End of the Remittance Basis Regime – Understanding the New 4-Year FIG Regime

 

From 6 April 2025 the UK tax rules changed for non-UK domiciled individuals. Under the new regime where you live (residence) rather than your origine (domicile) determines the UK tax treatment of foreign income and gains.

 

The changes affect individual who were eligible to make an election under the previous  regime only to be tax on foreign income and gains to the extent the such income or gains were brought into or used in the UK.

This option is no longer available. The tax treatment of foreign income arising on or after 6 April 2025 is no longer not determined by whether or not such monies are remitted to the UK.

Former remittance basis users – Key Points

• 2024/25 is the final tax year in which eligible non‑domiciled individuals can claim the remittance basis.
• After 5 April 2025, any remittance of previously untaxed foreign income or gains remains taxable.

To ease the transition two transitional measures apply to individuals who previously used the remittance basis before 6 April 2025:

1. Temporary Repatriation Facility (TRF)

A Temporary Repatriation Facility is available to individuals who previously has used the remittance basis of taxation. The TRF allows such tax payer to bring in pre-April 2025 untaxed foreign income and gains at reduced tax rates:

• 12% for tax years 2025/26 and 2026/27; and
• 15% for tax year 2027/28.

A valid election must be made for the relevant tax years to claim the benefit of the reduced rate and income and gains designated accordingly. Once taxed under the TRF, the designated income or gains can be remitted.

2. Capital Gains Tax Rebasing Option

Individuals who

• previously claimed the remittance basis of taxation;
• were not domiciled or deemed domiciled (i.e. resident for at least 15 tax years) before April 2025; and
• held foreign assets before 6 April 2017;

have the option to rebase the value of these assets. This relief allows the individual to rebase and set the value of these assets to their market value as of 6 April 2017.

This (higher) rebased value will be used as base cost when determining the taxable gain on disposal.

The New 4‑Year FIG Regime (from 2025/26)

The Foreign Income and Gains (FIG) Regime applies from 6 April 2025 and represents a fundamental redesign of the UK’s approach to taxing new arrivals.

Key Features

• Eligibility is based solely on residence;
• Domicile is irrelevant under the new rules;
• Available for individuals who become UK‑resident after a period of at least 10 consecutive years of non‑residence.

• Provides a full exemption from UK tax on foreign income and gains for up to four tax years
• Foreign income and gains that qualifies for FIG relief can be brought into or used in the UK tax‑free at any time during and after the FIG period.
• After the 4‑year window, individuals become taxable on worldwide income/gains on the arising basis.

Trade-offs:

Similar to the Remittance Basis regime claimants will lose:

• UK Personal Allowance (£12,570 for 2025/26); and
• the capital gains tax annual exempt amount (£3,000 for 2025/26); and

Foreign income or capital losses are not allowable and cannot be used to reduce UK-tax liabilities during the FIG period.

Comparison of the Previous and New Regimes

	Remittance Basis Regime	4-Year FIG Regime
Eligibility	Non-UK domiciled under common law and not deemed domiciled. At least 3 consecutive tax years of non-UK residence required for  OWR purposes.	Must have been Non-UK tax resident for at least 10 consecutive years before becoming UK resident.
Maximum duration	15 tax years	4 tax years
Taxation of foreign income and gains	Not taxed unless remitted and brought into or used in the UK	Fully exempt even if brought into or used in the UK.
Reporting requirements	Only if remitted, foreign income or gains must be reported	All relieved income and gains must be quantified and reported.
Loss of reliefs	Personal Allowance and CGT Annual Exempt Amount lost.	Same.
Foreign losses	Relief available only if an election was made with the first remittance basis claim.	Not allowable as deductions.
Making a claim	Optional in any of the 15 years.	Can be claimed in any or all of the first four years of UK residence.
Sources of income subject to an election	All foreign income	Can be claimed on a source-by-source basis.
Income eligible or excluded from relief	Most income eligible except for redemptions from certain offshore life insurance policies or bonds.	Most income is eligible. Certain foreign income is excluded including income from: –        employment, –        pensions paid under the Overseas Pensions Act 1973 –        foreign securities received in exchange for UK securities, –        UK-tax relieved funds within relevant non-UK pension schemes, –        foreign dividend coupons, –        certain disposals concerned with land in the UK, –        certain unremittable ceased sources, –       offshore life insurance policies and investment bonds.
Gains eligible or excluded from relief	Most foreign gains eligible.	Most foreign gains eligible. Gains deriving at least 75 per cent of value from UK land may be excluded.

 

Other Considerations

Income and gains arising from 6 April 2025 are either taxable in the UK on the arising basis or exempt under the FIG. Accordingly, such funds may be remitted to the UK after that date without additional UK tax.

Such funds should be kept separate from untaxed foreign income and gains from before 6 April 2025 in respect of which the individual elected the remittance basis of taxation.

If you have any queries about this topic, please contact a member of our team.

The material in this article is for general information only and does not constitute legal or other advice. Professional advice should be obtained before taking action.