Foreign income and gains (FIG) Regime for UK Tax residents effective from 6th April 2025
The UK government introduced a fundamental change to resident non-domiciled individuals that came into effect from 6th April 2025.
Previous position
UK resident but non domiciled individuals were able to claim “remittance basis” for foreign earnings provided they met certain criteria. In simple terms, this meant these individuals will only be subject to tax on any foreign income and gains remitted to UK and not all earnings worldwide.
Current position
Domicile status has been abolished as a concept for UK tax purposes and all residents will be subject to tax on UK and worldwide income on arising basis.
Foreign income and gains (FIG) Regime
A new regime has been introduced to individuals who come into UK following a period of non residence of over 10 years.
Where an individual qualifies and claims exemption there will be a full and absolute exemption from UK income tax and capital gains tax on foreign income and gains, regardless of whether they are remitted to UK or not. Please note that residents of the UK are required to pay UK tax on UK income and gains regardless of whether as claim is made.
If claimed:
- The first 4 tax years of residence will receive the exemption.
- The four years start from the first day of arriving in the UK and periods of absence following the first return are irrelevant provided that the individual remains a UK resident
- The claim is not automatic therefore it must be claimed via self-assessment.
- The personal allowance for income tax and annual exemption for capital gains will be removed for years where the claim is made.
- The claim for each year is an independent assessment and can be chosen based on the most tax efficient manner.
The change was published with various other tax changes to UK tax residents and careful consideration for individual circumstances must be given. As this is a complex area of tax, where you believe you will be affected, we strongly encourage you to seek specialist advice.
