Preparing for Your First Tax Return Under the FIG Regime

The 2025/26 tax year is the first year in which taxpayers may find themselves dealing with with the new foreign income and gains (“FIG”) regime as part of their Self Assessment tax return.

For internationally mobile individuals, this is a significant change.

The old remittance basis came to an end on 5 April 2025 and has been replaced by a residence-based regime. As a general rule, UK residents are subject to UK tax on their worldwide income and gains as they arise.

However, there is an important exception. Individuals who are within their first four years of UK residence, following at least 10 consecutive years of non-UK residence, may be able to claim relief from UK tax on qualifying foreign income and gains.

On the face of it, that might sound relatively straightforward: establish whether you qualify and, if you do, claim the relief.

Unfortunately, as is often the case with tax, there is a little more to it than that.

The information reported, the claims made and the interaction with other allowances and reliefs can all affect the final tax position. With the first FIG tax returns now being prepared, we have set out 10 practical points worth thinking about.

1. First things first – do you actually qualify?

Before considering what foreign income and gains might qualify for relief, the starting point is your UK residence history

Broadly, the FIG regime can apply during an individual’s first four tax years of UK residence following at least 10 consecutive tax years of non-UK residence.

It is therefore important to establish exactly when you became UK resident and which year of the four-year FIG period you are currently in.

This may require a little more thought where you have previously spent time in the UK, moved in and out of the country or had a more complicated residence position in earlier years. Getting this first step wrong can affect everything that follows.

2. Just because you can make a FIG claim does not always mean you should

FIG relief can clearly be valuable, but the decision should not be made in isolation.

Depending on your circumstances, making a FIG claim or Overseas Workday Relief election can affect your entitlement to certain UK allowances and reliefs, including the personal allowance and Capital Gains Tax annual exempt amount.

This means there can be a trade-off.

Where you have a substantial amount of qualifying foreign income or gains, the benefit of the FIG claim may comfortably outweigh the allowances lost. Where the overseas amounts are relatively modest, however, that may not necessarily be the case.

It is therefore worth looking at the numbers before automatically making a claim.

3. You still need to know exactly what your foreign income and gains are

Whilst FIG relief can mean that you do not have to pay UK tax on certain foreign income and gains, unfortunately, it is not quite as simple as just claiming the relief and forgetting about them!

Under the new rules, you still need to work out exactly what foreign income and gains you have received during the tax year and which amounts qualify for relief.

It is also worth remembering that FIG relief is not one blanket claim covering everything overseas. Foreign income and gains are dealt with separately, and you will need to identify the relevant sources of income and gains you want to claim relief on.

So, even if you end up paying no UK tax on these amounts, there can still be quite a bit of work involved in getting everything together and making sure the correct claims are made.

4. Do not assume overseas reports use UK tax rules

If you have investments overseas, you may receive an annual tax statement, investment report or broker summary setting out your income and gains.

That is certainly a useful starting point, but it should not automatically be assumed that those figures can simply be copied into a UK tax return.

Different countries calculate taxable income and gains in different ways. The UK has its own rules, including specific rules governing how shares are matched on disposal and the operation of share pooling.

As a result, a gain calculated by an overseas broker for local tax purposes may not be the same gain that needs to be considered for UK tax purposes.

Overseas reports are useful evidence, but they may still need some UK tax analysis behind them.

5. Check the dates – the UK tax year may not match your overseas statements

This sounds like a simple point, but it can cause a surprising amount of difficulty.

The UK tax year runs from 6 April to 5 April. Many overseas banks, investment managers and tax authorities instead work on a calendar year ending 31 December.

A statement for the year ended 31 December 2025 therefore does not neatly correspond with the 2025/26 UK tax year.

Transactions and income may need to be apportioned between reporting periods to establish exactly what falls into the UK tax year.

So, before relying on an annual statement, check exactly what period it covers.

6. Already paid overseas tax? Don’t automatically assume FIG relief is best

Foreign income or gains may already have suffered tax in another country.

