Many countries offer tax incentives to foreign nationals to incentivise relocation and investment, and the UK is no exception. This incentive was previously available under the Remittance Basis however, from 6 April 2025, the Remittance Basis was abolished and replaced with the UK Foreign Income and Gains Regime.
There are some key differences between the Remittance Basis and the UK Foreign Income and Gains Regime and therefore understanding whether you are eligible and the types of income affected is key to minimising the UK tax burden on your global income and ensuring you meet the UK’s reporting requirements. This guide provides a straightforward explanation of the eligibility criteria, the types of income impacted and the reporting requirements of the UK Foreign Income and Gains Regime.
We understand that moving to a new country with a different tax system can be complex and daunting so if you would like to discuss the UK Foreign Income and Gains Regime and receive tailored advice regarding your personal UK tax position, please contact us at Expat Tax Solutions.
What Is the UK Foreign Income and Gains Regime?
The UK Foreign Income and Gains Regime (the FIG regime) is a basis of UK taxation that allows ‘qualifying individuals’ to exclude their non-UK sourced income and gains from UK tax. It is available to UK tax resident individuals who have been UK tax non-resident for the previous 10 consecutive years and it can then be claimed for the first 4 years of residence.
As UK tax residents are taxable on their worldwide income and gains, the UK Foreign Income and Gains Regime allows individuals who are new to the UK to shelter their foreign income from UK tax in the first 4 years of residence. The scheme aims to simplify the previous Remittance Basis and incentivise individuals to move to and invest in the UK.
Individuals claiming the UK Foreign Income and Gains Regime will remain taxable in the UK on their UK sourced income which includes employment income relating to workdays exercised in the UK, UK rental property income, UK bank interest and UK dividends.
Individuals claiming the UK Foreign Income and Gains Regime will lose their entitlement to the £12,570 tax free Personal Allowance (which is lost anyway if your UK taxable income exceeds £125,140) and the £3,000 Capital Gains Annual Exemption. The FIG Regime is therefore likely to be beneficial for high income individuals or those with significant non-UK sourced income and gains.
Who Can Benefit from the UK Foreign Income and Gains Regime?
The UK Foreign Income and Gains Regime is available for ‘qualifying new residents’. These are individuals within their first 4 years of UK tax residence following a period of 10 consecutive years of UK tax non-residence. This differs from the eligibility criteria of the Remittance Basis which was based on an individual’s domicile.
If you become UK tax non-resident during the 4 year period, you cannot roll forward these years. For example, if you first became UK tax resident in 2025/26 following a 10 year period of non-residence, you can claim the FIG Regime for the 2025/26 – 2028/29 UK tax years. The FIG Regime will not be available for the 2029/30 tax year even if you were non-resident at some point during 2025/26 – 2028/29. The earliest that you could then claim the FIG Regime again would be the 2039/40 tax year provided you were non-resident throughout 2029/30 – 2038/39.
You can be eligible for the UK Foreign Income and Gains Regime if you became UK tax resident prior to 6 April 2025 provided that you meet the relevant criteria. I.e. if you became UK tax resident in 2023/24 after a period of 10 years of non-residence, you can claim the FIG Regime in 2025/26 and 2026/27 as these years are within your first 4 years of UK tax residence.
The previous Remittance Basis had no time limit (subject to deemed domicile rules) and therefore there will be individuals in their 5th+ year of residence who would’ve previously been eligible for the Remittance Basis but are not able to claim the FIG Regime.
What types of income are exempt under the UK Foreign Income and Gains Regime?
Foreign Income and Gains
The most common examples of foreign income and gains that are exempt under the UK Foreign Income and Gains Regime include:
- Interest arising on non-UK bank accounts
- Dividends paid by UK non-resident companies
- Rental income from properties situated outside of the UK
- Profits from a trade carried on wholly outside the UK
- Non-UK pension income
- Gains on the disposal of assets situated outside of the UK (foreign property and shares listed on foreign exchanges etc.)
Overseas Workday Relief
Overseas Workday Relief is the basis under which an individual claiming the UK Foreign Income and Gains Regime can exempt the overseas portion of their employment income from UK tax.
The overseas portion should be calculated on a ‘just and reasonable basis’ which is typically calculated via a workday apportionment. I.e. if you perform 20% of your workdays outside of the UK during the year, 20% of your employment income is foreign sourced and could be exempt under OWR.
The maximum amount of OWR that can be claimed in a year is limited to the lower of £300,000 or 30% of your qualifying employment income.
OWR was previously available under the Remittance Basis for the first 3 years of residence and, as the FIG Regime is available for 4 years, some transitional rules apply:
If you became UK tax resident from 2025/26
As you became UK tax resident after the implementation of the UK Foreign Income and Gains Regime, you are under the rules of the FIG Regime and can claim OWR for 4 years subject to the financial restrictions mentioned above.
If you became UK tax resident in 2023/24 or 2024/25 and are not eligible for the FIG Regime in 2025/26
As you would’ve been entitled to OWR in 2025/26 under the old rules, you remain entitled to it in 2025/26 even if you don’t meet the FIG eligibility rules. In addition, you are not subject to the financial limits (£300,000 or 30%) as these were not in place prior to 2025/26 however you cannot claim OWR in 2026/27.
If you became UK tax resident in 2023/24 or 2024/25 and are eligible for the FIG Regime in 2025/26
You can claim OWR in 2025/26 and 2026/27 as these are within the first 4 years of residence, and the financial limits do apply for both years.
