What the New FIG Regime Means for International Clients

2026 technical update

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

In practice, this means that a person’s exposure to UK tax no longer depends on whether they are deemed to be domiciled in the UK, but rather on how long they have lived in the UK.

Under these new rules, individuals who are UK residents will generally be taxed on their worldwide income and any capital gains arising. However, the new Foreign Income and Gains (FIG) regime was introduced to support people moving to the UK after a long period of residence abroad.

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

If a valid claim is made, most foreign income and capital gains arising during this period will not be subject to UK tax. Therefore, the funds can be brought to the UK without incurring additional tax charges during the four year exemption period.

This is a significant change from the previous remittance system, which allowed foreign income to remain outside the UK tax net without time limitas long as it is stored offshore.

Under the new regime, assistance is time-limited. Once the four year FIG period ends, individuals will usually be subject to full UK tax on their worldwide income and gains regardless of whether the funds are remitted to the UK or not.

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

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

It’s not just overseas personal income and profits that need to be considered as offshore trusts may also be affected.

If the FIG regime does not apply, income and gains arising in certain trusts in which the settlor has an interest may be taxed directly on the settlor who is a UK resident. This represents a change from previous rules that protected certain overseas trusts from UK tax attribution and may increase the UK tax exposure of individuals who have completed an offshore structure while domiciled outside the UK.

These changes also cover inheritance tax (IHT), as the UK moves to a residence-based approach to assessing liability for UK IHT, where an individual’s worldwide assets may fall within the scope of IHT if they have been a UK resident for at least ten of the previous twenty tax years – referred to as long-term tax residence in the UK.

In some cases, IHT exposure in the UK can continue for up to ten years after leaving the UK, depending on the length of previous stay.

In practice, the FIG regime is likely to benefit individuals arriving in the UK after a long period abroad, including returning British expatriates who have lived abroad for ten years or more.

However, those who intend to stay in the UK for a longer period, or who previously relied on remittance systems or offshore trust protection, may face increased complexities under the new rules.

Early planning is key and individuals moving to the UK should review the treatment of foreign income and profits before considering whether and when to claim relief under the FIG regime. They must also assess the ongoing suitability of any offshore structure in relation to their long-term residential intentions.

If you or your clients require any assistance with FIG, please contact us and we will be happy to help.