Ordinarily, Foreign Tax Credit Relief may be available to reduce the risk of the same income or gain being taxed twice. However, FIG relief and Foreign Tax Credit Relief cannot generally both be claimed on the same amount.

If FIG relief means there is no UK tax on a particular amount, there is no UK liability against which the corresponding foreign tax can be credited.

Where significant overseas tax has already been paid, it can therefore be worth comparing the alternatives.

Again, this comes back to looking at the overall tax position rather than simply making a FIG claim because it is available.

7. Former remittance basis users should not forget historic funds

The remittance basis may have gone, but that does not mean historic foreign income and gains accumulated under the old rules can simply be forgotten about.

Former remittance basis users may still have overseas bank accounts or investment portfolios containing pre-6 April 2025 foreign income and gains.

Understanding what those funds represent – and keeping the records to support that position – remains important.

There is also the Temporary Repatriation Facility (“TRF”) to consider. This may allow eligible former remittance basis users to designate qualifying pre-6 April 2025 foreign income and gains at reduced tax rates.

The TRF is available during the 2025/26, 2026/27 and 2027/28 tax years, so the first FIG tax return can also be a useful prompt to revisit historic overseas funds and consider whether any wider planning is appropriate.

8. Working overseas? Don’t forget Overseas Workday Relief

For individuals who have recently arrived in the UK but continue to spend part of their working time overseas, Overseas Workday Relief (“OWR”) is another important consideration.

The rules changed significantly from 6 April 2025.

Under the new regime, OWR is linked to qualifying residence under the FIG rules and is subject to an annual financial limit. Broadly, relief is restricted to the lower of £300,000 and 30% of the relevant qualifying employment income.

Things can become more complicated where remuneration includes bonuses, share awards or other deferred payments relating to duties performed across more than one tax year.

In these cases, the timing of the remuneration and the distinction between making an OWR election and claiming relief for particular income can become particularly important.

9. Don’t leave the overseas information until January

There is often a temptation with Self Assessment to think about the tax return as the 31 January deadline approaches.

For individuals with overseas affairs, that can make life unnecessarily difficult.

Depending on your circumstances, you may need information covering overseas bank accounts, investment portfolios, rental properties, foreign tax paid, capital disposals, employment income and potentially historic remittance basis funds.

If that information is spread across several institutions, or several countries, gathering it can take time.

Once you have it, there may then be currency conversions, UK tax calculations and further analysis to undertake.

Starting early gives you time to work out what is missing, ask questions and resolve any uncertainties without the pressure of an approaching filing deadline.

10. Finally, don’t confuse the filing deadline with the FIG claim deadline

The normal online filing deadline for a 2025/26 Self Assessment tax return is 31 January 2027.

The statutory deadline for making a FIG relief claim for 2025/26 is, however, generally 31 January 2028, one year after the normal filing deadline. The same general time limit applies to OWR elections and claims.

That additional time can be useful where further information becomes available after the original return has been submitted, but it should not be seen as a reason to put off dealing with the position.

If additional taxable income is identified later, further tax and interest may still arise.

There is another reason the deadline matters. If additional foreign income or gains are discovered after the relevant claim deadline has passed, it may no longer be possible to claim FIG relief on those amounts, subject to limited exceptions.

In other words, good records from the outset are still very important.

Looking ahead

The move from the remittance basis to the FIG regime is a major change to the way internationally mobile individuals are taxed in the UK.

For qualifying new residents, the regime can be extremely valuable, potentially providing relief from UK tax on qualifying foreign income and gains during their first four years of UK residence.

But whether someone qualifies is only the beginning of the conversation.

Residence history, foreign tax, overseas investment reporting, UK allowances, historic funds and employment income can all affect the final position. In some cases, there will also be choices to make about which reliefs to claim and when.

With 2025/26 being the first tax return filing season under the new rules, now is a good time to start gathering the relevant information and understanding how the regime applies to your circumstances.

Doing that work early should make the first FIG tax return considerably easier and, importantly, help make sure valuable reliefs or planning opportunities are not missed.

Next Steps

Preparing for your first tax return under the FIG regime then send ETC a message and let us guide you.