UK Non-Domiciled Tax Status Update: The New FIG Regime Explained

The Removal of the Remittance Basis of Taxation

 From 6 April 2008, individuals who were UK residents, but non-domiciled (‘non-doms’), had the option to be taxed on a ‘remittance’ basis. Under these rules, foreign income and gains were not taxed in the UK unless they were remitted to (i.e. brought into or enjoyed within) the UK.

This meant that non-doms could earn and grow wealth overseas without it affecting their UK tax bill, as long as they kept it offshore and provided they did not retain UK residency for 15 years or more.

The remittance basis was free to use until the individual had become a UK resident for at least 7 of the previous 9 tax years. Afterwards, an annual charge of £30,000 was required to use the remittance basis, which then rose to £60,000 in the event of becoming a UK tax resident for at least 12 of the previous 14 tax years. The remittance basis required an election to be made, unless the unremitted income and gains were below £2,000.

After 15 years of residence in the UK, individuals were then considered to have acquired a ‘deemed’ domicile status, meaning they could no longer claim the remittance basis of taxation. The effect of this was exposure to UK tax on their worldwide income and gains, regardless of whether or not they were remitted to the UK.

UK Long Term Non-Resident Tax Status Update: the FIG Regime?

 From 6 April 2025, a new tax regime known as the Foreign Income and Gains (FIG) Regime has come into play. This will replace long-standing rules surrounding the taxation of non-domiciled individuals and remove the domicile centered regime, instead focusing on tax residency. These changes will affect many individuals who have foreign earnings, investments, and assets, with many knock-on effects to the UK economy.

The effect of the FIG regime is that individuals who have been non-resident in the UK for tax purposes over a period of at least 10 consecutive tax years (long term non-residents) to freely accumulate overseas income and gains without charge to UK taxation whether brought into, enjoyed, or kept outside the UK.  If such an individual subsequently becomes UK resident, their overseas income and gains are exempt from UK tax for the first 4  tax years of their UK residency.  These new rules are more generous than the previous ‘remittance basis’ rules as they offer full exemption from UK tax (as opposed to a temporary exemption until a remittance occurs).  However, the FIG regime only offers relief for 4 years, compared to up to 15 years available under the previous remittance rules.

Application of the FIG Regime

• Eligibility: The FIG Regime is only available to ‘new’ UK residents, who have not been residents for at least 10 consecutive tax years prior to their arrival (or return).
• Duration: The FIG regime lasts for 4 consecutive tax years and starts from the first year of UK tax residence.
• Rules: During these 4 tax years, qualifying individuals will not be taxed under UK tax laws for any foreign income or gains, regardless of whether they bring them to the UK or not. However, once the 4 years are over, all foreign income and gains will be taxed under UK tax laws.
• Cost: There is no charge to use the FIG regime. It is automatic, assuming the eligibility criteria are met.
• Other Important Things to Note: The FIG regime runs for 4 consecutive years only. If an individual gives up their UK resident status partway through the 4 years, and then returns sometime later, the FIG regime will not continue from where they left off. If the individual returns within the 4 years, they will still qualify for the FIG regime with however much of the 4 years are left from the original UK resident period. If they return after the four years have concluded, they will not qualify to use the FIG regime and will be required to pay UK tax on all foreign income and gains.

How Will This Affect Non-Resident Individuals?

 For those moving to the UK (or returning after at least 10 years away), the new rules may well be a welcome change. The FIG regime offers clarity and simplicity. Qualifying individuals can enjoy their foreign income freely in the UK, without needing to pay UK tax on it.

Additionally, with the new regime in place, there is an incentive to relocate (short-term) to the UK. This is particularly helpful for business owners, skilled professionals, or wealthy individuals who were considering a move to the UK. With no UK tax on overseas gains, foreign individuals can relocate to the UK with ease, knowing that they’ve got 4 years to benefit from the new regime, and that they can enjoy their wealth in the UK, whereas previously this would have had to be kept offshore.

The biggest downside for long-term non-resident individuals however, is the fact that the regime only lasts for 4 years. This is a significant change to the 15 years that the previous remittance basis allowed. After the 4 years are over, that individual will have to pay UK tax on all foreign income and gains, regardless of where those gains are kept or enjoyed. This could deter some individuals from staying in the UK long-term.

How Will the FIG Regime Impact the UK Economy?

 The economy should benefit from the change in regimes. By offering a generous tax window to foreign individuals, the UK becomes a more attractive place to reside. This should help boost international recruitment, as more global talent should be looking to make the UK their next home.

Additionally, as this regime only lasts for four years, once this 4-year window closes, more individuals will be taxed on their global earnings if they remain in the UK. This could lead to increased long-term revenues for the UK.

The biggest downside to the regime from the UK economy’s point of view, is that the long-term incentives to stay in the UK are gone. Therefore, wealthy long-term non-resident individuals may only stay for 4 years. However, the regime will also appeal to a new wave of internationals looking to move to the UK and benefit from 4 years of the FIG regime.

How Does the New FIG Regime Impact You?

The impact the FIG Regime will have on you depends heavily on your circumstances.

New or Returning UK Residents (after 10+ years of Non-Residency)

• F4 tax years with no UK tax on your foreign income or gains
• Enjoy your foreign income anywhere, including in the UK
• No charge to use the regime
• Allows you to get settled in the UK without an immediate tax hit on your overseas wealth

Current Long-Term UK Residents from Overseas (4 years+ of Residency)

• The FIG Regime has completely replaced the remittance basis
• You will now be taxed on all your worldwide income and gains
• You cannot qualify for the FIG regime, as it only applies to people who have been non-resident for 10+ years

Current Short-Term UK Residents from Overseas (0-4 years of Residency)

• You may be able to qualify for the FIG regime
• If you have been a UK resident for less than 4 years, you may be able to benefit from the FIG regime, for however many months/years you have left until you hit the 4 years of residency
• However, you will only qualify if, before becoming a UK resident, you were a non-resident for 10+ consecutive tax years.

Non-UK Residents (10+ years of Non-Residency)/Individuals who have never lived in the UK

• You will qualify for the FIG regime upon moving to the UK
• You can enjoy 4+ consecutive years of no UK tax on foreign income and gains, regardless of whether it’s brought to the UK or remains overseas
• After the 4-year period has concluded, you will pay full UK tax on all foreign income, regardless of it being brought into or enjoyed in the UK.

Contact Our Tax Advisers

If you have any questions regarding how the new FIG regime, and the changes to non-domiciled UK tax laws affect you, contact our expert tax advisers. We offer a free initial meeting to discuss your needs, and how we can benefit you.