(UNITED KINGDOM) — HMRC introduced the Foreign Income and Gains regime on April 6, 2025, replacing the remittance basis with a residence-based system that gives some new UK residents up to four tax years of relief on qualifying foreign income and gains.

The change shifted the UK tax test away from domicile and onto tax residence. From that date, all UK residents are taxed on the arising basis on worldwide income and gains unless a specific relief applies.

Eligible new arrivals can claim relief on foreign income and foreign gains and then bring those relieved amounts into the UK without a further UK tax charge. The relief is not automatic, and it must be claimed through Self Assessment.

How the FIG Regime Differs from the Old Remittance Basis

Under the old remittance basis, some UK residents could avoid UK tax on foreign income and gains if they kept those funds outside the country. The Foreign Income and Gains regime works differently; it gives a limited window of relief tied to residence rather than domicile.

That matters for internationally mobile people who once looked first at non-dom status. The starting point now is whether a person qualifies as a new UK resident after a long period of non-UK residence.

Qualification Requirements

HMRC says a person qualifies if it is one of their first four years of UK residence after at least 10 consecutive tax years of non-UK residence and they are not a member of the House of Commons or House of Lords. UK residence is determined under the statutory residence test.

The rule captures people who are newly arriving or returning after a long spell abroad. Foreign professionals moving to London, entrepreneurs relocating to the UK, returning British expats, investors, senior employees, skilled workers and internationally mobile families are examples of the people who may fall within the regime.

Nationality does not decide eligibility. Tax residence does.

Four-Year Tax Relief Window

The four-year tax relief runs for up to four consecutive tax years starting from the year a person becomes UK resident. A claim must be made for each year in which the taxpayer wants relief on chosen foreign income, chosen foreign gains, or both.

Skipped years do not come back later. If a taxpayer does not claim in one year, the unused year cannot be rolled over to a later year.

HMRC gives the example of a person who becomes UK resident in 2025-26. That person may have a Foreign Income and Gains regime window for 2025-26, 2026-27, 2027-28 and 2028-29.

If the person skips a claim in 2026-27 because foreign income is small, there is no extra year in 2029-30. The clock starts with UK residence and continues in sequence.

Transitional Rules and Temporary Departures

Some people already inside their first four UK-resident years when the new system began may have a shorter period of access. HMRC says that where the first four UK-resident years started before April 6, 2025, the regime may be used from 2025-26 only up to the last tax year of that four-year period.

A person who became UK resident from 2022-23 may therefore have limited access to the regime. The start date of residence carries weight.

Temporary departures do not restart the four-year clock. HMRC says that if a person leaves the UK temporarily during the four-year period and becomes non-UK tax resident, they cannot claim the regime for the years they were temporarily non-resident, but they can claim for any qualifying years left when they return as a UK tax resident.

That rule affects workers on overseas assignments, entrepreneurs who move between countries and families still deciding whether the UK will be a long-term base. A break in residence interrupts the claim years available, but it does not create a fresh four-year period.

Qualifying Foreign Income and Gains

Qualifying foreign income can include profits of a trade carried on wholly outside the UK, profits of an overseas property business, dividends from non-UK resident companies, interest such as interest on a foreign bank account, and certain foreign pension income. Capital gains from qualifying foreign assets can also fall within the regime.

Common cross-border income sources that may qualify include foreign bank interest, overseas dividends, foreign rental income, profits from a business carried on outside the UK, certain overseas pension income and gains from qualifying foreign assets. That can cover funds and assets held in India, the United States, Canada, UAE, Singapore, Australia or Europe.

What Does Not Qualify

Not every foreign amount qualifies. HMRC says relevant foreign earnings and foreign specific employment income are not qualifying foreign income under a Foreign Income and Gains regime foreign-income claim, though relief may be available separately under Overseas Workday Relief where conditions are met.

That means employees moving to Britain should not assume that foreign salary or overseas workday income falls under the regime. Employment income needs separate analysis.

The gains side of the regime extends to certain foreign capital gains and certain gains attributed under UK anti-avoidance and trust-related rules. The practical effect is that a new UK resident selling foreign shares, overseas funds, private company shares, crypto assets held abroad, foreign property interests or other non-UK assets during the four-year window may have relief available if the gain qualifies.

