What the New FIG Regime Means for International Clients

Technical update 2026

On 6 April 2025, the UK replaced the long-standing “non-dom” remittance basis of taxation with a new system based on tax residence.

In practice, this means that an individual’s exposure to UK tax is no longer dependent on whether they are considered UK-domiciled, but instead on how long they have been resident in the UK.

Under the new rules, individuals who are UK resident are generally taxed on their worldwide income and capital gains as they arise. However, the new Foreign Income and Gains (FIG) regime was introduced to support people moving to the UK after a sustained period of living overseas.

Individuals who become UK resident after being non-resident for at least ten consecutive tax years may elect to claim relief under the FIG regime for their first four years of UK residence.

Where a valid claim is made, most foreign income and capital gains arising during this period will not then be subject to UK tax. Those funds can therefore be brought into the UK without triggering an additional tax charge during the four-year exemption window.

This is a significant change from the previous remittance basis, which allowed foreign income to remain outside the UK tax net indefinitely, provided it was kept offshore.

Under the new regime, the relief is time-limited. Once the four-year FIG period ends, individuals will usually become fully taxable in the UK on their worldwide income and gains regardless of whether those funds are remitted to the UK or not.

Whilst making a claim under the FIG regime can be advantageous, it may result in the loss of entitlement to certain UK tax-free allowances for the relevant tax year, such as the personal allowance for income tax and the annual exemption for capital gains tax. As a result, the decision to claim relief should be considered on a case-by-case basis each year, and the tax outcome may depend, amongst other things, on the amount of income and gains at stake.

To assist with the change in rules, a Temporary Repatriation Facility is available for the three tax years from April 2025. This allows certain historic foreign income and gains to be designated and remitted to the UK at reduced tax rates of 12% for 2025/26 and 2026/27, increasing to 15% in 2027/28.

It is not just offshore personal income and gains which need to be considered as offshore trusts may also be affected.

Where the FIG regime does not apply, income and gains arising within certain settlor-interested trusts may be taxed directly on a UK-resident settlor instead. This represents a change from the previous rules that protected certain offshore trusts from UK tax attribution and may increase the UK tax exposure of individuals who have settled offshore structures whilst non-UK domiciled.

The changes also extend to inheritance tax (IHT), as the UK moves towards a residence-based approach to assessing liability to UK IHT, under which an individual’s worldwide assets may fall within the scope of IHT where they have been UK resident for at least ten out of the previous twenty tax years – so-called long-term UK tax residence.

In some cases, exposure to UK IHT may then continue for up to ten years after leaving the UK, depending on the length of prior residence.

In practical terms, the FIG regime is likely to be beneficial for individuals arriving in the UK after a prolonged period abroad, including returning UK expatriates who have lived overseas for ten years or more.

Those intending to remain in the UK for longer periods, or who previously relied on the remittance basis or the previous offshore trust protections, may however, face increased complexity under the new rules.

Early planning is key and individuals moving to the UK should review the treatment of historic foreign income and gains before considering whether and when to claim relief under the FIG regime. They should also assess the ongoing suitability of any offshore structures in light of their longer-term residence intentions.

If you or your clients need any help with FIG please do get in touch and we would be happy to help.