The New FIG Regime – Recent Arrivals

by John McLaughlin & Urooj Sheikh, in , , ,

This article should be read in conjunction with The New FIG Regime – What is it?

This article should not be regarded as tax advice. If you would like advice on your specific circumstances, please get in touch. 

What will be the impact on individuals who recently arrived in the UK?

The FIG regime will be introduced on 6th April 2025 which means the first tax year where a claim can be made under the new rules will be 2025/26. Individuals who arrived in the UK after 6th April 2022 can still benefit from the FIG regime because 2025/26 will be within their first four tax years of UK residence.

Below is an illustration of how a FIG claim will work for recent arrivals:

  • Arrival in 2022/23 would mean that 2025/26 is the fourth year of UK residence. This would allow one tax year (25/26) of tax-free foreign income and gains.
  • Arrival in 2023/24 would allow two tax years (25/26 and 26/27) of relief.
  • Arrival in 2024/25 would allow three tax years (25/26, 26/27 and 27/28) of relief.

For individuals straddling the old and the new tax rules, it will be important to identify income arising pre and post 6th April 2025. Income & gains arising pre-6th April 2025 will incur a tax charge on remittance whereas income arising on or after 6th April 2025 can be remitted tax-free.

Planning Opportunities

There are some planning opportunities available whereby an individual could defer income and gains until 2025/26 to enable tax-free remittances.

The tax treatment of the foreign income under the remittance basis versus the FIG regime will be the same i.e. not taxable. However, the distinct difference is that the foreign income can be transferred to the UK.