The UK FIG Regime Explained in Plain English: Your First Four Years as a UK Resident

If you have moved to the United Kingdom recently, or you are planning to, the rules that decide how your overseas income is taxed changed completely on 6 April 2025. The old "non-dom" remittance basis is gone. In its place is the Foreign Income and Gains regime, usually shortened to FIG. This article explains it in the simplest terms we can manage.

The one-sentence version

If you are new to the UK and you were non-UK resident for the previous ten tax years in a row, then for your first four years of UK residence you pay no UK tax at all on your foreign income and foreign capital gains — and you can bring that money into the UK freely.

Who qualifies

• You become UK tax resident under the Statutory Residence Test.
• You were not UK tax resident in any of the ten consecutive tax years before you arrived.
• Your nationality and your domicile no longer matter. This is now purely a residence test, which makes it much easier to work out.

The four-year clock starts from your first year of UK residence and runs whether or not you claim relief in each of those years. If you arrive in 2026/27, your qualifying years are 2026/27, 2027/28, 2028/29 and 2029/30.

What is covered

Almost all non-UK source income and gains: overseas employment income earned abroad, dividends from foreign companies, interest on foreign bank accounts, rent from property outside the UK, and capital gains on foreign assets such as shares or an overseas property.

What is not covered

UK source income is always taxable — UK salary, UK rental income, UK bank interest, UK dividends. The FIG regime does nothing for those.

The catch: you lose your allowances

For any tax year in which you claim FIG relief, you give up your personal allowance for income tax and your annual exempt amount for capital gains tax. For most people with meaningful foreign income the claim is still worth many times more than the allowances, but it is an arithmetic exercise and it should be done year by year, not once and forgotten.

You still have to file

FIG relief is claimed, not automatic. You must register for Self Assessment and report the foreign income and gains you are claiming relief on, including amounts. Miss the claim and the relief is lost for that year. This is the single most common and most expensive mistake we see.

Overseas Workday Relief

If you qualify for FIG and you do some of your employment duties outside the UK, Overseas Workday Relief can exempt the overseas portion of your salary for the same four years. It is now capped at the lower of 30% of your qualifying employment income or £300,000 a year, and the money no longer has to be kept offshore.

What happens in year five

From your fifth year of UK residence you are taxed on your worldwide income and gains, like any other UK resident, whether or not you bring the money here. Year five is not the time to start planning — years one to four are.

Frequently asked questions

Do I have to bring the money to the UK to use FIG?

No. That is the biggest improvement over the old rules. Remittance is irrelevant; money earned abroad in a qualifying year can be transferred to a UK account without a UK tax charge.

Can I claim FIG for some years and not others?

Yes. It is an annual claim. In a year where your foreign income is small, keeping your personal allowance may be better.

Does FIG cover inheritance tax?

No. Inheritance tax now works on a separate residence test — broadly, you fall into the UK IHT net on worldwide assets once you have been UK resident for ten of the previous twenty tax years.

I am American living in the UK. Does FIG help me?

Partly. FIG affects the UK side only. The United States taxes its citizens on worldwide income regardless of where they live, so you still have a Form 1040 and probably FBAR and FATCA obligations. The interaction between a FIG claim and US foreign tax credits needs to be modelled together, not separately — that is exactly the work we do.

How we can help

We handle the UK Self Assessment return, the FIG claim, the allowance comparison and, for US citizens and green card holders, the matching US return. Consultations start at £150 for 30 minutes, and a fixed fee follows in writing once we have seen your position.