What Is a FIG? Understanding the New Foreign Income and Gains Regime
From 6 April 2025, the UK tax system will undergo a major shift. The remittance basis will be replaced by the Foreign Income and Gains (FIG) regime. This new approach focuses on UK tax residence rather than domicile. So, what is a FIG? It refers to foreign income and gains that UK residents must now report and potentially pay tax on.
Who Must Report Foreign Income and Gains?
Under the new rules, nearly all UK-resident individuals must report their foreign income and gains to HMRC. This includes those who previously used the remittance basis. If you are UK resident under the Statutory Residence Test (SRT), you fall within the scope of the FIG regime.
Those who do not qualify for relief under the new rules will pay tax on foreign income and gains as they arise. However, any foreign income or gains earned before 6 April 2025 will only be taxed if brought into the UK.
What Is a FIG Relief and Who Can Claim It?
A key feature of the new regime is the 4-year FIG exemption. So, what is a FIG relief in this context? It allows new UK residents to receive full tax relief on their foreign income and gains for up to four years. To qualify, you must not have been UK tax resident in any of the 10 previous tax years.
You must claim this relief through a Self Assessment tax return. The deadline is 31 January in the second tax year after the relevant claim year. You can choose which of the four years to claim, but you must include accurate figures. If you don’t, HMRC will tax the income at standard rates.
Planning Ahead for the FIG Regime
The FIG regime introduces stricter reporting and broader tax obligations. Understanding what is a FIG and how it affects your tax position is essential. Early planning and accurate record-keeping will help you stay compliant and make the most of available reliefs.