If you became UK tax resident in 2022/23 and claimed OWR
As you claimed OWR 3 years before the UK Foreign Income and Gains Regime was introduced (which is the maximum allowed under the old rules), you are not eligible for OWR in 2025/26 even if you are a qualifying new resident eligible for the FIG regime.
How Do I Claim the UK Foreign Income and Gains Regime
The UK Foreign Income and Gains Regime is claimed via your self-assessment UK tax return and the deadline to claim is the 12 month anniversary of the tax return filing deadline which is 31 January after the end of the tax year.
I.e. the deadline to file a 2025/26 UK tax return is 31 January 2027 and the deadline to claim the FIG Regime for 2025/26 is 31 January 2028. This allows late returns to still include a valid claim for the FIG Regime provided they are not more than 12 months late.
Temporary Repatriation Facility
One of the key differences between the FIG Regime and the Remittance Basis is that foreign income had to be retained overseas to be eligible for exemption under the Remittance Basis however that is not a condition under the FIG Regime. If exempted amounts were remitted to the UK, they would be charged to tax at the individual’s marginal tax rate (20%, 40% or 45%).
As such, individuals who previously claimed the Remittance Basis may have foreign income that was exempted in prior years that has been retained overseas. HMRC have therefore introduced the Temporary Repatriation Facility which enables such individuals to bring prior year foreign income to the UK for a lower charge. This only applies to foreign income earned and exempted while claiming the Remittance Basis, and foreign income earned while UK non-resident is available to be brought to the UK for no charge.
The TRF is only available for the 2025/26, 2026/27 and 2027/28 UK tax years and the amount of the charge is:
- 12% for income designated in 2025/26 or 2026/27
- 15% for income designated in 2027/28
To benefit from the TRF, individuals must ‘designate’ an amount of foreign income. This amount is declared on their self-assessment tax return at which time the charge is paid. The individual can then remit those amounts to the UK.
If any foreign tax has been paid on the foreign income, the amount designated is net of the foreign tax and foreign tax credit relief is not available to reduce the TRF charge.
Example
John is UK tax resident and has a salary of £200,000 and £50,000 of overseas rental profit per year. In 2024/25, he exempted the overseas rental profit from UK tax under the Remittance Basis and it is currently in his foreign bank account. If John were to remit this to the UK, it would be a taxable remittance subject to tax at his marginal tax rate of 45%.
John therefore designates £50,000 of foreign income in 2025/26 and pays the Temporary Repatriation Facility charge of £6,000 (£50,000 x 12%). He is now able to remit the full £50,000 to the UK at any time.
An important note is that paying the TRF charge could be treated as a taxable remittance if it is paid from remittance basis income that has not been designated. John should therefore pay the £6,000 TRF charge from his UK taxable income or from the £50,000 of designated income to ensure he is not taxed on a £6,000 remittance.
Differences Between the UK Foreign Income and Gains Regime and the Remittance Basis
The following table summarises the key differences between the Remittance Basis and the UK Foreign Income and Gains Regime:
| Element | Remittance Basis | UK Foreign Income and Gains Regime |
|---|---|---|
| Who can claim? | Individuals who are not domiciled in the UK | Individuals with 10 consecutive years of UK tax non-residence pior to their first year of residence |
| How long can I claim for? | Typically for up to 15 years after which you will become UK deemed domicile. | For 10 years. |
| Which types of income/gains can be exempted? | Non-UK sourced income including bank interest, dividends, rental income and pensions. | Non-UK sourced income including bank interest, dividends, rental income and pensions. |
| Can I exempt employment income relating to overseas workday? | Yes. Overseas Workday Relief is available for the first 3 years of residence. | Yes. Overseas Workday Relief is available for the first 4 years of residence. |
| Are there any limitations? | No financial limitations however the income must be retained outside of the UK and cannot be remitted. | Exempted income can be remitted to the UK however OWR claims are limited to the lower of £300,000 and 30% of employment income. |
| Will I lose the personal allowance and annual exemption? | Yes unless the remittance basis applies automatically (unremitted income and gains less than £2,000). | Yes. |
| How to claim? | Via self-assessment by 31 January following the tax year. | Via self-assessment by the 12-month anniversary of 31 January following the end of the tax year. |
The Foreign Income and Gains Regime FAQs
Can I claim the UK Foreign Income and Gains Regime?
If you had 10 consecutive years of UK tax residence prior to your first year of UK tax residence, and you are within 4 years of becoming UK tax resident then you should be able to claim the UK Foreign Income and Gains Regime.
Do I need to report my foreign income when claiming the UK Foreign Income and Gains Regime?
Yes. Even if the foreign income is exempt in the UK under the Foreign Income and Gains Regime, you are still required to declare the income on your self-assessment tax return where relevant.
Can I bring my foreign income to the UK if it has been exempted under the UK Foreign Income and Gains Regime?
Yes. Unlike the Remittance Basis, there are no restrictions on bringing your foreign income that has been exempted under the UK Foreign Income and Gains Regime to the UK.
Should I claim the UK Foreign Income and Gains Regime?
This is subject to your specific circumstances as there are some drawbacks to claiming the UK Foreign Income and Gains Regime, for example losing the Personal Allowance. These should be weighed against the benefits of claiming to determine your optimal filing basis.
Get Expert Help With The UK Foreign Income and Gains Regime
If you want to understand how you can benefit from the UK Foreign Income and Gains Regime, our experts can help. Schedule a free no-obligation consultation to receive expert advice from a Chartered Tax Advisor.