This guide provides an easy to understand explanation of the foreign income and gains (FIG) regime which, from 6th April 2025, replaces the previous Remittance Basis of Taxation for non-doms in the UK.
The new foreign income and gain (FIG) regime replaces the previous Remittance Basis of Taxation for non-doms in the UK from 6 April 2025 and affects people who are new arrivals into the UK, including returning British nationals.
To be deemed a new arrival, you must have been classed as non-resident by means of the Statutory Residence Test for the ten consecutive tax years prior to your arrival.
If this is the case for you, then for the first four consecutive years from your arrival in the UK you can make a claim under the FIG regime – or an election for Overseas Workday Relief (OWR) – and look to claim relief on the majority of your foreign income and gains for that period.
The difference between the FIG regime compared to the remittance basis for non-doms in the UK is that foreign income and gains can, in principle, be brought into the UK without changing the tax approach under the FIG regime.
It is worth noting that when it comes to the FIG regime, you need to make sure you quantify the foreign income and gains you're claiming relief on.
These changes are going to affect two sets of people. The first are those who are currently taxable under the non-dom regime and eligible for the remittance basis of tax.
The concept of non-domicile, from an income tax perspective, is going to be abolished from 6 April 2025 onwards. This means, if you have been taxed under the remittance basis and you don't meet the criteria for the FIG regime from the 2025/26 tax year onwards, you are going to be taxed in the UK on your worldwide income.
Others who might be affected are those who meet the criteria of being a long-term non-resident but who wouldn't be eligible for the old non-dom regime. For example, people who were born in the UK to a UK domiciled father, but who have been outside of the UK for a prolonged period of time (at least 10 years).
Additionally, if someone has been outside of the UK for perhaps 15 to 20 years and they’re now looking at coming back to the UK, they would potentially be eligible for the FIG regime under the new rules.
Those most likely to benefit from the new foreign income and gains regime are new arrivals to the UK. To be eligible, you must be a long-term non-resident. This means you must have been outside the UK for at least ten consecutive tax years, and have been classed as non-resident during this time by means of the Statutory Residence Test.
If someone is from the UK but has lived outside of the UK for a number of years, and perhaps got stuck in the UK during the pandemic, they might end up being treaty resident outside of the UK, but tax resident in the UK by means of the Statutory Residence Test.
As a new arrival, the FIG regime applies to the first four years from your arrival. Note that the clock starts ticking on those four years from the moment you arrive in the UK – it does not mean your first four years of UK tax residence.
If you were to arrive in UK during the 2024/25 tax year, you would have availability for the foreign income and gains regime in the 25/26, 26/27 and 27/28 tax year. If you happened to be non-resident during one of those years and were to return to the UK, you wouldn't be able to then claim the relief in the 28/29 tax year.
Those who were eligible for the remittance basis of taxation under the non-dom regime, who have been in the UK for at least four years, are going to be negatively impacted from the 2025/26 tax year onwards.
For example, if you are in your 5th to 15th year of UK tax residence under the non-dom regime, even if you had to pay the remittance basis charge, you could in principle apply for relief from UK taxes in certain instances up until you'd been UK tax resident for 15 out of 20 tax years.
Under the new rules, the relief is going to be better – in that you’ll have more financial freedom with the money you bring into the UK – but it will only be available for the first four years from your arrival in the UK. The remittance basis restricted where you could use that money, but you could get benefits for up to 15 years.
Under the FIG regime, you’re only eligible for relief on the majority of your foreign income and gains. There are certain income sources that aren't relievable under the FIG regime, even if they are technically foreign income. For example, pension contributions where you've received UK tax relief at source or offshore chargeable events gains on insurance policies or bonds. The reason for this is because you can obtain Time Apportionment Relief (TAR) for the period where you were non-resident.
