Understanding the UK’s Foreign Income and Gains (FIG) regime

On 6 April 2025, the UK’s Resident Non-Domicile (RND) tax regime, which has been in place for over 200 years, was abolished and replaced with a new Foreign Income and Gains (FIG) regime. What do the new rules mean for you?

We outline the changes, and explore how they affect those moving to the UK for the first time, those returning to the UK after a period of non-UK tax residence, and former UK RNDs.

qualifying for the FIG regime.

• The new rules are ‘residence based’ rather than ‘domicile based’. To take advantage of the FIG regime you must be considered a Qualifying New Resident (QNR) – simply put, this means you must have had at least ten consecutive years of non-UK tax residence before becoming a UK tax resident.
• Both British and non-British citizens can qualify.
• The FIG regime will be available for the first four years of tax residence in the UK, including the tax year of arrival.
• An individual who became resident in the UK between 6 April 2022 and 5 April 2025 may benefit from the FIG regime if they meet the QNR criteria. They will not qualify for the full four-year period; instead, this will be reduced by the number of tax years they have already been UK resident.

the tax benefits.

• For QNRs, most categories of foreign income and gains are exempt from tax in the UK, and individuals are able to bring them freely into the UK.
• Distributions from offshore trusts received by QNRs during the qualifying period are also tax exempt.
• To take advantage of these exemptions, an individual must make a claim for the FIG regime in their self-assessment tax return, providing details of all foreign income and gains subject to the claim.

what if you don’t qualify?

• Individuals who have been resident in the UK for more than four tax years, or recent arrivals who fail to meet the QNR criteria, are not eligible for the FIG regime, and as such are taxed on an arising basis (i.e. subject to UK tax on worldwide income and gains).

optimising your banking and investment strategy.

To maximise the benefits of the FIG regime, QNRs should avoid UK situs assets and UK-sourced income as far as possible. There are no other tax constraints, and segregation of income and capital is not required.

It is important to note that certain categories of income do not qualify as tax-exempt under the FIG regime, for example chargeable event gains on life insurance bonds, and any structures should be reviewed in advance of relocating to the UK.

For individuals who are not able to take advantage of the FIG regime (either because they never satisfied the QNR criteria or because their four-year eligibility has ended) and who are not yet Long Term Resident (i.e. those who have not been UK resident for at least 10 of the past 20 tax years) for UK inheritance tax (IHT) purposes, it may still be worth avoiding UK situs assets in order to minimise exposure to UK IHT.

For QNR individuals who were previously taxed on the remittance basis as UK RNDs, foreign income and gains received before 6 April 2025 will continue to be taxed under the previous remittance rules, so should continue to be segregated. We can manage this as part of a comprehensive solution for former UK Resident Non-Domiciled clients.