated rules are complex and subject to change. Please seek qualified professional advice before making any decisions.