Those gains still need to be reported and claimed through Self Assessment. Relief under the Foreign Income and Gains regime does not mean a taxpayer can ignore a foreign disposal on a UK return.

How to Claim FIG Relief

HMRC says the claim must be made through the UK Self Assessment tax return. Taxpayers must complete the relevant boxes on the SA109 residence and FIG pages and then claim the amount of relief on the relevant supplementary pages, depending on the income or gains involved.

Foreign income may need to be reported on SA106 foreign pages, and capital gains on SA108 capital gains summary pages, with the Foreign Income and Gains regime claim made through SA109. A taxpayer does not need to claim relief on all foreign income or all foreign gains, but must identify the amounts and sources for which relief is claimed.

The filing rules leave room for choice, but not for silence. Income or gains may still need to appear on the return, with the claim entered in the correct boxes.

Time Limits and Deadlines

HMRC says the time limit to make a claim is the anniversary of January 31 following the end of the tax year to which the claim relates. For the 2025-26 tax year, where the normal filing date is January 31, 2027, the Foreign Income and Gains regime claim deadline is January 31, 2028.

That timing gives taxpayers more than one chance to review the figures, but record-gathering can take time. Foreign income records, asset-sale documents, exchange rates, foreign tax documents and residency records may all be needed before a claim is filed.

Loss of Allowances and Tax Credits

The new four-year tax relief also carries a price. HMRC says a taxpayer who claims relief may lose the personal allowance, the capital gains tax annual exempt amount, blind person’s allowance, tax reductions for married couples and civil partners, transferable tax allowance and certain other reliefs.

HMRC’s general guidance also warns that claiming relief means losing tax-free allowances for Income Tax and Capital Gains Tax, along with certain marriage and blind person allowances. A taxpayer with small foreign income may decide the loss of allowances outweighs the benefit of a claim in a given year, while a taxpayer with large foreign dividends, foreign interest or foreign gains may reach the opposite view.

Foreign tax credits are also restricted. HMRC says that if a taxpayer claims relief under the Foreign Income and Gains regime, they cannot also claim Foreign Tax Credit Relief on that income.

They can claim Foreign Tax Credit Relief only on the appropriate proportion of foreign income not covered by a Foreign Income and Gains regime claim. That point matters for people arriving from countries where foreign tax has already been paid, including people receiving dividends from India or the United States.

Timing of Income and Gains

The timing of the income and gains matters as well. HMRC says the regime applies to qualifying foreign income and gains arising on or after April 6, 2025.

A foreign income claim cannot be made for a tax year before April 6, 2025. Former remittance basis users who returned to the UK after 10 years of non-UK residence cannot claim Foreign Income and Gains regime relief for foreign income and gains that arose before that date, even if those funds are remitted during the first four years after their return.

HMRC notes that some former remittance basis users may instead consider the temporary repatriation facility for pre-April 2025 foreign income and gains. The new regime does not sweep in every historic offshore amount.

Common Mistakes to Avoid

Several mistakes that new arrivals should avoid include assuming the regime applies automatically, assuming eligibility turns on non-domiciled status, missing the four-year clock, claiming relief without weighing the loss of allowances, assuming foreign salary is covered, and failing to report income or gains because relief is expected.

Each of those errors flows from the same feature of the new system. The Foreign Income and Gains regime is claim-based, residence-based and limited in duration.

Who Should Take Action

People arriving with substantial foreign investments, family businesses, overseas rental property, foreign bank accounts, share portfolios, crypto assets, foreign pensions, offshore trusts or planned asset sales face the most immediate decisions. Globally mobile workers who may become UK tax resident while continuing to work partly outside the UK may also need to review the Foreign Income and Gains regime alongside Overseas Workday Relief.

The old remittance basis has gone. In its place, the United Kingdom now offers a residence-based, four-year tax relief window that can exempt qualifying foreign income and gains from UK tax and allow those relieved funds to be brought into the country without a separate tax charge, but only if the claim is made carefully and on time.