Navigating UK tax for new arrivals

Navigating the UK’s new foreign income and gains (FIG) scheme

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As the UK government gears up for significant changes in tax legislation, it’s essential for both UK residents with international interests and overseas Britons considering a return to the UK to understand the new rules. The recent abolition of non-domiciled status will soon transform how foreign income and gains are taxed, making the new Foreign Income and Gains (FIG) scheme a crucial topic for many. Here’s what the new rules mean and how you can prepare effectively.

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Key changes to the UK tax system

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The upcoming 2025/26 tax year will mark the end of non-dom status, a rule that previously allowed individuals residing in the UK to keep foreign income and gains tax-free for up to 15 years, as long as they kept those funds offshore. In its place, the FIG scheme introduces new criteria and benefits for foreign incomes and gains but with more stringent residency requirements and a shorter tax exemption period.


For those unfamiliar, non-dom status allowed individuals not domiciled in the UK to avoid paying UK taxes on foreign income and gains, provided these earnings stayed outside the UK. The replacement FIG scheme offers similar benefits but reduces the tax-exemption period from 15 years to four, and only if you’ve been a non-resident for ten consecutive years prior to your UK arrival.

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Eligibility for the FIG scheme

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To qualify for the FIG scheme, applicants must show they’ve lived outside the UK for ten consecutive tax years before becoming a UK resident. Here’s how the scheme will impact different groups:


For New Arrivals to the UK: Individuals moving to the UK who have never resided in the UK can claim exemption from UK taxes on their foreign income and gains for their first four years. During this period, they can remit these earnings to the UK without tax penalties.


For Returning Britons: British citizens who have lived abroad for a decade will also be eligible for FIG upon their return, allowing a four-year grace period before they’re taxed on worldwide income and gains.


For Recent Residents: Those who’ve been UK residents for fewer than four years by the start of the 2025/26 tax year can also benefit from FIG until the end of their fourth year.


This shift represents a major change from the previous system, creating a new landscape for those planning to live or work in the UK temporarily.

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FIG compliance obligations

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To claim FIG benefits, you’ll need to file an election with HM Revenue and Customs (HMRC) through a self-assessment tax return, similar to a remittance basis claim. The deadline for this election will be one year after the self-assessment filing deadline for the relevant tax year. For example, for the 2025/26 tax year, the election must be completed by January 31, 2028.


It’s important to note that if you choose the FIG scheme:

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- You will forgo personal allowances (such as the £12,570 income tax allowance) and capital gains exemptions.
- You’ll still need to declare foreign incomes and gains to HMRC, even though these amounts won’t be taxed during the four-year period.


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Understanding these obligations and deadlines will be crucial for individuals planning to leverage the FIG scheme, as failure to comply may lead to penalties or loss of eligibility.

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Temporary repatriation facility

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Another significant introduction is the Temporary Repatriation Facility (TRF), which offers a tax opportunity for those who previously used the remittance basis for tax-free foreign earnings. Under TRF, individuals can repatriate these previously exempt funds to the UK at a favourable tax rate: 12% in the 2025/26 and 2026/27 tax years and 15% in 2027/28. However, note that TRF income and gains won’t qualify for foreign tax credits, meaning any overseas tax paid won’t reduce the UK tax obligation on these repatriated funds.

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Preparing for the FIG scheme changes

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With these changes in mind, it’s essential to seek guidance to fully understand your eligibility and obligations under the FIG scheme, TRF, and other new tax rules. Here’s how Global Tax Consulting can support you through these updates.


FIG Scheme Evaluation: Our team can help you assess whether you qualify for the FIG scheme based on your residency history, ensuring you maximise tax efficiency for your foreign income and gains.


TRF Optimisation: If you’ve used the remittance basis in the past, we can guide you in determining whether repatriating funds under TRF is advantageous and help calculate the tax implications.