Foreign Income and Gains (FIG) Regime Case Study

The Client

We were approached by a client, a successful entrepreneur who had been living and working in Dubai for the past 15 years. He had built a substantial portfolio of investments including overseas rental properties, dividend-paying shares in foreign companies, and a profitable consultancy business operating in the Middle East.

Him and his family had made the decision to relocate to London in September 2025. His wife had been offered a senior position at a major UK hospital, and they wanted their children to attend British universities. He planned to continue running his Dubai-based consultancy remotely while also exploring new business opportunities in the UK.

The Problem

The client came to us with several concerns about his UK tax position:

1. Foreign Income Exposure: The client had approximately £400,000 in annual foreign income from his consultancy, rental properties in Dubai and Singapore, and dividends from foreign investments. He was worried about being taxed on all of this at UK rates of up to 45%.

2. Capital Gains: He held foreign assets worth over £5 million with significant unrealised gains. He was concerned that selling any assets after becoming UK resident would trigger substantial Capital Gains Tax bills.

3. Remitting Money to the UK: The client needed to bring funds into the UK to purchase a family home and fund living expenses. He had heard the old remittance basis rules were complex and wanted clarity on how this would work under the new regime.

4. Long-term Planning: He wanted to understand what would happen after the initial relief period ended and how to plan for this.

Our Approach

Step 1: Establishing UK Tax Residence Status

We first needed to confirm the client’s UK tax residence position under the Statutory Residence Test (SRT). This test determines whether someone is UK tax resident for any given tax year.

Having been outside the UK for 15 years, the client clearly met the 10-year non-residence requirement. Upon his arrival in September 2025, we analysed his circumstances against the SRT criteria:

• He would have a home in the UK (the rented property where his family would live)

• He would spend more than 183 days in the UK from September 2025 onwards

• His family ties to the UK would be significant

We confirmed the client would become UK tax resident from the 2025/26 tax year, with split year treatment potentially applying to exempt the pre-arrival portion of the year from UK tax on overseas income.

Step 2: Analysing FIG Regime Eligibility

The new FIG regime came into effect on 6 April 2025, replacing the old remittance basis system. We analysed whether the client qualified as a "qualifying new resident":

• The client had been non-UK resident for 15 consecutive tax years, having lived in Dubai before arriving in the UK.

• They became UK tax resident from the 2025/26 tax year under the Statutory Residence Test.

• At the time of the advice, the client was in year one of the four-year UK residence window.

Conclusion: The client qualified for the FIG regime for tax years 2025/26, 2026/27, 2027/28 and 2028/29 (a full 4 years).

Step 3: Understanding the Tax Benefits

We explained to the client the key benefits of claiming the FIG regime:

100% Tax Exemption on Foreign Income and Gains: Unlike the old remittance basis , the FIG regime provides a complete exemption from UK tax on qualifying foreign income and gains.

Freedom to Bring Funds to the UK: This was a game-changer for the client. Under the new rules, he could bring his exempt foreign income and gains into the UK without triggering any UK tax liability - something that was not possible under the old remittance basis.

No Charge to Access: The old remittance basis required long-term users to pay an annual charge of up to £60,000. The FIG regime has no such charge.

Step 4: Identifying the Trade-offs

We also explained the important trade-offs that come with claiming the FIG regime:

Loss of Personal Allowance: In any year, the client client claims FIG relief, he would lose his income tax personal allowance (currently £12,570) and the Capital Gains Tax annual exempt amount (£3,000).

Foreign Losses Cannot Be Used: Any foreign income losses or capital losses arising in a year when FIG relief is claimed cannot be set against other income or gains.

Full Reporting Required: The client must declare all his worldwide income and gains on his UK tax return, even though the foreign elements would be exempt from tax.

Step 5: Running the Numbers

We prepared a detailed analysis comparing the client’s tax position with and without the FIG claim, on the basis that he would be classed as an additional rate taxpayer.

• The client received £300,000 in foreign consultancy profits, which would have generated a £135,000 UK tax liability without a FIG claim. With the FIG claim, the tax liability was reduced to £0.

• They also received £60,000 in foreign rental income, which would otherwise have resulted in £27,000 of UK tax. Under the FIG regime, the tax due was £0.

• A further £40,000 of foreign dividend income would have created a £16,000 tax liability, but this was also reduced to £0 through the FIG claim.

• Overall, the client’s estimated annual UK tax liability was reduced from £178,000 to nil, creating an annual tax saving of £178,000.

Annual Tax Saving: £178,000

Total Tax Saving over 4 Years: Over £700,000

Step 6: Planning for Life After FIG

We also advised the client on what happens after his 4-year FIG window expires in April 2029:

• From the 2029/30 tax year onwards, the client would be taxed on his worldwide income and gains as they arise

• We recommended he uses the 4-year window to restructure certain investments

• We discussed the potential to realise gains on foreign assets during the FIG period while they remain tax-free

• We explained the new Inheritance Tax rules (10 out of 20 years residence test) and how this would affect his estate planning

The Outcome

The client instructed us to proceed with claiming the FIG regime for his first year of UK residence (2025/26). The results were transformative:

Immediate Tax Savings: The client saved approximately £180,000 in his first year alone.

Flexibility with Funds: He was able to bring his exempt foreign income into the UK to purchase his family home without triggering any UK tax.

Peace of Mind: The client could continue running his overseas business and receiving foreign income knowing exactly what his UK tax position would be for the next 4 years.

Future Planning: We put in place a clear roadmap for restructuring his affairs before his FIG relief expires, maximising the benefits of this transitional period.

Key Takeaways

1. The new FIG regime offers significant tax benefits for individuals who have been non-UK resident for at least 10 years before arriving in the UK.

2. Unlike the old remittance basis, you can bring your exempt foreign income and gains to the UK without any tax consequences for the first four years. After the initial period of four years, individuals will be taxed on their worldwide income and gains, regardless of whether their foreign income is brought into the UK or kept offshore.

3. The relief lasts for 4 tax years - careful planning is essential to maximise the benefits during this window.

4. Professional advice is crucial to ensure eligibility, understand the trade-offs, and plan for life after the relief period ends.

How Can We Help You?

If you are considering relocating to the UK or have recently arrived and want to understand your tax position under the new FIG regime, we can help.

We offer comprehensive tax planning services including:

• UK tax residence analysis under the Statutory Residence Test

• FIG regime eligibility assessment and claims

• International tax structuring advice

• Inheritance Tax planning